China steps up climate fight with launch of emissions trading scheme

China steps up climate fight with launch of emissions trading scheme
A coal-burning power plant can be seen behind a factory in China’s Inner Mongolia Autonomous Region, October 31, 2010. (Reuters)
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Updated 16 July 2021

China steps up climate fight with launch of emissions trading scheme

China steps up climate fight with launch of emissions trading scheme
  • Deep questions remain over the limited scale and effectiveness of emission trading scheme
  • China aims to reach peak emissions by 2030, neutrality by 2060

BEIJING: China launched its long-awaited emissions trading system on Friday, a key tool in its quest to drive down climate change-causing greenhouse gases and go carbon neutral by 2060.
The scheme was launched with China, the world’s biggest carbon emitter, seeking to take a global leadership role on the climate crisis in the lead up to a crucial UN summit in November.
China has hailed it as laying the foundations for what would become the world’s biggest carbon trading market, forcing thousands of Chinese companies to cut their pollution or face deep economic hits.
The program was launched just days after the European Union unveiled its detailed plan to achieve carbon neutrality by 2050.
However deep questions remain over the limited scale and effectiveness of China’s emission trading scheme, including the low price placed on pollution.
More broadly, analysts and experts say much more needs to be done if China is to meet its environmental targets, which includes reaching peak emissions by 2030.

'Long way to go'
China’s economic and energy policies are becoming more aligned with the government’s environment goals, according to Zhang Jianyu, vice president of Environmental Defense Fund China.
“But there is a long way to go,” he said.
China first announced plans for a nationwide carbon market a decade ago, but progress was slowed by the influential coal-industry lobby and policies that prioritized economic growth over the environment.
The scheme will set pollution caps for big-power businesses for the first time, and allows firms to buy the right to pollute from others with a lower carbon footprint.
The market will initially cover 2,162 big power producers that generate about a seventh of the global carbon emissions from burning fossil-fuels, according to data from the International Energy Agency.
Those power producers account for 40 percent of the 13.92 billion tons of Earth warming gases belched out by Chinese factories in 2019.
Citigroup estimates $800 million worth of credits will be bought for this year, rising to $25 billion by the end of the decade.
That would make China’s trading scheme about a third the size of Europe’s market, currently the biggest in the world.

Limited scope
The scheme was originally expected to be far bigger in scope, covering seven sectors including aviation and petrochemicals.
But the government “pared down ambitions” as economic growth took precedence amid the pandemic-induced slowdown, according to Lauri Myllyvirta, lead analyst at the Center for Research on Energy and Clean Air.
“China’s coal, cement and steel production have all gone up as the government pours in billions of dollars to energy-intensive sectors to boost growth after the pandemic,” Myllyvirta said.
“Rules to limit emissions will disrupt this growth model.”
Another concern for environmentalists is the low price China is placing on pollution.
Opening trade at the market in Shanghai started off at 52.7 yuan ($8) per ton of carbon on Friday morning.
The average carbon price in China is only expected to hover around $4.60 this year — far below the average EU price of $49.40 per ton, Citic Securities said in a recent research note.
Free pollution permits given out at the start and token fines for non-compliance would keep prices low, according to analytics company TransitionZero.
However, China has characterised Friday’s launch as just the first step.
The scheme will expand to cover cement producers and aluminum makers from next year, Zhang Xiliang, chief designer of the scheme, said last week.
“The goal is to expand the market to cover as many as 10,000 emitters responsible for about another 5 billion tons of carbon a year,” Zhang said.
Chinese state media have also pointed out the current version is already the world’s largest market when assessed by the amount of greenhouse gas emissions covered, rather than trading value.
Other concerns about the scheme include that a lack of technical know-how and continued pressure from powerful coal and steel lobbies could slow down progress.
Local officials and companies know little about accounting for emissions or even the basics of climate science, said Huw Slater from China Carbon Forum.
And regions that rely on coal and carbon-intensive industries for growth have been slow to join the scheme.
“Officials are afraid that if they curb pollution too quickly it could cut jobs and lead to social unrest,” Slater said.


Saudi Arabia's blockchain market to grow 41 percent by 2025

Saudi Arabia's blockchain market to grow 41 percent by 2025
Updated 12 sec ago

Saudi Arabia's blockchain market to grow 41 percent by 2025

Saudi Arabia's blockchain market to grow 41 percent by 2025

Saudi Arabia's blockchain market is expected to grow by 41 percent between 2021 and 2025, according to estimates of the Kingdom's communications sector regulator.

The blockchain market surge is part of wider expected growth in the IT and emerging technology sector that will hit SR100 billion by 2025, with an annual compound growth rate of 10 percent, Saudi Press Agency reported, citing Raed Alfayez, vice-governor of emerging technologies at the Commission of Information Technology and Communication.

The market today has a size of SR65 billion, he added.

 


Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young

Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young
Updated 7 min 54 sec ago

Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young

Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young

Middle Eastern businesses are increasingly making use of the alternative route to public listing known as SPACs, a report by Ernst & Young has claimed.

The analysis shows a rise in activity involving special purpose acquisition companies (SPACs) and MENA-based firms.

SPACs are publicly listed companies created with the sole purpose of purchasing privately owned businesses, which therefore leads to its target to be listed. 

As well as private companies, sovereign wealth funds in the Middle East — including Saudi Arabia’s Public Investment Fund (PIF) and Abu Dhabi’s Mubadala — have also made use of SPACs, with PIF investing USD$75 million in NYSE-listed Compute Health in February.

Gregory Hughes, Ernst & Young MENA IPO and transaction diligence leader, said: “IPO activity during H1 2021 was below expectations, nevertheless the year did bring some remarkable deals with MENA companies showing an ever-increasing interest in SPAC transactions as a means to go public. We expect this trend to continue as companies seek to increase their international presence and gain access to a wider pool of investors.”

Among the MENA companies to go public this year after merging with SPACs were Abu Dhabi-based music streaming platform Anghami, and Dubai-headquartered transit firm Swvl Inc.

While SPAC activity was surging, the proceeds from initial public offerings (IPOs) across the region saw a year-on-year drop of 48 percent in the first half of 2021. 

Four IPOs raised USD$425.8 million, even though the number of listings stayed the same as 2020. 

Matthew Benson, EY MENA Strategy and Transactions Leader said that despite the drop, his company’s outlook on the region’s IPO activity “remains positive”.


European shares slide 1% to near two-month low on global growth worries

European shares slide 1% to near two-month low on global growth worries
Image: Shutterstock
Updated 31 min 53 sec ago

European shares slide 1% to near two-month low on global growth worries

European shares slide 1% to near two-month low on global growth worries
  • European shares sank 1 percent to a near two-month low on Monday
  • The benchmark European stocks index has now fallen for three straight weeks on worries about slowing global growth

European shares sank 1 percent to a near two-month low on Monday, tracking Asian equities lower, as investors feared major central banks would start giving cues about tapering their pandemic-era stimulus programs at various meetings this week.


The pan-European STOXX 600 index was down 1.4 percent in early trading, with energy and mining stocks leading declines on a slide in commodities prices.


The benchmark European stocks index has now fallen for three straight weeks on worries about slowing global growth and the spillover from tighter regulation of Chinese firms.


The U.S. Federal Reserve's policy meeting is in focus on Tuesday and Wednesday, where the central bank is expected to lay the groundwork for a tapering. On Thursday, the Bank of England holds its own policy meeting.


German shares slumped 1.6 percent as data showed a bigger-than-expected jump in producer prices last month.


In its biggest ever overhaul, the benchmark German index began trading on Monday with an increase in the number of constituents to 40 from 30.
 


Saudi remains China's top oil supplier as arrivals surge

Saudi remains China's top oil supplier as arrivals surge
Image: Shutterstock
Updated 39 min 43 sec ago

Saudi remains China's top oil supplier as arrivals surge

Saudi remains China's top oil supplier as arrivals surge
  • Saudi oil arrivals surged 53 percent from a year earlier to 8.06 million tonnes
  • Shipments from the United Arab Emirates fell nearly 40 percent year-on-year

Saudi Arabia, the world's biggest oil exporter, kept its ranking as China's top crude supplier for a ninth straight month in August as major producers relaxed production cuts.

Saudi oil arrivals surged 53 percent from a year earlier to 8.06 million tonnes, or 1.96 million barrels per day (bpd), data from the General Administration of Customs showed on Monday.

That compares with 1.58 million bpd in July and 1.24 million bpd in August last year.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, decided in July to ease production cuts and increase supply by a further 2 million bpd, adding 0.4 million bpd a month from August until December. In July, OPEC output increased by 640,000 bpd to 26.66 million bpd. read more

China's crude oil imports from Russia stood at 6.53 million tonnes in August, or 1.59 million bpd, flat versus 1.56 million bpd in July.

The big gap behind Saudi volumes was due to Beijing's decision to slash crude oil import quotas to its independent refiners, who favour Russia's ESPO blend.

Crude oil arrivals from Malaysia more than doubled from year-ago levels to 1.75 million tonnes, with traders saying refiners might have rebranded Venezuelan heavy oil previously passed on as bitumen blend into Malaysian crude after Beijing imposed hefty import taxes on blending fuels. read more

Meanwhile, shipments from the United Arab Emirates fell nearly 40 percent year-on-year, a possible sign demand for Iranian oil passed on as grades including UAE supplies remained lacklustre after peak arrivals early this year.

Official data has consistently recorded zero imports from Iran or Venezuela since the start of this year. 


Growth in ESG, Islamic investments support stronger asset inflows in the GCC: Moody’s

Growth in ESG, Islamic investments support stronger asset inflows in the GCC: Moody’s
Updated 20 September 2021

Growth in ESG, Islamic investments support stronger asset inflows in the GCC: Moody’s

Growth in ESG, Islamic investments support stronger asset inflows in the GCC: Moody’s
  • There will be a significant increase in demand for ESG-compliant investment products, around 38 percent of respondents said

DUBAI: The growing demand in Islamic and environmental, social, and governance (ESG)-compliant investments is expected to increase asset inflows over the next 12 months.

This is according to asset managers in Gulf countries, based on Moody’s 2021 survey of chief investment officers (CIOs) from eight leading fund firms.

“Half of CIO respondents expect double-digit growth in net inflows, and another 33% foresee a high single-digit increase,” Vanessa Robert, vice-president of senior credit officer at Moody’s Investors Service said.

“Improved investment results and stronger fees, already comparatively high in the GCC region, will further support revenue growth,” she added.

There will be a significant increase in demand for ESG-compliant investment products, around 38 percent of respondents said, while half of them expect sales of Islamic products will grow faster than sales of conventional investments in the next year.

The report also found around 50 percent of respondents said they were open to merger and acquisition activities within the next two years