A TOTAL of 7,220 tons of CO2 permits were auctioned by the Shanghai carbon exchange yesterday, the bourse said, enabling local firms to meet a deadline to comply with their carbon targets.

    The permits, sold to firms at a minimum price of 48 yuan (US$7.73) per ton, were only a small fraction of the 580,000 tons of permits put on offer by the Shanghai city government, but were enough to allow seven laggard firms to meet their targets, the exchange confirmed.

    “All of the companies have complied with their targets, with two of the seven laggard companies buying the permits they needed from the auction and the other five surrendering on time,” said Tong Yan, founder of ideacarbon, a Chinese consultancy based in Shanghai.

    “We didn’t expect a higher bidding price from the auction — all the big shortfalls had been filled if you look at the trading volumes since the auction was announced,” said Tong.

    The 191 local firms covered by the scheme faced a deadline yesterday to buy permits to cover their emissions in 2013. The secondary market for permits closed last Friday, with a final price of 39.4 yuan per ton.

    Firms buying permits have to surrender them to the government by June 30 to cover their emissions, but a shortage of permits on the market had made it difficult for some of the bigger emitters to comply, forcing Shanghai to announce the last-day auction.

    Seventy percent of carbon permits on the exchange are allocated to large State firms such as Baoshan Iron and Steel Corp., Huaneng Power and Shenergy Corp.

    But after a rise in activity in the last few days of trade, only seven of the 191 firms had not yet met their targets, according to an official note.

    “There is limited demand from the remaining seven firms, and the ratio of sellers to buyers was rising in the last couple of days, which put pressure on prices and encouraged most firms to buy all they needed from the market,” said Tong. (SD-Agencies)