The Zhitong Finance App learned that Galaxy Securities released a research report saying that on January 22, the National Greenhouse Gas Voluntary Emission Reduction Trading (CCER) Market was launched, and together with the National Carbon Emissions Trading (CEA) Market launched in July 2021, it forms a complete national carbon market system. The bank believes that CCER will be officially restarted, and the four major areas covered by the first batch of methodologies will be the first to benefit. For the offshore wind power industry, it is recommended to focus on Three Gorges Energy (600905.SH), Longyuan Power (001289.SZ), Zhongmin Energy (600163.SH), and Jiangsu Xinneng (603693.SH); in addition, mature CCER methodologies will release carbon monitoring requirements. It is recommended to focus on Cedilong (002658.SZ) and Juguang Technology (300203.SZ).
Galaxy Securities's views are as follows:
CCER officially relaunched, complementing the CEA market:
On January 22, 2024, the National Greenhouse Gas Voluntary Emission Reduction Trading (CCER) Market was launched. Together with the National Carbon Emissions Trading (CEA) Market launched in July 2021, it forms a complete national carbon market system. Among them, the CCER market is a voluntary emission reduction market, which is linked to the mandatory emission reduction market CEA to jointly help achieve dual carbon goals. Currently, CEA only covers emissions from the power industry, covering about 4.427 billion tons of carbon dioxide emissions, accounting for about 40% of total carbon dioxide emissions from energy use. In the future, the power industry will be used as a breakthrough, and the industry's share of emissions will be included as a determining factor. Industries with high energy consumption and high emissions such as petrochemicals, chemicals, and building materials will gradually be included, and the carbon trading market coverage is expected to exceed 10 billion tons, which in turn will drive demand for CCER growth. We expect the 2024/2030 carbon trading coverage to be 6 billion tons/10.6 billion tons, the carbon price will be 74 yuan/139 yuan, and the carbon trading market coverage will be 447.1 billion yuan/1470 billion yuan; based on a 5% offset ratio, the corresponding CCER market size for 2024/2030 will be 22.4 billion yuan/73.5 billion yuan.
Carbon prices have risen sharply in recent years, and there is still plenty of room for subsequent increases:
As of January 22, 2024, the CEA closing price was 70.67 yuan/ton, up 25% from the average price since the opening of the market in July 2021; the average transaction price of the first batch of CCER was 63.51 yuan/ton, slightly lower than the CEA closing price on the same day. Looking forward to the future, as the carbon neutrality process progresses, free carbon quota supplies will continue to decline, and carbon quotas and CCER supply and demand will continue to improve, which in turn will drive prices to rise for a long time. Against overseas benchmarks, on January 19, the EU EUA continuous contract transaction price was 61.38 euros/ton, and there is plenty of room for improvement in China's carbon price.
Europe proposes higher emission reduction targets, and the carbon market helps achieve the zero-carbon vision:
In December 2019, the European Commission proposed the European Green Agreement, which sets the goal of “reducing carbon emissions by 55% in 2030 from 1990”. In this context, in July 2021, the European Union announced a climate package called “Fitfor55.” The European carbon market is maturing, allowing the EU's energy structure to be continuously optimized. The official implementation of CBAM on October 1, 2023 may promote China's carbon trading to speed up international benchmarking. China's carbon market is expected to accelerate integration into high-emission industries.
The new methodology covers three major fields: new energy, green carbon, and blue carbon:
The Ministry of Ecology and Environment has released 4 new CCER methodologies including grid-connected photothermal power generation, grid-connected offshore wind power generation, mangrove planting, and afforestation carbon sink. The four methodologies cover the three directions of green carbon, blue carbon, and renewable energy, and represent the latest achievements in green energy and ecological protection. CCER can help these industries expand revenue sources, obtain more capital and policy support, and also provide a way to monetize the value of carbon storage.
Risk warning: CCER offsets the risk that the upper limit will be reduced; the risk that too many CCER projects will cause their prices to fall short; the risk that newly introduced methodologies fall short of expectations; the risk that the progress of carbon market construction falls short of expectations.