Carbon trading has become the biggest driving force for the development of energy internet

With the advancement of the energy internet pilot demonstration work from 2016 to 2018, the deepening of the carbon emission trading pilot work in the "two provinces and five cities", and the launch of the national carbon emission trading system in 2017, it can be foreseen that the construction of the energy internet and the carbon trading market will be able to gradually complete deep integration, jointly support the structural adjustment of the energy supply side and the response optimization of the demand side, significantly increase the proportion of non-fossil energy in primary energy consumption, and ultimately achieve the reorganization and reconstruction of the entire chain of production, transmission, storage, consumption, and trading, complete the green and low-carbon transformation of economic and social development, and solve the current practical problems of environment, climate, safety, efficiency, fairness, etc. in energy consumption.

Carbon emission reduction targets are clear, and carbon finance forces energy internet to accelerate

China's medium- and long-term goals for carbon emission reduction are gradually becoming clear. According to the 12th Five-Year Plan for Energy Development, my country's target for the proportion of non-fossil energy consumption in 2015 is 11.4%; according to the National Plan for Addressing Climate Change (2014-2020), my country's non-fossil energy will account for about 15% of primary energy consumption by 2020; according to the China-US Joint Statement on Climate Change, China plans to peak carbon dioxide emissions around 2030 and will strive to peak as soon as possible, and plans to increase the proportion of non-fossil energy in primary energy consumption to about 20% by 2030. It can be seen that the country's medium- and long-term energy planning for the future is very clear.

The carbon trading market needs an energy internet platform to realize transactions. Under the energy internet, the supporting role of the power grid function is transformed into a comprehensive platform for interaction between sources, networks, loads and people. In the future, an open energy trading platform will appear on the energy internet, providing an open and shared trading environment for all participants, supporting various types of transactions such as energy trading and carbon trading. However, due to the serious information asymmetry between buyers and sellers in the carbon trading market, an energy internet platform is needed to match transactions. According to the experience of the European market, the over-the-counter market for carbon trading accounts for more than 40%, which brings important opportunities for the development of matching transactions and related derivatives.

Energy Internet needs carbon trading as a medium to realize Internet finance. In the future, power sales companies can provide users with energy-saving and consumption-reducing products and services in the energy trading market, and users can obtain subsidies through carbon trading. Thus, carbon trading will be integrated into the energy Internet and become a tool and bridge to promote the organic combination of energy Internet and Internet finance.

Sharing and co-construction of energy internet and carbon trading market

Energy Internet and carbon trading market have shared energy production and consumption entities. Both are mainly involved in energy-intensive industries. At present, it is estimated that 6,000 to 7,000 enterprises will be included in the national carbon emission trading market in the first phase, covering key emission industries such as petrochemicals, chemicals, building materials, steel, nonferrous metals, papermaking, electricity, and aviation. These production capacity or energy-consuming units will also be the main units participating in the construction of energy Internet.

Energy Internet and carbon trading market have a shared potential group of participants. The construction of energy Internet allows more small, scattered and distributed entities to be included in the common platform, such as buildings (households) and transportation (cars). The individual emission sources of these sectors are small, but they account for a large proportion (about 60%) and are the main source of future growth (about 70%). At present, the carbon trading costs of these sectors are very high and the economic efficiency is poor, but the energy Internet makes the information acquisition and verification of these small units more convenient and efficient, thereby greatly reducing the transaction and supervision costs, making it possible for these "masses" to participate in carbon trading.

Energy Internet and carbon trading market have common support objects. One of the original intentions and functions of the construction of energy Internet is to absorb more renewable energy. The offset mechanism of carbon trading market (such as CCER) is also mainly sourced from renewable energy. In the future, the deployment of high proportion of renewable energy requires energy Internet to realize comprehensive dispatch and management in terms of technology, and requires carbon trading market to reflect environmental externality costs in terms of economic returns, so that it can carry out comparable and fair market competition with fossil energy.

Energy Internet and carbon trading market have shared technologies, policies and business models. Clean energy technologies, comprehensive utilization technologies, intelligent network systems, demand-side management, and transformation of various production capacity and energy-using facilities for building energy Internet are all similar to the methodology of carbon trading. Currently, the scope of carbon trading is mainly based on carbon dioxide emissions from energy consumption. The relevant incentive policies in the fields of energy and climate are almost overlapping. In terms of business and profit models, short-term government subsidies, industrial support, and long-term technological progress and market transactions are the core of both.

Energy Internet and carbon trading market can jointly build a "Green Silk Road" with cross-regional energy infrastructure and carbon trading market interconnection as the main focus. As the world trend of the new industrial revolution, seeking low-carbon growth and achieving energy equity is likely to be the "greatest common divisor" with relatively few obstacles in China's industrial and financial internationalization strategy. In combination with the national "Belt and Road" construction and the content of the construction of two market mechanisms in the Paris Agreement, the two can jointly develop cross-regional market connections such as East Asia, Asia, and Eurasia, establish an open and shared international cooperation mechanism for energy Internet and carbon trading market, strengthen the interconnection of energy infrastructure and cross-regional carbon trading markets with neighboring countries, establish regional trading systems and platforms, gradually complete the basic docking of measurement, accounting, transmission, monitoring, reporting, verification, allocation, trading, supervision and other rules, and jointly discuss and formulate cross-regional general technical standards, including energy conversion standards, equipment standards, information exchange standards, safety protection standards, trading standards, measurement and collection standards, and regulatory standards.

The carbon trading market will greatly enhance the market competitiveness of the energy internet

The carbon trading market will greatly enhance the market competitiveness of the energy internet. The formation of the carbon market internalizes the environmental externalities of carbon emissions and discovers prices through transactions. On the one hand, it increases the consumption cost of fossil energy, and on the other hand, it enables the renewable energy industry to obtain additional financial income through the offset mechanism to reduce costs, supporting the access of a higher proportion of renewable energy in the energy internet. With the development of carbon finance, the financing channels and sources of energy internet enterprises and industries will be more abundant. International multilateral financial institutions, policy banks, and fiscal funds continue to invest. Commercial banks, investment banks, insurance companies, fund companies, etc. have drawn on the design ideas of traditional financial products such as credit, insurance, and securities. A series of green financial products supporting new energy forms are being launched around quotas and CCERs. According to current international market data, about 1/6 to 1/5 of clean energy investment each year comes from the financing function of the carbon market. In the future, in China's CCER market, about 70% of transactions will likely come from the new energy market. The financing scale of energy internet enterprises through the carbon market is expected to reach 5-23 billion yuan by 2020, and will exceed 3 trillion yuan in total by 2030. At the same time, the carbon market will likely complement green electricity certificate trading, financial subsidies, etc., thereby further improving and achieving a reasonable profit level for energy Internet companies.