China's carbon trading market has been developing steadily and promoting power generation companies to become greener since its launch three years ago, according to the Chinese Ministry of Ecology and Environment.
Tuesday marks the third anniversary since the market opened.
The carbon market, also known as the carbon emission rights trading market, is one of the country's core policy tools to achieve carbon peaking and neutrality goals.
The government sets a carbon emission cap within a certain time limit and allocates quotas to companies on the market as an incentive to encourage them to reduce emissions. Companies could sell their surpluses for money, but would have to buy more quotas if they use them up.
Data from the ministry shows that the market has seen over 460 million tonnes of carbon emission quotas, or 27 billion yuan (about $3.7 billion), transacted as of Monday.
In the three years, the closing price of carbon dioxide per tonne has risen from over 40 yuan (about $5.5) at the beginning to around 90 yuan (about $12.4), and the historical highest carbon price has exceeded 100 yuan (about $13.8).
The increase in carbon prices is believed to be able to encourage more than 2,000 coal-fired power enterprise in the market to save energy conservation and reduce emissions.
"The higher the price, the higher the cost for enterprises to purchase carbon emission rights quotas. For some enterprises with surplus quotas, they can obtain higher profits by selling quotas. The fluctuation of prices could motivate or influence the decision-making of enterprises," said Yu Xiang, director of the department of climate change economics research in the Research Institute of Eco-Civilization under Chinese Academy of Social Sciences.
According to experts, all companies currently participating in the market are coal-fired power generation companies but more energy-intensive industries, such as the steelmaking and construction sectors are expected to join the market this year.
Experts also hope that technological advances will gradually lower the companies' costs for emission reduction.
"Building a national carbon market is a major institutional innovation that uses market mechanisms to control and reduce greenhouse gas emissions and promote green and low-carbon development of the economy and society. It is also an important policy tool for actively and steadily promoting carbon peak and carbon neutrality. It has become an important window to show China's active response to climate change," said Xu Huaqing, chief scientist of the National Center for Climate Change Strategy Research and International Cooperation.
(Cover via CFP)