Shanghai ETS mandates carbon allowance price range, companies report

25 March 2014 18:23 Source:ICIS

The Shanghai government has reportedly set a mandatory CNY30-40/tonne (€3.5-4.7/tonne) price range for 2013 allowances, or a so-called ‘reference price’. Compliance companies are to rely to it when trading allowances, according to a director of a local firm. Two other local covered entities also confirmed the information.

The local government could not immediately be reached for comment.

The Shanghai government originally set a reference price of CNY28/tonne for compliance companies when the local carbon trading pilot system started last year on 26 November in 2013, according to an official at the platform that hosts the ETS.

However, she could not confirm whether the government has or will set a new reference price in 2014.

The use of a reference price explained the divergence between rising volumes and static prices in the Shanghai ETS, said Yang Qifeng, the director of Shanghai-baws low carbon development company Goreco2.

The transaction volume in the Shanghai pilot has risen sharply since mid-February, reaching a daily average of 7,047 tonnes of allowances in March. This is highest traded volume figure of the five existing Chinese pilot systems to date.

But the price of Shanghai 2013 allowances has failed to respond to the rising volume traded, instead hovering between CNY30-40/tonne so far over the same period. Ling Ma

By Ling Ma