BEIJING, June 6 China's Shenzhen city sold on
Friday only about a third of the 200,000 carbon permits offered
in its first-ever auction despite pricing them at half the
market rates due to restrictions on eligibility of bidders and
questions about the scheme.
The southern city, one of seven regions in China hosting
carbon markets as the world's biggest-polluting nation seeks to
cut its emissions, arranged the auction to help its power
generators and manufacturers comply with the scheme.
A total of 94 buyers successfully bid the official minimum
price of 35.43 yuan, bagging just over a third of the permits on
offer - or nearly 75,000 - an official at the China Emissions
Exchange told Reuters.
Sources said some traders declined to participate in the
auction because they were unhappy about the scheme and plan to
appeal to the government about how their emission targets have
"They don't think the rules are right and they don't want to
pay more than they think they should," a Shenzhen-based trader
who did not wish to be named told Reuters.
The 635 firms participating in the scheme have
intensity-based CO2 targets but some disagree with how those
have been calculated.
Initially the exchange had said that the 200,000 permits
would not be enough to cover the shortfall for nearly 200
companies that emitted more CO2 in 2013 than they have permits
to cover for.
The minimum price was set at half the average price since
the market opened in June last year, and sparked complaints from
some traders who said the government undermined the value of
their investments in the market.
Since the May 27 announcement, secondary market prices have
dropped 12 percent to 66.02 yuan, still making Shenzhen's carbon
price the highest in China.
Demand at the auction was restricted somewhat as speculators
were not allowed to participate, and emitters could only buy
enough permits to cover for 15 percent of their shortage.
Scheme participants must hand over permits to the government
to cover for their 2013 emissions by the end of this month, or
(Reporting By Kathy Chen and Stian Reklev; Editing by