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First carbon credits deal completed on China’s voluntary carbon market

ISLAMABAD (PEN) : The first transaction was completed as China’s voluntary carbon market for greenhouse gas reductions was revamped in Beijing on Monday.

China National Offshore Oil Corporation (CNOOC), the largest offshore oil and gas producer in the country, has purchased 250,000 tonnes of carbon credits to offset its emissions. One tonne of carbon credits can offset one tonne of carbon dioxide emissions.

China’s carbon trading system is composed of two main sections.

One is the compulsory national carbon trading market, or the national Emissions Trading Scheme (ETS). Under the national ETS, the government sets emission caps for some entities or enterprises with high carbon emissions. If the enterprises exceed the cap, they need to buy equivalent carbon allowances to offset their excess emissions.

The other one is a voluntary carbon market for greenhouse gas reductions, also known as the China Certified Emission Reduction (CCER) scheme.

The first offshore wind power project with a capacity of one million kilowatts in the Guangdong-Hong Kong-Macao Greater Bay Area was fully completed and put into operation, Huizhou City, south China's Guangdong Province, December 12, 2023. /CFP

The first offshore wind power project with a capacity of one million kilowatts in the Guangdong-Hong Kong-Macao Greater Bay Area was fully completed and put into operation, Huizhou City, south China’s Guangdong Province, December 12, 2023. /CFP

Birds fly above the mangrove forests in Haikou Dongzhaigang Mangrove Nature Reserve, Haikou City, south China's Hainan Province, November 9, 2023. /CFP

Birds fly above the mangrove forests in Haikou Dongzhaigang Mangrove Nature Reserve, Haikou City, south China’s Hainan Province, November 9, 2023. /CFP

The CCER is an important supplementary mechanism to the national ETS in achieving the country’s “dual carbon targets” of peaking carbon emissions by 2030 and achieving net zero emissions by 2060. With the CCER scheme, all social enterprises and companies are expected to sell their carbon credits, but the current trading is mainly focused on sales of carbon reductions by projects in four major areas, including forestation, solar thermal power, offshore wind power generation and mangrove planting.

In the future, when the program is more mature, any individual may sell their carbon reductions generated from green behavior, said Yang Pingjian, a director at the Chinese Research Academy of Environmental Sciences.

According to predictions made by the China Beijing Green Exchange (CBGEX), if compared to the European Union Emissions Trading Scheme, after the future financialization of China’s carbon market, with its 7 to 8 billion tonnes of quotas, it is expected that the annual trading volume will exceed 10 billion tonnes, and the transaction value is expected to exceed 1 trillion yuan (over $140 billion).