Report Industry Investment Rating - Not provided Core Viewpoints - The conflict in Iran has doubled the TTF price, and the gas - coal conversion has pushed the EUA price up slightly [1] - Italy plans to "strip" the ETS cost from the electricity price formation mechanism, which may weaken the EUA price signal and hinder the green transition [1] Summary by Related Catalogs Market Conditions - **Primary Market**: The EUA auction price is 68.77 euros/ton (0.51%), and the bid - cover ratio is 1.46 [1] - **Secondary Market**: The EUA futures settlement price is 73.33 euros/ton (3.91%), with a trading volume of 58,600 lots (0.18) [1] - **Auction Details**: On March 3, 2026, the EUA auction price was 68.77 euros/ton, the CBAM certificate price was 69.58 euros/ton, the auction volume was 2.7125 million tons, the bid - cover ratio was 1.46, and the auction revenue was 186.54 million euros [3] - **Futures and Spot**: On March 3, 2026, the futures settlement price was 73.33 euros/ton (3.91% increase), the futures trading volume was 58,600 lots (0.18 increase), the spot settlement price was 71.91 euros/ton (3.89% increase), and the spot trading volume was 4,077 lots (- 883 decrease) [4] Strategy - Signal strength: 0 (0 means empty position, ±1 means slightly long/short, ±2 means long/short) - There are no new positive factors, and the negative factor is Italy's plan to "strip" ETS cost from the electricity price formation mechanism [1]

Core Insights - The carbon market is a trading platform that incentivizes organizations and individuals to offset their greenhouse gas emissions through the trading of carbon emission allowances or credits [1][3] - There are two main market mechanisms: compliance markets driven by government policies and voluntary markets for emission reductions [1][2] Group 1: Market Overview - As of the end of 2024, there are 36 operational carbon trading systems globally, with 14 under construction and 8 in planning stages, collectively regulating approximately 9.9 billion tons of CO2 equivalent, which accounts for 18% of global greenhouse gas emissions [3] - The growth of the global regulatory framework is expected to accelerate in the coming years due to factors such as ESG investment, new financial tools for market participation, and improved transparency in carbon credit quality [3][5] Group 2: Key Mechanisms - Cost-Optimal Emission Reduction: The carbon market enables countries to achieve emission reductions at the lowest cost by pricing carbon and allowing trading [6] - Cross-Border Coordination: Carbon markets facilitate international cooperation by connecting different jurisdictions' climate policies to meet emission targets [7] - Revenue Generation Mechanism: Governments can create revenue through the auctioning of emission allowances, which can be reinvested in climate action and clean energy projects, exemplified by the social climate fund under the EU carbon trading system [8] Group 3: Market Risks - Countries lacking effective carbon markets may face multiple risks, including trade barriers and investment losses, making participation in carbon markets crucial for companies to maintain compliance and financial stability [9] Group 4: Project Experience - The company has developed a comprehensive methodology for designing, developing, and implementing both types of carbon markets, with notable projects including establishing a joint venture for carbon credit approval in Gulf Cooperation Council countries and identifying opportunities for participation in the global carbon market for one of the largest trade areas [10]

Core Insights - The national carbon market in China has achieved stable operation and is seen as a crucial tool for addressing climate change and promoting a green economic transition [1][3] Group 1: Market Performance - As of December 31, 2025, the cumulative trading volume of carbon allowances reached 865 million tons, with a total transaction value of 57.663 billion yuan [1] - In 2025, the number of key emission units included in the carbon market management reached 3,378, with an annual trading volume of 235 million tons, representing a year-on-year increase of approximately 24% [2] - The average trading price for the year was 62.36 yuan per ton, with a year-end closing price of 74.63 yuan per ton [2] Group 2: Regional Developments - Shanghai's carbon market has included over 400 enterprises across 28 industries and has been a pioneer in incorporating the aviation and water transport sectors [3] - Hubei province manages the national carbon emissions registration and settlement system, covering approximately 80 billion tons of carbon allowances, which accounts for over 60% of the total greenhouse gas emissions in the country [3] Group 3: Policy and Institutional Innovations - In September 2025, China announced new Nationally Determined Contributions (NDC) targets, aiming for a 7% to 10% reduction in greenhouse gas emissions by 2035 from peak levels [4] - The release of the "Opinions on Promoting Green and Low-Carbon Transition" marks a significant step in advancing the carbon market and indicates a phase of deepening and accelerating development [4] Group 4: International Cooperation - During the 2025 China Carbon Market Conference, a memorandum of understanding was signed between the Beijing Green Exchange and the Singapore Metaverse Green Exchange to facilitate cross-border carbon credit technology integration [6] - China's carbon market is recognized internationally for its effective design and innovation, providing valuable experience for other emerging economies [7]

Group 1: Carbon Emission Allowance (CEA) and Certified Emission Reduction (CCER) Price Indices - The expected buy price for CEA in June 2025 is 68.36 CNY/ton, with a sell price of 74.78 CNY/ton, resulting in a midpoint price of 71.57 CNY/ton. The buy price index decreased by 12.77%, and the sell price index decreased by 9.54% [2] - The expected buy price for CCER in June 2025 is 82.84 CNY/ton, with a sell price of 92.74 CNY/ton, resulting in a midpoint price of 87.79 CNY/ton. The buy price index decreased by 3.37%, and the sell price index decreased by 6.18% [2] Group 2: Green Electricity Certificate (GEC) Price Indices - The price indices for GECs for 2024 and 2025 show an overall increase. The expected price for centralized projects in 2025 is 6.85 CNY/unit, with a price index of 124.55, while for distributed projects, it is 6.40 CNY/unit with a price index of 129.86 [3] - The price for biomass power generation GEC in 2025 is expected to be 6.16 CNY/unit, with a price index of 119.43. The price increases for 2025 production GECs are significantly higher than those for 2024 production [3] Group 3: Market Activity and Regulatory Developments - In May, the average closing price for CEA was 70.30 CNY/ton, down approximately 13% from April's average of 80.87 CNY/ton. The trading volume increased significantly, with an average daily transaction volume of 57.97 million tons, doubling from April [5] - The draft of the Ecological Environment Law, which includes provisions for establishing a carbon market trading system, is currently under review. This law aims to strengthen the control of greenhouse gas emissions and support the operation of carbon markets [6][7] Group 4: Global Carbon Market Trends - The global carbon market showed mixed trends in May, with varying transaction volumes across different markets. The EU carbon market saw a 24.11% decrease in average daily transaction volume, while the UK market increased by 5.03% [8] - Carbon prices in major global markets generally increased, with the EU market rising by 9.44%, the UK market by 14.43%, and the Korean market by 4.71% [8]