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CCX Knocks: Another Carbon Trading Prowls in China

Presently, China has become the biggest greenhouse gasses discharge right supplier under the Clean Development Mechanism(CDM). However the prevailing carbon trading system that is prevailing in China is exclusive to the CDM, partial domestic institutes also are seeking the more convenient nongovernmental-guided carbon trading system. The carbon trading platform of Chicago Climate Exchange(CCX) seems to provide a trading selection for the Chinese emission reduction project. Few Chinese enterprises that become the CCX members also hope to promote the shaped emission reduction to come into CCX market.
Ratify Historical Emission Reduction
Under the framework of "Kyoto Protocol" effective in 2005, CDM allows the developed countries to perform the emission reduction obligation with the emission reduction produced in the project , which is executed in the developing countries. After several years of practices, the emission reduction trading under the CDM framework has become the main carbon trading mechanism today in China .
But also in 2005, the state department in charge and relating enterprises also are in the process of seeking the carbon transaction mechanism applicable to Chinese situation outside CDM. After understanding the CCX transaction mechanism, Chinese government and the relating enterprises have obviously had the strong interest in the CCX. Hereafter, five Chinese organizations obtained CCX verification to become the members one after another.
"CDM requires to search the buyer of the greenhouse gases emission reduction right before the project is established and the CDM should be confirmed by the certification authorities and relating governments before shaping the emission reduction quota . The CCX ratifies the emission record shaped historically by seller.” Voiced LiShuren, a member of Financial & Investment Department of China Shenwu Group.
Shenwu group has become CCX Offset Provider member in 2006 , can register the emission reduction produced in its own emission reduction projects onto the CCX to sell. In the project cooperated between Shenwu Group and Huaiyin Iron and Steel (Group) Co Ltd, Shenwu group provided the solution to help the cooperator in reducing the greenhouse gases emission, and help them in realizing the certificate of emission reduction quota, finally registering the certified emission reduction in the CCX to sell.
"What CDM does is ' the future matter '. The emission reduction already produced cannot be included in the CCX transaction. CCX had supplemented the CDM mechanism for the traded and certified emission reduction. Two kinds of mechanisms happen to respectively deal with one item.” voiced ShenJing, General supervisor of Xi'an Zhongyang Electric Corporation, “the CCX transaction mechanism and CDM carbon market in China form the situation of ‘differential competition’. Xi'an Zhongyang Electric Corporation is a member of Offset Aggregator member in CCX .When the dioxide carbon equivalent in the emission reduction project is lower than 10000 tons, the owner of the project must register in CCX through Offset Aggregator to sell the emission reduction.
Marketized Transaction
CCX was established in 2003, is a first market platform targeting in emission reduction and transaction of greenhouse gases and undertakes the legal bindings for the emission reduction. Different from the CDM appearing at that time, CCX is a greenhouse gases transaction based on the market with different mode. Moreover, in the carbon transaction benefit distribution and supervising and managing aspects, CDM and CCX platform transactions also have the differences.
Under the CDM framework, the enterprises that is to transfer the greenhouse gases emission reduction must firstly apply to the National Development and Reform Commission, after passing through the ratification, the enterprises should pass through the qualification evaluation of a third party and submit the project report to the UN CDM Executive Board for registration. Afterwards, National Development and Reform Commission is responsible to supervise the CDM project fulfillment of the enterprise and verify that the enterprise can really transfer the greenhouse gases emission reduction. The government in charge draws the verified expenses of 25-65% of income in selling the emission reduction quota of the project owner.
"And the CCX transaction mechanism is not led by the government, but by the transactions between enterprises and even between individuals ,“ voiced ShenJin, "on the CCX platform similar to the capital trading , what is transacted is the emission reduction that is certified by the authorities. CCX carbon trading is a simple” Folk Activity” by contrasting to the complex interest chain including the government, owner and the immediate organizations under the CDM framework.
Methodological Obstructs
Although CCX trading platform seems to be easy for emission reduction project owner to enter by contrasting with the CDM, up to date, there is still no emission reduction quota from Chinese emission reduction project to register onto CCX for selling.
Shen Jing believed that, CCX originally carried out the activities only in North America, many methodologies used in Chinese emission reduction projects are not within the approved range by CCX." Regardless of the emission reduction of which industry, there must be methodologies. We are in the process of developing the methodology, this process will be extremely long, especially complex, and it must come from the beginning ".
The methodology is the foundation of conformity and evaluation and computation of the emission reduction project. Shen Jing introduced, CCX has been engaging in agricultural projects, such as fallow of farmland fallow, use of methane, sink of forest carbon and so on. The methodologies used in the Chinese emission reduction projects are outside the CCX-approved categories ."At present the methodologies corresponding to a project can be formed by only unifying the concrete project advancement." She voiced , "If the enterprise’s emission reduction project uses the methodologies with he CCX-approved categories, the transaction will be smoother."
At present, two kinds of projects of water & electricity and the blast furnace fuel gas , which Xi'an Zhongyang Electric Corporation participated in, are in the process of ratification by experts commission, afterwards, they well be entered the verification flow. The emission reduction quota of the currently 2 emission reduction projects will be possibly the first batch of Chinese emission reduction quota that is registered in CCX for trading.
Although the present CCX also approves individual CDM-produced emission reduction quota to be traded in CCX, LiShuren believed that, this lacks the actual feasibility. Because the buyer should be determined for the trading of emission reduction quota under the CDM framework without emission reduction registered in CCX for trading.

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