Core Viewpoint - The Ministry of Ecology and Environment is expanding the voluntary greenhouse gas emission reduction methodologies to include biomass energy utilization and methane reduction in the oil and gas industry, indicating a shift towards more specialized and refined emission reduction mechanisms in China [2][3]. Group 1: New Methodologies - The Ministry of Ecology and Environment has opened public consultation on four new methodologies related to biomass power generation and methane recovery from oil and gas fields [2]. - The first batch of national voluntary greenhouse gas emission reduction trading market methodologies was released in October 2023, focusing on afforestation carbon sinks and renewable energy [2]. - The second batch, released in January 2025, included methodologies for energy-saving in tunnel lighting and low-concentration gas utilization in coal mines [2]. Group 2: Focus on Methane Emission Control - Methane is the second-largest greenhouse gas after carbon dioxide, and the new control plan emphasizes the comprehensive utilization of methane and the management of methane emissions from oil and gas fields [3]. - The third batch of methodologies aims to address "hard-to-reduce" sectors, enhancing the economic viability of methane recovery for oil and gas companies [3]. - The implementation of these new methodologies is expected to provide a clear pathway for biomass power projects to participate in the carbon market [3].

Investment Rating - The report maintains an "Outperform" rating for the industry [6] Core Insights - The establishment of the "1+6" rule system for the electricity market is a significant step towards unifying the national electricity market, addressing issues such as high cross-province transaction costs and inefficiencies in data transparency and settlement cycles [3][18] - The third batch of methodologies for voluntary emission reduction projects (CCER) has been initiated, focusing on expanding the coverage of reduction projects, particularly in biomass energy utilization and methane reduction in the oil and gas sector [4][24] Summary by Sections Market Review - From August 11 to August 15, the gas sector rose by 2.49%, the environmental sector by 1.77%, and the water sector by 0.29%, while the electricity sector fell by 1.04%. The Shanghai and Shenzhen 300 index increased by 2.37% [12][13] Industry Perspectives - The "Electricity Market Measurement and Settlement Basic Rules" were issued, marking the completion of the initial construction of the "1+6" rule system for the electricity market, which includes long-term, spot, and ancillary service rules [3][18] - The rules consist of 6 chapters and 56 articles, covering measurement management, settlement management, and supervision management, and aim to unify the national measurement and settlement processes [18][19] Investment Recommendations - The report recommends Jiangsu Guoxin in the thermal power sector, with cautious recommendations for Sheneng Co. and Zhejiang Energy Power. It suggests attention to Funiu Co. and Huadian International [4] - In the nuclear power sector, cautious recommendations are made for China Nuclear Power and China General Nuclear Power [4] - For the green electricity sector, it suggests focusing on Three Gorges Energy and Jiangsu New Energy, with cautious attention to Longyuan Power and Zhejiang New Energy [4] - In the hydropower sector, it recommends Changjiang Power and cautiously recommends Huaneng Hydropower and Qianyuan Power [4] - In the environmental sector, it recommends Yongxing Co. and Xuedilong, with attention to Huaguang Environmental and China Tianying [4]