Entering carbon trading, Hainan is trying another way - blue carbon.
It took about 4 years. In February this year, the Hainan International Carbon Emissions Trading Center (hereinafter referred to as the "Sea Carbon Center") was approved to be established. At present, the preparation team is carrying out various preliminary preparations and is expected to open for operation in the second half of this year.
The construction of carbon emission rights trading venues continues to expand and expand, and also opens up a broader field of exploration and innovation.
The trading center to be established in Hainan is positioned internationally, and the information disclosed so far shows that it will mainly trade blue carbon products and various carbon financial products.
In the opinion of experts, unlike the regional carbon market pilots in Beijing, Tianjin, Shanghai and other places as well as the national carbon market, the Ocean Carbon Center is anchored in striving for the right to formulate international blue carbon standards, and seizes the international commanding heights in ocean carbon sink research.
Experts predict that in the future, the earliest sea carbon centers to trade may be in the Asia-Pacific region and countries along the "Belt and Road".
Why blue carbon?
Hainan's blue carbon business has taken steps
In March, the Hainan Provincial Local Financial Supervision and Administration organized a meeting to promote the establishment of the Sea Carbon Center, and revealed that the Sea Carbon Center will promote Hainan's blue carbon methodology to become the Internationally recognized standards and incorporated into the international ocean governance system.
At the same time, the Sea Carbon Center will provide a strong capital market basic support platform for various carbon financial products.
What is blue carbon?
In simple terms, blue carbon is the carbon that is absorbed and sequestered by marine ecosystems.
"Blue carbon" here is relative to the "green carbon" fixed by terrestrial ecosystems.
Seagrass beds, mangroves, and salt marshes are considered to be three important coastal blue carbon ecosystems. my country is one of the few countries in the world that has these three blue carbon systems at the same time. As early as the "13th Five-Year Plan" period my country has already begun to explore the pilot work of blue carbon and ocean carbon sinks.
In July 2021, Xiamen Property Rights Trading Center (Xiamen Carbon and Emissions Trading Center) established the country's first marine carbon sink trading service platform.
In September of the same year, the 2,000-ton marine carbon sink of the Luoyang River Mangrove Ecological Restoration Project in Quanzhou was traded on the trading platform.
Hainan also has unique natural conditions and policy advantages in the development of blue carbon.
Lan Hong, a professor at the School of Environment, Renmin University of China, told Shell Finance that Hainan has a vast sea area, with a wide variety of marine ecosystems, high species diversity, strong carbon storage capacity, and great potential for increasing sinks.
In recent years, Hainan has actively carried out pilot projects for carbon sinks in marine ecosystems, and has a good foundation in blue carbon.
Hainan has launched marine pastures and blue bay remediation actions, and promoted the investigation of blue carbon ecosystems, the protection and restoration of blue carbon ecosystems such as mangroves and seagrass beds, and the exploration of fishery carbon sink expansion. The blue carbon cause has already taken steps. .
In addition, the Hainan Free Trade Zone will help bring Hainan blue carbon products and sea carbon centers to the world.
Regarding the products that may be traded by the Sea Carbon Center in the future, Li Wujun, a representative of the Hainan Provincial People's Congress, once proposed in his proposal that the Sea Carbon Center will focus on incremental products for the carbon emission trading market, and strive to be the first to launch an international aviation carbon offset and emission reduction plan. (CORSIA) trading varieties, explore the innovation of aviation and shipping emission reduction financing products, serve the development of the national aviation and shipping emission reduction market, and establish a carbon market system that is in line with international standards.
CORSIA is the first global industry emission reduction market mechanism, adopted in 2016 at the 39th Assembly of the International Civil Aviation Organization (ICAO).
The mechanism is designed to offset carbon dioxide emissions from international aviation, and aircraft operators will acquire and remove emission units from the global carbon market, with a pilot phase from 2021 to 2023.
Lin Jiaqiao, director of the Panzhishi Environmental and Energy Research Center, told the Shell Finance reporter that the current international product that the Sea Carbon Center may trade is carbon offsets. If Hainan wants to develop innovative blue carbon methodologies and standard systems, there is a high probability that it will be Do it under the CCER (National Certified Voluntary Emission Reduction) system.
CCER has been certified as a compliance standard by CORSIA. In principle, CCER can enter the CORSIA system of aviation for transactions, which is already a start.
There are no signs of other cross-regional carbon trading, but there are possibilities in the future.
How to dislocate development?
Positioning internationally, connecting domestic and international carbon markets
In the context of the country's vigorous promotion of the marine strategy and the "dual carbon" work, the role and significance of blue carbon have become increasingly prominent.
The establishment of an international carbon emission trading venue in Hainan was clearly proposed as early as April 2018.
The "Guiding Opinions of the Central Committee of the Communist Party of China and the State Council on Supporting Hainan's Comprehensive Deepening of Reform and Opening-up" (hereinafter referred to as the "Guiding Opinions") proposes to support the establishment of international energy, shipping, bulk commodities, property rights, equity, carbon emission rights and other trading venues in Hainan in compliance with laws and regulations , and pointed out to carry out a pilot project for carbon sinks in marine ecosystems.
Shell Finance reporters combed and saw that at the Hainan Provincial Two Sessions in 2021, Li Wujun, a representative of the Hainan Provincial People's Congress, put forward a proposal to speed up the construction of the Hainan International Carbon Emissions Trading Center, which revealed the construction of the Sea Carbon Center as of that time.
Sanya International Trading Group took the lead in launching the preparatory work of the Sea Carbon Center in 2019, formed a founding shareholder team composed of central enterprises, the central bank, construction units of national carbon emission trading venues, and leading enterprises in the carbon sink industry, etc., and completed the drafting of the sea carbon center. The center's application materials shall be submitted to the Hainan Provincial Financial Bureau.
It was also in July of this year that the national carbon market was launched, and the “twin-city model” was adopted in the specific operation and management. Shanghai was responsible for the construction of national carbon trading institutions and systems, and Wuhan was responsible for the construction of national carbon registration and settlement institutions and systems.
In addition, Beijing proposed to build a national voluntary greenhouse gas emission reduction management and trading center, which is an important supplement to the national carbon market.
Hainan International Carbon Emissions Trading Center is positioned internationally, which is different from the existing national carbon market and local carbon market in China.
Lin Jiaqiao pointed out that the international positioning of the Sea Carbon Center is related to the special geographical location of Hainan. On the one hand, it faces the southern provinces of my country and develops international business in Southeast Asia. On the other hand, it conforms to the construction of the Hainan Free Trade Zone and the “One Belt, One Road” strategic plan.
A reporter from Shell Finance noticed that the international energy trading venue proposed in the "Guiding Opinions" has been implemented.
Hainan International Energy Trading Center was registered and established on July 5, 2019, and has become a trading platform for the energy sector to open up international and domestic markets.
According to data from the Hainan Provincial Finance Bureau, as of April 2021, the number of listed companies in the Hainan International Energy Trading Center has reached 747, and the transaction volume on the platform has reached 183.2 billion yuan.
Lin Jiaqiao pointed out that the transactions of energy products and carbon market-related products are also traded on other exchanges in the world at the same time, such as the Intercontinental Exchange (ICE), which covers trading products including energy, agricultural products, metals, currencies, environmental credit, etc.
From Hainan's point of view, energy product trading can drive carbon product trading, or conversely, carbon product trading can drive energy products, depending on which product is more mature.
How far is it to go out?
The earliest possible deal with Asia Pacific and other regions
Lin Jiaqiao said that it may take a long time for the sea carbon center to reach the final international transaction, because the establishment of the blue carbon methodology takes time, and it may take three to five years to register the project after approval.
Therefore, the greater significance of establishing a sea carbon center at present lies in the positioning of future goals.
In Lanhong's view, the foreign trade of the sea carbon center may initially involve the Asia-Pacific region and countries along the "Belt and Road".
Among them, the Asia-Pacific region includes New Zealand, South Korea, Tokyo, Japan, which have established carbon markets, and Thailand and Vietnam, which are considering establishing carbon markets.
For the Korean and New Zealand markets, which have been in operation for several years, voluntary carbon reduction projects can be started.
As for areas that have not yet been established, we can strive for cooperation from the very beginning, and take the lead in promoting Hainan's blue carbon products.
In addition, the industrial complementarity between China and the countries along the “Belt and Road” has also created new and excellent opportunities for the development of blue carbon economic cooperation.
Although many countries along the "Belt and Road" do not have their own carbon trading markets, China can integrate the carbon trading needs of these countries and establish a regional carbon market.
Regarding the future development of Hainan's international carbon market, Lan Hong said that, first of all, it is necessary to strengthen the protection and utilization of blue carbon resources.
It is necessary to formulate a blue carbon action plan, promote the research and utilization of blue carbon methodologies, establish and improve a blue carbon statistical investigation and monitoring system, and conduct research on the carbon storage and carbon sink dynamics of typical blue carbon ecosystems such as mangroves, seagrass beds, coral reefs, and marine pastures. Scientific monitoring and analysis to find out the "family".
Secondly, it is necessary to strengthen international cooperation, build a blue carbon international exchange platform, seize the right to speak in the international public opinion on ocean carbon sinks, and promote the internationalization of my country's carbon market with the help of the ocean carbon center.
Establish certification standards that are recognized by global investors, actively plan the right to formulate international standards for marine carbon sinks, establish an internationally recognized marine carbon sink standard system suitable for my country's national conditions, highlight Hainan's characteristics, and lead the international standardization of marine carbon sinks.
In addition, it is necessary to give full play to the convenience of the free flow of cross-border funds in Hainan Free Trade Port and the synergy of the Hainan carbon market, introduce international funds and foreign investors to participate in climate investment and financing activities, encourage Chinese financial institutions and enterprises to conduct climate financing overseas, and promote bilateral climate financing. Pragmatic cooperation with multilateral climate investment and financing to build Hainan into a cross-border climate investment and financing window.
Beijing News Shell Finance reporter Gu Zhijuan