, China
Photo by Pixabay from Pexels.

China's carbon market tightening to boost RE demand

Press reports suggest that China is looking into reducing the free emission allowance.

The expected tightening of China’s national carbon market would drive the demand for renewable energy, as the potential increase in carbon prices would deem clean energy as more practical for manufacturers, according to Fitch Ratings.

“The potential cut in emission quotas is consistent with our expectation that the authorities will eventually scale back free emission allowances, as the profitability of thermal power gencos has been returning to normal on falling coal prices,” the report read. 

“This could increase the cost burden on the industry but we believe the impact on Fitch-rated thermal power gencos should be limited, as their gradual improvements in energy efficiency should mostly offset incremental emission costs in the near term,” Fitch Ratings added.

Fitch Ratings said recent reports show that the Chinese government could reduce the free emission allowance for key emitters and place a cap on the quote that can be carried over to the next year.

There are also plans to expand the market to cover more sectors such as aluminium and cement producers.

Fitch Ratings noted that the unit emissions of its rated power gencos are always below the latest benchmark level of 0.8177 tonnes of carbon dioxide per megawatt hour. They are expected to perform better as they replace their older and less efficient power plants with new ones.

Several of them have also sold their surplus emission quotas under the mandatory emission trading systems which suggests that they have further leeway when the quotas were reduced.

Fitch Ratings added that the rated thermal power gencos have also diversified theory fuel mixes and have grown their China Certified Emission Reduction credits by venturing into renewable energy projects.

Follow the link for more news on

Join Asian Power community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!


Why Singapore could be the ‘tipping point’ for ASEAN renewable and grid development
Heavily reliant on gas, the country is still on track for its 2035 net-zero target, but could be more ambitious to hit its 2050 goal by 2045.
Power Utility
Will the government pay for coal power exit in Vietnam?
The country’s coal power phase-out strategy sees renewables accounting for 67.7%–71.5% of the energy mix by 2050.