BEIJING, June 11 China's Shenzhen will impose
sanctions on companies that fail to comply with targets under
the city's carbon trading scheme, an official said according to
a local media outlet, despite criticism about the rules.
The Shenzhen government, hosting the oldest of China's six
pilot carbon trading markets, last week arranged a special CO2
permit auction to help local emitters meet their targets for
2013 by the June 30 deadline.
But only around a third of the permits on offer were picked
up, with some of the 635 scheme participants saying they didn't
participate because they were unhappy about scheme rules and
planned to appeal to the government about how their emission
targets had been set.
Guangdong province faces a similar situation in its market,
casting doubt over China's ability to enforce targets in its
carbon markets, the main policy tool to cut climate-changing
greenhouse gases in the world's biggest-emitting
"Non-compliers will be asked to pay a fine of three times
the market value (of each permit they fail to hand over to the
government)," Zhou Quanhong, head of the Shenzhen government
carbon trading office, told a conference on Tuesday, according
to news service provider Crystal Carbon.
He said those who failed to pay a fine would be dealt with
by the court, and that violators would have their lending
credibility downgraded and lose any subsidies or preferential
fiscal treatment they might receive.
The government did not immediately respond to questions
regarding Zhou's comments, but they were confirmed by several
sources who participated at the conference.
Zhou's message was seen by market players as sending a
strong message that the government intends to ensure the scheme
is properly implemented and reassure traders that market
regulations would be upheld.
Nearly half of all emitters covered by the Shenzhen
emissions market face a shortage of permits to meet 2013
targets, according to the government, although data released on
Tuesday said the 635 companies cut their emissions by 11
percent, or around 3.7 million tonnes, last year.
Last week's auction offered permits at half the market
price, but Zhou confirmed on Tuesday the government would not
hold any more auctions, forcing emitters to meet targets by
buying permits in the secondary market.
The 2013 permits last traded Wednesday at 70 yuan ($11.24),
up half a yuan on the previous day.
But finding sellers could be a challenge for buyers, who
only have 19 days to get their books in order.
Liquidity in the scheme is poor with only a handful of
thousand permits trading each day. Some 12,000 permits changed
hands on Wednesday.
The China Emissions Exchange, which hosts trading of permits
in the Shenzhen market, on Wednesday began offering trading of
2014 permits. Bids and offers opened far apart, with the first
trade going through in the afternoon at 60 yuan, but only for a
The government has issued 33 million permits for 2014,
according to the exchange.
(Reporting by Kathy Chen and Stian Reklev; Editing by