China ETS carbon prices rally to record highs

Allowance prices rise 34% since start of year as regulator imposes tighter limits and considers reduction of free allocations

China’s ETS has passed a milestone after the spot price of carbon allowances topped RMB100/t ($13.8/t) for the first time since it opened for business nearly three years ago. The rising price and potentially fewer credits available for trading could benefit renewable energy providers by incentivising more demand for green power from emitters that will soon be covered by the ETS. China’s ETS covers only the power generation sector, with more than 2,000 mostly coal-fired plants included in the scheme. The power plants account for about 40% of national emissions. Each participating power plant is allocated free allowances every year based on the benchmark emission intensity of 0.818/t of CO₂/MW