There are new problems in the Chinese carbon market whose prices are already flat

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(Bloomberg) – China’s troubled carbon market is facing further delays in receiving emissions allowances, as it struggles to tackle data fraud.

The Ministry of Ecology and Environment has suspended the release of the latest batch of permits in the second half of the year, according to people familiar with the matter, who asked not to be identified due to the sensitivity of the issue.

Although there was no official timeline for the release of the allowance, traders were expecting those permits by June. Allowances are partially allocated in advance, and the last part will cover a two-year period by the end of 2022.

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The ministry did not respond to a fax request for comment.

The carbon market was plagued by problems even before it was launched in the middle of last year, which was delayed several times. Trading has been largely weak, and volume has been particularly thin this year. Carbon prices remained unchanged at 58 yuan per tonne for the 11th session in a row on Thursday. Beijing’s decision to prioritize the use of coal in response to energy shortages also appears to have dampened market growth.

Currently, there are only 2,200 power companies in the market. A plan to add major aluminum and cement producers – originally scheduled for this year – may not be in place until 2023, a researcher who assisted in market design said in March.

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See also: Designers of China Carbon Market see expansion delayed

Qian Guoqiang, vice-general manager of consultancy Sinocarbon, said market participants were largely on the sidelines as new allowances were yet to be issued and details of the next compliance period were still unclear.

Provincial inspections earlier this year found widespread problems with emissions data submitted by power plants, who had to pay for each ton of carbon dioxide they exceeded an allotted amount. The four consulting firms that help utilities prepare their deposits have also been criticized for negligence or misrepresentation.

See also: China’s weak carbon market hits a new roadblock – data fraud.

Wang Jun, a carbon analyst and author of The Carbon Neutrality Era, says unfinished data fraud correction work, delays in adding more industries, and the long wait before the next compliance deadline have closed recent trade. .

“The top priority of the authorities now is not to activate the market, but to solve data fraud,” he said.

© 2022 Bloomberg LP

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