Longyuan sells credits on Beijing ETS

Chinese wind giant Longyuan has sold 10,000 carbon credits to PetroChina within Beijing’s newly implemented carbon market, heralding a new source of potential revenue for Chinese renewables developers.

China has launched – or will imminently launch – seven pilot carbon markets, covering certain cities and regions, including Beijing, Shanghai and Guangdong province.

Each of the pilot markets will allow companies to buy offsets – known as Chinese Certified Emissions Reductions (CCERs) – to help meet some of their legally binding obligations.

In Beijing – where 40% of carbon emissions are now covered by the ETS – companies can meet 5% of their obligation via CCERs.

PetroChina paid Longyuan 16 yuan ($2.63) each for credits generated at a wind farm in Gansu province. That compares to the $0.40 or so now fetched by Certified Emission Reductions (CERs) generated under the UN’s Clean Development Mechanism.

That price gap is potentially important, given that Chinese renewables developers dominated the Clean Development Mechanism until CER prices fell too low to make projects viable.

Should China’s fledgling carbon markets gain traction – and a national trading scheme may be put in place as soon as early 2016 – they may further fuel renewables development and revenues across the country in the years ahead.

China has allowed projects currently generating CERs under the Clean Development Mechanism to switch over to generating CCERs.

One of China’s pilot carbon markets will cover Guangdong province and its 100 million citizens, making it the second largest carbon market in the world after the ailing EU emissions trading scheme.