Guangzhou planning to set up GBA carbon exchange

Guangzhou is planning to set up a carbon exchange for the Greater Bay Area, encompassing Hong Kong and Macau, Acting Mayor, Guo Yonghang, said this week in his government report to the Guangzhou municipal congress, news publication Caixin reported.

According to the report, a regional carbon emission market would fit into the city’s goal of establishing itself as a major hub for green finance, with no exact timeline provided.

Guidelines by the National Development and Reform Commission and the Ministry of Commerce issued this week stated that financial and health authorities should ramp up their efforts to connect the insurance market of Shenzhen with those in the special administrative regions of Hong Kong and Macau.

Last year a newly established Guangzhou Futures Exchange also formally inaugurated off the process of developing emissions derivative products, putting a vital pricing mechanism into place to spur China to meet President Xi Jinping’s goal of attaining carbon neutrality by 2060.

The exchange – the fifth financial marketplace in China for trading futures – was planned to include carbon emissions futures, climate-related products and commodities index futures.

Carbon caps can be set for certain industries, allowing companies that release less carbon dioxide to sell their excess credits to companies that are still exceeding their limits.

A nationwide, certified and regulated trading platform allows companies to trade such credits, and any futures products derived off the contracts can be used as hedges against risk.

The development of integrated financial markets within the Greater Bay Area has been earmarked by central government as an important element of the blueprint for the development of the region and better integrated the SARs within the mainland system.

That goal is also included in the 14th National Five-Year Plan and the General Project for the Construction of the In-Depth Cooperation Zone between Guangdong and Macau in Hengqin.