The phenomenon of "greenwashing" in the carbon market is prominent. How does the price mechanism work?
Zero-carbon transformation has become an international consensus. As the world's largest developing country, my country has achieved initial results in promoting green and low-carbon transformation. Among the "five major articles" of finance, green finance also occupies a place, and its importance is self-evident. On October 20, at the closing ceremony of the 2024 Financial Street Forum Annual Conference, many industry celebrities, experts and scholars discussed the development prospects of green finance and international cooperation to promote the zero-carbon goal. Overall, the current price incentive mechanism is the most effective in guiding the allocation of low-carbon investment, but the carbon market and carbon prices will also be flawed. There are still certain problems in aspects such as "green-floating" phenomenon in the carbon market, large fluctuations in carbon prices, and the connection between spot carbon quotas and future prices. Financial markets have experience and ability to better help the formation and construction of carbon markets and carbon prices.
Need price incentive mechanism guidance
2023 is the hottest year since meteorological records began in the world, breaking the warmest record and 0.14 ° C higher than the previous high temperature record year in 2016. Behind the high temperature warning, the global climate change problem is becoming increasingly serious.
In the context of intensified geopolitical conflicts, concerns about climate issues and low-carbon development have become more complex. Zhou Xiaochuan, vice chairman of the Boao Forum for Asia and former governor of the People's Bank of China, said that in the past two years, in the face of global geopolitical conflicts, the priority of climate change has changed, so it is also facing great challenges.
"Over the years to deal with climate change, there have been various efforts, but in the end, it seems that price incentives are the most effective." Zhou Xiaochuan pointed out that the goal can be better achieved through the weighting of the objective function and the allocation of resources through an effective price mechanism. If the carbon market and carbon prices can be made to function better, regardless of whether climate change is the top priority goal, low-carbon emissions can still be achieved. goal.
The carbon market is an important measure to use market mechanisms to control greenhouse gas emissions and achieve the goals of carbon peaking and carbon neutrality. According to the relevant person in charge of the Ministry of Ecology and Environment, in July 2021 and January 2024, my country successively launched the national carbon emissions trading market and the national voluntary greenhouse gas emission reduction trading market, which together constitute the national carbon market system.
Data shows that as of the end of August 2024, the cumulative transaction volume of the national carbon emissions trading market was 476 million tons, with a transaction volume of 27.9 billion yuan. Carbon prices fluctuated around 90 yuan per ton, which was generally at a reasonable level.
"China has emphasized the importance of developing the Shanghai carbon quota market, CCER and voluntary carbon market, but it is not enough. Further attention is needed to realize the role of a good price mechanism in coordinating multiple priority goals." Zhou Xiaochuan said.
The fundamental solution to "greenwashing" lies in measurement
After early development and construction, a preliminary consensus has been reached on the formation and establishment of the carbon market and carbon price around the world. The coverage of the carbon market has been continuously expanded, and the trading rules and systems of the carbon market have been continuously improved. However, in the process of development, the phenomenon of "greenwashing" in the carbon market cannot be ignored.
"Greenwashing" is a false environmental behavior that has become an obstacle to the construction of the carbon market. Zhou Xiaochuan said that the fundamental solution to the problem of "green bleaching" lies in strengthening the actual measurement, confirmation and accounting of the real emission reduction effect. At present, the small coverage of the carbon market and a large number of free quotas have caused large fluctuations in carbon prices. At the same time, it is also necessary to connect spot carbon quotas with future prices to cope with uncertainty.
"There are many uncertainties in the future. If we don't make enough efforts to reduce carbon dioxide emissions or other greenhouse gas emissions, carbon prices will gradually become higher and higher in the future, and the greater the task to achieve net zero emissions will be. However, it is also possible that as some science and technology mature in the future, carbon prices will go downward. In order to cope with uncertainty, there must be a carbon market that combines spot and forward futures." Zhou Xiaochuan added.
In addition, the current total carbon emissions are still in an ambiguous zone. Zhou Xiaochuan pointed out that the amount and overall target value of carbon emissions reduction have not yet been determined, and the measurement standards vary among countries, and there is still much room for improvement.
"The core and fundamental principle to avoid 'greenwashing' is integrity." According to Mark Carney, chairman of Bofeng Asset Management and former governor of the Bank of England, the supervision of the carbon market requires data infrastructure to be able to record it. It also needs to adjust future forward prices to help judge and balance. It also needs to reach a global standard to jointly establish and participate in the carbon market to reduce "greenwashing" behavior.
Financial markets help build carbon markets
There is no doubt that the current construction of carbon markets and the formation of carbon prices are still in their early stages and still need to be continuously improved, and the financial market is an important force.
"Rising sea levels and temperatures have become one of the most influential issues, but many countries are unable to obtain funding to support climate transformation and development." Standard Chartered Group CEO Wintos said that developing countries need 100 trillion yuan in funds to support the goal of net-zero emissions. This part of funds is difficult to obtain through traditional methods and can only be obtained through the joint participation of the private and public sectors. Adequate funding requires the participation of the capital market.
Philip Hildebrand, former president of the Swiss National Bank and vice chairman of the BlackRock Group, also said that the capital market can promote and accelerate the flow of funds to the energy sector, which requires policy promotion, consumer preferences and producer drive.
Financial markets play an important role in promoting the construction of carbon markets. Zhou Xiaochuan believes that financial markets already have considerable experience in dealing with price formation, risk management, and integrity issues, and these capabilities can better help the construction of carbon markets and price formation.
Li Yang, member of the Faculty of China Academy of Social Sciences and chairman of the National Finance and Development Laboratory, said that financial technology can empower green development, develop risk control systems based on big data, and comprehensively judge users by deeply mining user data and introducing external public data. Credit situation, eliminate "fake green","green dyeing" and "green bleaching" projects, make green financial activities measurable and verifiable, and effectively alleviate information asymmetry. At the same time, the Internet platform business model can enhance the participation of the whole society in green finance development. Through the Internet platform, it can generate endogenous indirect network effects and related pricing effects to reduce business costs, reduce credit operating costs, and improve the sustainability of financial institutions 'operations.
