China : Guangdong first 2014 auction achieves over CNY50 million

At Guangdong’s first allowance auction of 2014 held on 26 September, two million tonnes of allowances were purchased at the same price of yuan (CNY) 26/tonne, which resulted in the total turnover of CNY52 million.

According to the 2014 Guangdong Allowance Allocation Plan, the compliance entities are no longer required to attend the auction in order to activate their free allowances. Meanwhile, qualified organisations other than the compliance entities are also allowed to bid in the auction.

Last Friday, 33 organisations participated in the auction and they declared 3.22 million tonnes of allowances with the average bidding price at CNY27.56/tonne during the bidding process. At last, two million tonnes were share by 13 compliance entities, two new entrant projects and four institutional investors at the settlement price at CNY26/tonne. And it is worth mentioning that 46% of the allowances were acquired by institutional investors, which indicated investors’ confidence in Guangdong Emission Trading Scheme (ETS).

Regarding the outcome of the auction, Gao Guohui, a manger of Guangzhou Exchange, told ICIS that the auction achieved expected results in terms of the bidding volume and the settlement price. In addition, the settlement price was lower than the CNY30/tonne to CNY40/tonne price range in the spot market, However, the influence should be moderate since the volume of two million tonnes is relatively limited compared to the 300 million annual emission allowance volume of Guangdong ETS.

Based on relevant information, by 26 September, 14.44 million tonnes were traded in the primary and secondary market of Guangdong ETS generating a total turnover of CNY791 million, which accounted for 50.49% and 62.26% respectively of China’s pilot carbon markets during the corresponding period. Kun Yang