Carbon Trading

Chinese carbon trader makes HK$127,000 in one month

Carbon trader Shi Cheng capitalised on the still-growing nature of a developing market

PUBLISHED : Wednesday, 06 November, 2013, 5:59pm
UPDATED : Wednesday, 06 November, 2013, 6:51pm

The first Chinese individual investor to profit in the country’s budding carbon emission trading scene has netted 100,000 yuan (HK$127,000) one month after beginning trading.

Shi Cheng, a Shenzhen local working in the loan industry, first became attracted to the idea of carbon trading while studying abroad in Australia, the Yangcheng Evening News reported.

After assessing the untapped potential of the Shenzhen Emissions Exchange, which covers over 600 industrial firms and opened only this year, Shi felt that “an opportunity to make money” existed, and with the assistance of family members, raised the 300,000 yuan (HK$382,000) needed to enter the market.

In July, Shi opened an online account and purchased 7,000 tonnes of carbon emission quotas after several weeks of “sitting in front of the computer every day monitoring prices.”

After observing market conditions, Shi decided on an average price of 65 yuan (HK$83) per quota, and eventually sold 5,200 tonnes, winning a profit of about 100,000 yuan.

Carbon trading in Shenzhen launched on June 18. Analysts expect markets to eventually open in Beijing, Shanghai, Chongqing and Tianjin, but trading in Shenzhen thus far has been much less than anticipated.

Shi attributed this reality to the youthful nature of the market, which has only attracted aggressive sales and purchases from around 10 individual investors and companies, even though over 200 companies have registered online accounts in the Shenzhen Emissions Exchange.

“All investors are still waiting to see how the market develops ... Once carbon trading diversification occurs, then the enthusiasm of investors will also increase,” Shi said.

Carbon trading first arose after the 1997 Kyoto Protocol as a means of controlling and limiting carbon emissions in an effort to reduce climate change.

The process gives carbon dioxide a monetary value, and individual investors and companies that purchase carbon are essentially buying permits that allow them to burn a certain amount of the gas, while those selling carbon are giving up these permits.

While carbon trading is still new to China, a country that is ironically the world's largest carbon emitter, it now forms the majority of most emissions trading in other nations around the globe.