THE latest auction for carbon permits on the Guangdong carbon exchange Tuesday was oversubscribed as bidders were eager to buy up permits at below market rates.

    All 500,000 carbon permits offered were sold in the third auction for the 2016 trading year at the minimum bidding prices of 12.69 yuan (US$1.95) a ton, according to the local bourse, the China Emissions Exchange. The minimum bidding price is set 20 percent below the average open market price over the last three months. Current prices are at 16 yuan a ton.

    Nine bids were made for 554,000 permits at prices ranging from the minimum to a high of 16.49 yuan a ton, the exchange said.

    The previous two quarterly auctions were also oversubscribed as the prices had dropped below 13 yuan, down 67 percent from the auction last June.

    Trading companies were cautious during this auction as most demand for permits is coming from power stations and many other firms already had enough permits to cover their emissions, said Cai Chao, director of a local trading company, VCarbon.

    “The biggest shortfalls are held by some power stations, which have cut their operating hours and are working less efficiently and more carbon intensively,” Cai said.

    He added that many companies were also planning to buy cheaper Chinese Certified Emissions Reductions — offset credits that cost 20 percent less than the permits traded on the open market.(SD-Agencies)