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China plans new participants, derivatives in carbon trading market-Shanghai Sec News – Reuters

A woman wearing a mask walks on a bridge during a hazy day in downtown Shanghai December 5, 2013. REUTERS/Aly Song

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SHANGHAI, Dec 29 (Reuters) – China plans to add new participants to its national emissions trading scheme (ETS) and roll out derivative products as part of efforts to grow liquidity, the head of the exchange that hosts trading told the Shanghai Securities News.

The national ETS, which covers some 2,225 power companies, will be opened to financial institutions as well as emitters in sectors such as non-ferrous metal and building materials, said Lai Xiaoming, chairman of the Shanghai Environment and Energy Exchange.

The exchange also aims to launch carbon-related derivative products, including swaps, forwards and options to help build China into a global centre for carbon trading and pricing, Lai was quoted as saying.

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China’s spot trading in carbon dioxide quotas has surged since November as power companies rush to honour their obligations in emission management towards year-end, but the volume will likely slump in January, as market players are from the same sector, the newspaper said, citing Lai.

The exchange has been studying ways to diversify participants and boost liquidity in the carbon trading market, the report said.

Producers of non-ferrous metal and building materials may be included in the market as early as next year, while the exchange is considering adding other sectors, it said.

China is seeking to use market mechanisms to help bring emissions to a peak before 2030 and to net zero by 2060.

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Reporting by Samuel Shen and David Stanway; editing by Richard Pullin

Our Standards: The Thomson Reuters Trust Principles.