Shell and Huaneng team up in China’s carbon market

Guangzhou, 10 June 2015: The Guangdong Branch of Huaneng Power Int’l lnc and Shell Energy (China) Ltd today signed in Guangzhou one of the largest bespoke structured deals in the China carbon market. Huaneng Carbon Asset Management Co Ltd and the China Emissions Exchange Guangzhou (CEEX) witnessed the signing. The deal is an innovative design, combining swaps of emission allowances, Chinese Certified Emissions Reductions (CCERs) and over-the-counter (OTC) trades. Compliant with both national regulations and that of the Guangdong province, the structured deal combines several types of environmental trading products, which can help promote the healthy development of the Chinese carbon market.

Guo Liang, General Manager of the Guangdong Branch of Huaneng Power Int'l Inc, said: “We are pleased to work with Shell on the CO2 trading front to capture value and contribute to the healthy development of carbon trading in Guangdong. The Huaneng Guangdong Branch always attaches great importance to energy saving, emission reduction and carbon asset management. Our Haimen power plant is the first in the China Southern Power Grid equipped with a million kilowatts ultra-supercritical thermal power unit and its economic indicators top the industry in China. Our Shantou power plant is the only coal burning thermal power plant listed in the first group of enterprises certified for clean production in Guangdong. With support from Huaneng Carbon Asset, the Guangdong Branch will invest the captured value from carbon trading to accelerate technology upgrading and promote transformation towards a green and low carbon enterprise.”

Shell is one of the largest carbon traders in the international market. This is Shell’s first carbon deal in China involving both allowances and offsets, making it one of the first wholly owned foreign entities (WOFE) to participate in the Chinese emissions market. Shell is a leader in CO2 trading with more than a decade of experience in global carbon markets. The company offers comprehensive products and solutions from spot transactions to complex structured OTC deals for customers across the globe. Shell is active on all fronts of carbon management as demonstrated through innovation in carbon reduction technologies and its leading role in the discussion about climate change.

Huibert Vigeveno, Executive Chairman of Shell Companies in China, said: “The Huaneng Group is one of China’s leading energy companies and we are excited to work with Huaneng in the China market. We believe that carbon trading can play an important role in helping reduce China’s CO2 emissions. Shell is proud to bring its international trading experience to China and make a contribution to the development of the country’s carbon market.”

Huaneng Power Int’l lnc, in which China Huaneng Group is the controlling shareholder, is one of the largest listed power companies in the world and an active carbon trader in China and around the world. Its power plants were involved in the first deals in most pilot markets in China for compliance. The collaboration between Huaneng and Shell demonstrates support of both parties for China’s emissions trading as well as commitment to the development of that market.

Ning Jinbiao, General Manager of Huaneng Carbon Asset Management, said: “Huaneng Carbon Asset is the operation platform of China Huaneng Group for developing, managing and trading emission allowance and offsets and is also one of the first traders in China’s carbon market. We are happy to co-design this innovative deal jointly with Shell and be involved in carbon trading with support from CEEX . ”

Now in the China carbon market, compliance entities can use environmental products, such as allowances and offsets, to meet emission reduction targets and compliance obligations.

Jin Guoliang, President of China Emissions Exchange Guangzhou, said: “We thank both Shell and Huaneng Carbon Asset Management for localizing a global carbon trade practice, designing a structured deal on the Guangzhou exchange, and creating an innovative carbon product. The Exchange will keep practicing our mission, which is serving members and the physical economy of China. ”

CEEX is one of seven carbon trading exchanges in China, covering Guangdong - the largest pilot market in the country.

Enquiries:

He Yi

Assistant Manager

Huaneng Carbon Asset Management

China Huaneng Group

Tel: (86-10) 63081973

Email: hey@hncarbon.com.cn

Steel Shen

Spokesperson

Shell Companies in China

Tel: (86-10) 65295484

Email: steel.shen@shell.com

Notes to the editor:

Shell Energy (China) Limited, the trading entity for Shell in China, is registered in the Shanghai Free Trade Zone. An integral part of Shell’s global trading network and one of the world’s leading carbon traders, it leverages decades of knowledge and expertise to offer customers a competitive and diversified portfolio of LNG, gas and CO2 emissions management and strategy options in China. Our Environmental Products Trading Business actively pursues opportunities in environmental markets around the world. Shell Energy (China) Limited is the first wholly owned foreign entity to participate in the Chinese emissions market.

China Huaneng Group is a key power enterprise established with the approval of the State Council. By the end of 2014, its total installed capacity in China and overseas reached 150 million kilowatts, top of the world. Other businesses supporting the core power business of the Group include coal, finance, technology research and development as well as logistics, and all have a certain scale. Huaneng Power Int’l lnc, in which China Huaneng Group is the controlling shareholder, is listed in New York, Hong Kong and Shanghai. It is also the largest listed power company in the world.

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