The first round of performance earnings geometry

Changzhou Hutang Thermal Power Co., Ltd. is located in Changzhou Wujin Textile Industrial Park, the company mainly supplies steam for enterprises in the park, the business scale is not too large. Ye Guoqing, vice president of the company, told reporters that in May last year, the company got a third-party verification of carbon emissions report, and realized that there might be a small gap in carbon emission quota, so it actively sought buying opportunities after the market opened.

The so-called carbon emission quota is the carbon emission quota allocated by the government to control emissions enterprises within a specified period, and the unit is measured in "tons". When the actual emissions of an enterprise are higher than the quota, the excess part needs to be purchased; when the actual emissions are lower than the quota, the surplus part can be sold, thus forming the basis of carbon trading.

"At that time, we were expecting a quota gap of 50,000 to 60,000 tons in 2019-20, so we bought in the beginning to fulfill the contract." Ye guoqing said that after the carbon trading market opened, the company first bought a small amount of "test water". The first transaction was to buy 1,000 tons of carbon at 45 yuan per ton. "At present, the average purchase price of the quota held by the company is about 42 yuan per ton, which is profitable at the current price." Ye guoqing said.

Similar to Changzhou Hutang Thermal Power Co., LTD., The performance of Jiangsu Changshu Power Generation Co., Ltd. in the first performance period was very smooth and profitable. It is closely related to the efforts of the enterprise in energy saving and carbon reduction that the carbon emission quota can achieve surplus and profit in the implementation process. "In recent years, the company has invested more than 1 billion yuan in energy conservation and environmental protection." Company director said.

On December 14 last year, the 10 power plants under the banner of China Resources Power In East China unified the first implementation period of the national carbon market quota clearing. According to the relevant person in charge of China Resources Power Holding Co., LTD. East China region, the total performance of 10 enterprises in East China region exceeded 100 million tons. Among them, eight jiangsu enterprises have fulfilled a total of 78.76 million tons of contracts. "Thanks to equipment upgrading, operation optimization and management strengthening, the whole region has achieved remarkable results in systematic energy saving and carbon reduction. According to our calculation, the whole region has achieved a carbon surplus of more than 7 million tons during this implementation period." The chief said.

"This is the first time for jiangsu enterprises to implement the contract in the form of a group, and it has set an example for enterprises across the province to implement the contract." According to Chen Yuehua of the Climate Change Department of the Provincial Department of Ecology and Environment, the surplus of carbon quota achieved through energy saving and carbon reduction can be kept in corporate accounts or traded. No matter which form, will be a valuable asset of the enterprise.

More gameplay to be "unlocked"

For jiangsu enterprises, which are among the first to be included in the carbon trading market and take the lead through energy saving and carbon reduction, how to effectively manage carbon assets and maximize the use of carbon assets is becoming a new topic.

"The transition from free allocation of carbon emission quota to paid allocation will be the future trend, and the carbon cost of emission control enterprises will be higher and higher, which also means that the 'carbon price' is a bullish market in the long term." In the more mature European market, the "carbon price" has risen to more than 70 euros per tonne, according to Wang Yan, a new energy analyst at a private equity firm in Suzhou.

But at home, it's just getting started. According to Wang Yan, an outstanding phenomenon in the first performance cycle is that the "carbon price" rose suddenly before the deadline of the performance cycle, indicating that many people do not know the market and are under the pressure of performance to buy. Data show that on December 31, 2021, the closing price of carbon emission quota was 54.22 yuan per ton, up 12.96 percent from the opening price on the first day. Ye Guoqing also told reporters that because the company had "spot" on hand, at the end of last year, before the end of the first performance cycle, someone offered to buy 58 yuan per ton, "but we did not sell, because we bought as an asset allocation, not in a hurry to sell."

In effect, while some have yet to understand the rules of the game, others have already seen carbon asset management as a new industry and introduced financial power. In September last year, a printing and dyeing enterprise in Zhangjiagang successfully obtained the "carbon right loan" of 3 million yuan from Zhangjiagang Agricultural and Commercial Bank, which added to the green development of enterprises. "This enterprise has its own power plant and is one of the first enterprises to obtain carbon emission quota in China. After learning that the carbon emission quota of the enterprise has not been fully used, our bank immediately communicated with the enterprise and took the initiative to design a 'carbon emission loan' tailored to the enterprise with 95,900 tons of carbon emission quota as pledge." Zhangjiagang agricultural commercial bank staff introduction.

"Faced with the emerging business of carbon asset management, many enterprises in Jiangsu have not yet reacted." Chen Yuehua introduced that with the gradual development of the carbon market, not only the power generation industry, petrochemical, chemical, steel and other key industries will be gradually included in the future, there will be more enterprises in Jiangsu to participate in carbon trading, naturally, the sooner preparation, the better.

In this regard, Zhou Yapeng, director of carbon assets in East China region of China Resources Power, said that Jiangsu is the province with the largest number of installations in China, and the company has rich experience in carbon asset management and trading, as well as certain exploration in carbon finance. At present, the company plans to build a digital and analog platform to provide "carbon finance" products and related derivatives research services, and promote the further development of the company's carbon asset management.

The reporter learned from the provincial Development and Reform Commission that our province has always attached importance to the role of third-party service organizations in promoting the carbon market. In April 2020, Our province issued the "Opinions on Promoting the Development of Green Industry", which clearly proposed to cultivate and expand a number of carbon trading and carbon asset management service companies.

GCL Carbon Asset Management co., Ltd. is responsible for carbon asset management, transaction and project application of enterprises, and provides relevant users with carbon neutral technology business services. According to the company, in addition to strengthening internal carbon asset verification technology and carbon asset data management to reduce carbon emission compliance costs, related emission control enterprises can also increase their carbon asset income by building "carbon finance" portfolio products.

Opportunities and Challenges "Side by side"

New "ways" bring new opportunities, but for many companies, adaptation is still a process.

"If you really want to manage and trade carbon assets well, the organization of the whole company should have relevant awareness. Carbon asset management is actually a test of a company's organizational and decision-making ability." Zhou Yapeng proposed that the quota should be operated as the company's asset, and the pressure of carbon cost should be turned into a revenue driving force. In terms of production, energy saving measures are spread throughout all aspects of production. It is impossible for one or two people to think of all of them. In terms of trading, timely and accurate price prediction analysis and trading timing control must be inseparable from the efficient and rapid decision-making of the management.

In fact, the reporter found in the interview, some enterprises in the carbon trading pre-link - "find out the bottom of the family" carbon verification stage, has fallen behind. As early as 2020, the Ministry of Ecology and Environment proposed that, in order to guide enterprises to conduct actual measurement of parameters related to carbon emissions, the high limits recommended by relevant documents would be adopted for those that have not been conducted or whose measurement methods do not meet the requirements of actual measurement. Due to the lack of attention, some Soviet enterprises did not measure the carbon content of coal per calorific value as required, resulting in an increase of nearly 20% in carbon emissions after accounting, which ultimately caused difficulties in implementing the agreement.

Not only that, but also a number of businessmen expressed their "awkward" situation. "Carbon trading is supposed to be a 'master project' for us, but when it comes to implementation, wrangling between different parties has become the norm. Because the coordination process takes too long, we end up buying quotas with the help of local governments." An enterprise official revealed.

What is more, during the implementation period, substantive progress has not been achieved, and finally we have to "test the law by example". A company in Zhangjiagang city, Jiangsu province, was found to have failed to pay its carbon emission quota in full and on time during an inspection by the city's ecology and Environment Bureau. The company has been ordered to rectify and file a case, making the case the first in China's carbon market to fail to fulfill its carbon emission quota on time.

However, the market will not be stopped by stragglers. There are signs that the national CCER (national certified voluntary emission reduction) market, another important underpinning of the dual carbon goal, is expected to restart in 2022. CCER is another basic trading product in the carbon market in addition to the carbon emission quota. As a "carbon offset" mechanism, enterprises that control emissions can purchase certificates that can be used to offset their own carbon emissions from enterprises that implement "carbon offset" activities. "Simply put, the emissions reductions that a company generates through new energy, afforestation projects, etc., can be sold to another company that needs the emissions." In this way, not only new energy enterprises can participate, but also more environmental protection enterprises usher in new opportunities, Wang yan said.

In the past month or so, As an A-share listed company, Wuxi Dongzhu Ecology has attracted dozens of institutions for research, with investors focusing on forestry carbon sinks. Forest carbon sinks are a new focus in CCER's development. Forests can reduce the concentration of carbon dioxide in the atmosphere and thus function as carbon sinks. Enterprises involved in afforestation can sell these carbon sinks for profit. "The company is one of the earliest companies in the industry to enter the field of ecological and environmental restoration, and has formed a first-mover advantage in wetland parks, national forests and other fields. Currently, it has established a wholly-owned subsidiary, Dongzhu Carbon Sink, and is actively exploring the development opportunities in forestry carbon sink and other fields." In the future, the company will jointly develop forestry carbon sequestration projects with partners by providing technology, funds and services, so as to realize forest carbon trading and improve forestry ecological benefits, according to the introduction of the relevant personage of East Pearl Ecology.