Financial institutions brought into play in carbon market

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.