February 2023: China’s carbon markets after the Spring Festival holiday - Modest momentum amidst slow policy progress

Highlights

• China Emission Allowances (CEAs) prices were stable from January to February, averaging RMB 56.09/t before settling 1.79 % lower month-on-month. Following the trade resurgence after the Spring Festival, liquidity in the national ETS slightly improved with a few bulk transactions reported mainly in the second half of February.
• In most regional pilots, closing prices remained flat (apart from the Beijing pilot). The total volume traded in eight pilot markets decreased sharply.
• Liquidity in the offset market dropped significantly during February. The majority of China Certified Emission Reductions (CCERs) were traded in the Tianjin bourse. As in January, no CCERs were traded in the Beijing, Guangdong, Hubei, Chongqing or Fujian markets.
• Notwithstanding the lower-than-expected policy progress, prices and trade volumes in China’s carbon markets are expected to follow a slightly bullish trend in March.