Original article from the official website of the Ministry of Ecology and Environment

The carbon market leverages a market-based mechanism to control greenhouse gas emissions and promote green and low-carbon transition of the economy and society. Accelerating China’s National Carbon Market development and fully grasping the decisive role of the market in resource allocation is crucial for ensuring that emission mitigation responsibilities are assumed, achieving emission control targets, and reducing emissions abatement costs in various sectors.

The Chinese government attaches great importance to the development of the national carbon market. The report to the 20th National Congress of the Communist Party of China (CPC) proposed to improve the carbon emissions trading system. President Xi Jinping called for creating a more effective, vibrant, and internationally influential carbon market. China’s National Carbon Market consists of both a compliance emissions trading system and a voluntary emissions reduction trading market. While each has its own focus and operates independently, these two markets are interconnected through an offsetting mechanism for China Carbon Emission Allowances surrendering and together they form the national carbon market system. Since 2023, the State Council promulgated and implemented the Interim Regulations for the Management of Carbon Emission Trading and the second compliance cycle of the national carbon emissions trading market has successfully concluded. The National Voluntary Greenhouse Gas Emission Reduction Trading Market was also officially launched, significantly boosting market vibrancy. The role of the carbon market in promoting emission reductions across sectors has been elevated, and China’s carbon pricing mechanism, with the national carbon market playing the principal role, has basically taken shape.

The construction and development of China’s National Carbon Market has attracted significant attention and widespread interest both domestically and internationally. The Ministry of Ecology and Environment has organized the compilation of this report, which aims to introduce the progress and main achievements of China’s National Carbon Market and to share development perspectives and relevant policy design considerations, hoping to enhance domestic and international recognition and support. This report focuses on the construction of the National Carbon Emission Trading System, market operations in the second compliance cycle, China Carbon Emission Allowances allocation and surrender, and data quality management. This report also shares the progress since the launch of the National Voluntary Greenhouse Gas Emission Reduction Trading Market , as well as the development of the national carbon market’s infrastructure, achievements, and international cooperation. Additionally, the report provides an outlook on the future development of China’s National Carbon Market.

Visit the official website of Ministry of Ecology and Environment of China for the full report