Eight securities companies have been granted approval to participate in the domestic carbon markets using their own funds, having received non-objection letters from the China Securities Regulatory Commission. The participation of securities firms in the carbon emission rights trading market is an important way for financial institutions to serve the real economy.
By the end of 2024, the cumulative trading volume in China’s carbon market had reached 630 million tons, with a cumulative transaction amount of 43.03 billion yuan ($5.91 billion). Carbon finance is a key part of the effort to address climate change. It is a way to fund projects that reduce or avoid greenhouse gas emissions. It places a financial value on carbon emissions and allows companies wishing to offset their own emissions to buy carbon credits earned from sustainable projects. The healthy and orderly development of carbon finance helps to improve the carbon pricing mechanism, and promote controlled-emission enterprises to achieve carbon reduction targets in a cost-effective manner.
As important intermediaries in the capital market, securities companies connect investment and financing. The entry of securities companies into the carbon market can increase capital liquidity. At the same time, they can also play the role of brokers by matching carbon asset transactions and reducing transaction costs.
Some institutions predict that the scale of China’s carbon market transactions may reach 10 trillion yuan in the future, in which the market coverage of subjects, industries, product types and other elements will gradually be expanded. Against this background, it is necessary to allow financial institutions to play a greater role in the carbon trading market.
In recent years, China has actively carried out system and mechanism innovation in climate investment and financing, carbon market construction and other aspects, creating favorable conditions for financial institutions to participate in the carbon market. However, to truly make good use of finance in the carbon market, it is still necessary to improve the support provided.
Relevant authorities need to strengthen the system construction, establish corresponding macro-management policy frameworks, clear up the blockages and bottlenecks for financial institutions to enter the market and provide long-term policy signals and guidance for financial institutions. Meanwhile, the scope of trading subjects in the carbon market should be expanded in a timely manner, financial products and trading methods linked to carbon emission rights should be enriched, and finance guided to support the development of the carbon market.
