❗️China’s official response to EU Carbon tariff #CBAM #OCTT

Exclusive news by Yicai news from the 5 & 7 June WTO trade policy review of the EU 🇪🇺

🇨🇳 delegate: “CBAM is regrettable and fails to comply with UNFCCC, Paris Agreement principles and WTO rules” Yicai news: “China said such measures would discriminate against imported products and restrict market access, especially for products from”

European Carbon price shows very strong correlation with Gas price lately

Today: 📈Front-month TTF +23% and EUA +5%

Last week when TTF fell 14%, it pulled down #EUETS price too 📉 #Fuelswitchingison TTF gas is up because 👇

https://twitter.com/sstapczynski/status/1665728289531469825?s=46&t=-zEPqrdNVw-rrSlVnX-UmA

Gas shortages in Hebei province 🇨🇳

Check this in-depth analysis by Caijing news, with frontline interviews of the residents

-Long-existing problems of Pricing mechanism
-Legacy issues from the massive Coal to Gas conversion in 2017

mp.weixin.qq.com/s/kRt1ULyB5A_M… Late December, some residents in the northern Hebei province are faced with local gas shortages and purchase restrictions. They had to use coal or firewood.

The shortage lasted several weeks and is reportedly resolved in January.

scmp.com/economy/china-…

🚀This week European Carbon price approached €100

Main drivers:

Short-term: short-covering, options, catch-up hedging, colder weather

Underlying: Compliance demand, improving economic outlook and optimism following #EUETS reform deal

🧵A thread The Dec23 EUA contract broke above several resistance levels in recent sessions, hitting €97.55/t on 1 February, the highest since August 2022.

🇨🇳 state planner released the long-awaited 14th Five-Year Plan for Energy sector today.

by 2⃣0⃣2⃣5⃣:

Energy production: 4.6 bln tsce
CO2/GDP intensity: -18%
Energy/GDP intensity: -13.5%
Non-fossil: 20%
Non-fossil power: 39%

⚡️installed capacity: 3000 GW This official doc '14th Five-Year Modern Energy System Plan' is dated 29 Jan 2022, approved by State Council then, and now released on 22 Mar by NDRC

ndrc.gov.cn/xxgk/zcfb/ghwb…

(A quick look at the headline targets, largely in line with previously announced)

⚠️China Carbon data fraud

On 14 March 🇨🇳environment ministry published official statement on Carbon emissions data falsification and slammed 4 firms for misconduct.

mee.gov.cn/ywgz/ydqhbh/ws…

🧵A thread with more info than the official statement What happened?

4 firms were charged with forging data/testing reports/writing distorted and inaccurate conclusions in CO2 data verification

Zhongtan Nengtou 中碳能投
SinoCarbon 中创碳投
Qingdao Xinuo 青岛希诺新能源
Liaoning Dongmei 辽宁省东煤测试分析研究院

🚨China Power Sector Reform

🇨🇳NDRC just released Guidance on Speeding up establishing National Uniform Power Market

This is HUGE news 🎉

2025: preliminary completion 2030: finalizing national power market

Set up national Power Exchange This new milestone document set out key components of China power market following the Document No.9 in 2015 kicking off the second round of power sector reform

ndrc.gov.cn/xxgk/zcfb/tz/2…

It is official: China power sector liberalization will speed up! 🚀

🏭 China Coal power outlook

China Electricity Council expects coal-fired capacity to increase 180 GW in 2021-2030 period to peak at 1260 GW in 2030.

Their report from last December:
cec.org.cn/detail/index.h… China Electricity Council then expects power sector's coal consumption to rise from 2.3 bln tonnes in 2020, to 2.52 bln in 2025, and between 2.45-2.53 bln in 2030.
This implies the pathway for coal plants' emissions then.

🚨 Latest high-level guidance on China climate policy

At the Politburo group study session on 24 Jan, 🇨🇳president Xi stressed 'Deeply analyzing the situation and tasks in pushing forward Carbon peak and neutrality work'

Xinhua:
news.cn/politics/leade… Xinhua:
Xi stresses solid implementation of decisions, arrangements on carbon peaking, neutrality
english.news.cn/20220125/da588…

🚨China Energy policy in 2022

👇This long and extensive 10000-word full page Opinion piece in People’s Daily definitely set the tone for the year and maybe 14FYP (to 2025)

“Energy rice bowl must be in one’s own hands”

opinion.people.com.cn/n1/2022/0107/c… This Opinion on “Pushing forward China energy high quality growth in new era” definitely shed light on policy focus in the upcoming Energy sector’s 14FYP & Carbon peak action plan ✍️

It also mirrors policy signal from Central Economic Workimg Conference.

⚠️First year of operation will not be smooth, but China's new national Carbon market is facing many more obstacles in run-up to looming compliance deadline.

'Free borrowing' practice and 'Unclear tax rules' could hamper the market #OCTT

Thread 🧵 What is Free Borrowing?

Ahead of looming Compliance deadline on 31 Dec, provincial Ecology and Environment authority is under pressure to ensure enterprises to surrender enough allowances in time.
However, allocation for 2019-2020 has not finalized

📰What caused China's Coal shortage?

An in-depth analysis by Caijing (financial news) with exclusive interviews of coal miners/traders/power plants in the journalists' month-long field visits to Shanxi and Inner Mongolia.

Link: bit.ly/3l1ZQbN These firsthand interviews of stakeholders provide new insights into China's energy crunch.

Some mentioned the 'cutting coal mines' capacity since 2016' as a major reason causing coal shortage.

Caijing journalist found out this is not the case.

🏭Coal-fired power plants are still being favored in German power merit order...despite €70/t #EUETS price

European Gas price is just too HIGH

This does exhibit some fundamental support for current carbon rally: high coal burn leads to high EUA demand Coal-fired plants' advantage is clearly shown in its Short run marginal cost vs Gas.

even the 36% efficient coal plants are in the money, as surging gas prices driving up Gas SRMC

On 24 October, China released Top-level design document in the '1+N' Carbon Peak and Neutrality policy framework.

On the eve of #COP26, and 1 year after China announced 2060 carbon neutral pledge, the implications of this landmark doc are HUGE:

🧵thread: This doc is released by the Communist Party of China and General Office of the State Council:
gov.cn/zhengce/2021-1…

It is dated 22 September, and titled 'Opinions on Completely, Accurately and Comprehensively Implementing Carbon Peak and Carbon Neutrality'

OFFICIAL: China just released the Top-level design of its carbon neutrality policy framework ‘1+N’
🎉🎉🎉

On 24 October, the Communist Party of China and the General Office of the State Council issued the Opinions on carbon peak and neutrality

via Xinhua China OFFICIALLY releases it top-level design in '1+N' Carbon peak and neutrality policy framework on 24 October.

reported CCTV in daily news Xinwenlianbo:

🔋China to boost Energy Storage above 30GW by 2025

🇨🇳 state planner NDRC released draft 'Guidelines on Speeding up New Types of Energy Storage (excl. pumped storage) Deployment'

That is tenfold increase in Battery Storage capacity from 2020 level of 3.3GW The draft NDRC guideline states key targets:

2025: New Type of Energy Storage will evolve from initial commercial stage to large-scale deployment.

2030: Full market-based mechanism for Energy Storage 🔋, meeting needs in New Power System.

🎉Strong boost for Wind and Solar development in China.

🇨🇳energy regulator NEA aims to raise Wind & Solar generation's share in total power consumption to 11% in 2021 and 16.5% in 2025, from 9.7% in 2020.

This implies adding 100GW Wind&Solar per year. China National Energy Administration released draft Notice on Wind and Solar Development in 2021 for consultation.

The overall objective is to 'achieve 2030 targets of 25% non-fossil share and 1200GW Wind and Solar capacity'

NEA: nea.gov.cn/2021-04/19/c_1…

👇Power trading in China

🇨🇳energy regulator announced 5 new Spot trading pilots, adding to previous 8 pilots since 2017.

In 2020, 8 pilots have all tested full-month continuous settlement, and will start with longer period trial spot trading this year. NDRC announced the expansion of spot trading pilots at spot market weekly work meeting on 9 March.

In addition to 5 new pilots, it also aim to build regional power markets in Beijing-Tianjin-Hebei and Southern (led by Guangdong).

shoudian.bjx.com.cn/html/20210317/…

⚡️ China Nuclear power capacity Outlook:

2025: 70 GW, from draft 14th Five-Year plan

2030: 110 GW, China Nuclear Energy Association
2035: 180 GW, CNCC proposal
2050: 327 GW, Tsinghua ICCSD low carbon scenarios 🇨🇳Nuclear power plants locate mostly in coastal regions.

By Dec. 2020, there are 48 reactors with total operating capacity of 49.89 GW according to CEC.

Note some put capacity at 51 GW, depends on whether testing capacities are counted (I was told so...)