China's national carbon market incentivizes green transition

July 16 marks the third anniversary of China's launch of its national carbon market. As of July 15, 2024, the cumulative transaction volume of carbon emission allowances in the national carbon market exceeded 460 million tonnes, with a cumulative transaction value of nearly 27 billion yuan ($3.86 billion).

In the past three years, the price per tonne of carbon dioxide emissions has risen from more than 40 yuan to about 90 yuan, with the highest carbon price in history exceeding 100 yuan.

The stable operation of the carbon market has promoted the green transformation of power generation enterprises.

The development of the carbon trading market has brought more profits to enterprises. The price of carbon allowances has become an incentive to encourage enterprises to reduce emissions more and sell surplus carbon allowances.

Higher carbon pricing means that enterprises need to pay higher costs when purchasing carbon emission rights, said Yu Xiang, director from the Institute of Ecological Civilization at the Chinese Academy of Social Sciences. For enterprises with surplus quotas, they can obtain high returns by selling the quotas, Yu added.

For example, Huadian Xiangyang Power Generation Corporation, in Hubei Province, has been incentivized to use tree bark and other agricultural waste to generate electricity. Through biomass power generation, the company can reduce carbon dioxide emissions by 50,000 tonnes per year.

Yang Tao, head of biomass operation and maintenance of the company, said reducing carbon dioxide emissions through biomass operations has freed up carbon quotas for the company's other generators, saving them 2 million yuan in expenditure each year.