Since 2005, China's carbon market has gone through three stages of development: The first stage was from 2005 to 2012, when China's Clean Development Mechanism (CDM) provided a certain amount of original funding for the development of new energy. During this period, carbon emissions were reduced by 1.102 billion tons, with a price of about 100 yuan per ton of emission reduction products (CERs), and revenue exceeding 110 billion yuan. The second stage is 2013-2020. China has launched regional carbon trading pilot projects in four municipalities directly under the central government, namely Beijing, Tianjin, Shanghai, and Chongqing, as well as Guangdong, Hubei, Shenzhen, Fujian, and Sichuan. However, the scale, price, and liquidity of the pilot projects are limited. Starting from 2021, the power generation industry was first included in the national unified mandatory carbon trading market, with a total market quota of 4.5 billion tons. It was allocated to 2162 power generation enterprises with middle-aged emissions of more than 26000 tons in the power industry. The current year's trading volume was less than 200 million tons, the trading amount was less than 10 billion yuan, and the turnover rate was less than 2%. Objectively, as a developing country, China's unified mandatory carbon market has successfully concluded its first performance period, with a healthy and orderly market operation and a steady increase in transaction prices, which has promoted enterprise emission reduction and green low-carbon transformation. Of course, compared to the EU carbon market, there is still a certain gap in the scale, price, liquidity, and investment and financing functions of China's carbon market. In 2021, the quota for the EU carbon market was only one-third that of China, but the trading volume exceeded 10 billion tons, with a trading amount of over 680 billion euros (approximately 5 trillion yuan), and a turnover rate of 770%. Of course, as a developing country, China's economic structure is dominated by manufacturing, its energy structure is dominated by coal, and its financial institutions are dominated by banking. It is understandable that the carbon market is at this stage and level of development.

At present, Chinese new energy enterprises mainly obtain profits from the voluntary carbon market. By the end of 2021, China's existing nine trading institutions had accumulated 443 million tons of nationally certified voluntary emission reductions, with an amount of over 4 billion yuan and a unit price of only 10 yuan/ton. Compared to the national carbon market quota price of about 50 yuan/ton, the emission reduction (CER) price generated by registered CDM projects in China is 100 yuan/ton, and there is still some development space for the voluntary carbon trading market in China.

In the future, when all eight major industries enter the mandatory carbon market in China, the quota will reach 7 billion to 8 billion tons, more than 5 times that of the EU carbon market. If China forces the carbon market to gradually melt cash, the transaction volume and amount may exceed 60 billion tons and 10 trillion yuan, respectively. Therefore, if 5% of 8 billion tons of carbon can be purchased to offset national certified voluntary emission reductions, a scale of 400 million tons of national certified voluntary emission reductions can be created. If calculated at a carbon price of 200 yuan/ton, the transaction amount can reach 80 billion yuan.

In 2021, the State Council entrusted the Beijing Green Exchange with a higher mission: on the basis of assuming the positioning of a national carbon trading center such as voluntary carbon market emission reduction, upgrade to a global level exchange, and establish a green finance and sustainable financial center. Beijing Green Exchange hopes to make every effort to promote the construction of an effective, stable, and liquid global voluntary carbon market, establish a global carbon credit trading platform, provide investors with higher quality and more transparent carbon credit products, actively explore cross-border transfer of green assets, explore the widespread use of domestic carbon credits for international offsetting, and draw on mature experience in carbon financial products in the international carbon market, Actively carry out carbon finance innovation in the voluntary carbon market. As a trading platform for the national voluntary carbon market, Beijing Green Exchange will spare no effort to provide services and contribute to the carbon revenue of new energy assets for enterprises.

In short, in the context of carbon neutrality and carbon tariffs, as the world's largest carbon emitter, China's carbon market is facing unprecedented challenges. Liu Jizhen, academician of the CAE Member and former president of North China Electric Power University, made a statistical study. In 2021, China's energy consumption will account for about 26.5% of the world's energy consumption, and its carbon emissions will be close to 30% of the world's carbon emissions. China's coal consumption accounts for about 52.8% of the world's total, more than half of the world's total, and its carbon emissions are more than the sum of the United States, the European Union, and Japan. With China's economic, energy, and financial structure, the pressure to achieve carbon neutrality is enormous.

We also have opportunities. China has the largest new energy system in the world. In 2021, the total installed capacity of new energy exceeded 600 million kilowatts, accounting for about 80% of the global total; Energy storage capacity accounts for about 70% of the global total; The manufacturing capacity of new energy equipment accounts for 60% of the global total; The production of new energy electric vehicles accounts for more than 50% of the global total. China has a vast market, abundant new energy resources, mature industrial chain, and a number of world-class new energy enterprises. In short, China's carbon neutrality and carbon market "have unprecedented challenges and opportunities, and countermeasures for green finance". Because international carbon neutrality is somewhat similar to the Olympics, countries are competing for low-carbon technology, low-carbon industry, and low-carbon finance. Although there are still many issues, including the inability to reach full consensus on concepts and interests, there is no doubt that the carbon market, especially the voluntary carbon market, has significant spillover effects and incentive mechanisms for carbon neutrality. How to neutralize China's carbon emissions of more than 10 billion tons while developing our new energy industry system with higher technology, faster speed, and stronger strength, we must vigorously develop the carbon market.

According to research, the first industrial revolution in human society relied on the bond market, while the second industrial revolution relied on the stock market. In addition to the bond market and the stock market, this industrial revolution also needed the support of a new financial market, the carbon market. If China can make the carbon market bigger and stronger, it can achieve the carbon peak and carbon neutrality goals with the lowest cost and highest efficiency. By seizing the historic opportunity that is once in a lifetime, it can achieve the great rejuvenation of the Chinese nation and make contributions to the global response to climate change and the community with a shared future for mankind. Of course, all of this will take time. China's carbon market cannot immediately have a large scale, strong liquidity, and high prices, but we are full of hope.