In the global context of combating climate change, the rise of China's national carbon market is undoubtedly a milestone event. As the world's largest carbon emissions control system, China's national carbon market not only provides strong support for the green and low-carbon transformation of its domestic economy and society but also contributes "Chinese wisdom" to global climate governance. Since its official launch in 2021, this market system, which covers the largest greenhouse gas emissions globally, has been evolving through continuously improved policies and innovative mechanisms, becoming a new engine for driving global low-carbon development.
The uniqueness of China's national carbon market lies in its dual-track structure of compliance and voluntary markets. The compliance market primarily targets key emitting enterprises, ensuring the achievement of national carbon emission control targets through strict quota allocation and settlement mechanisms. By the end of 2023, the national carbon emissions trading market had included 2,257 key emission units in the power generation industry, covering approximately 5.1 billion tons of CO2 emissions annually, accounting for over 40% of China's total CO2 emissions. Meanwhile, the national voluntary greenhouse gas reduction trading market, launched in January 2024, provides a broader platform for all sectors of society to participate in carbon reduction, further stimulating low-carbon innovation across the board.
On January 25, 2024, the State Council promulgated the "Interim Regulations on Carbon Emissions Trading Management," marking the establishment of China's national carbon market policy and regulatory framework. This significant regulation not only clarifies the main procedures and legal responsibilities of carbon emissions trading and related activities but also strengthens the supervision and penalties for illegal activities. With the continuous improvement of the system framework, the market operation mechanism is becoming more mature, with a steady increase in the trading volume and price of carbon emission allowances, significantly enhancing market vitality. Notably, on April 24, 2024, the closing price of the national carbon emissions trading market exceeded 100 yuan per ton for the first time, highlighting the market's robust dynamism.
The successful operation of China's national carbon market is reflected not only in the scale and activity of the market but also in its profound impact on corporate behavior and industry development. Data shows that in 2023, the carbon emission intensity of China's thermal power sector decreased by 2.38% compared to 2018, and the carbon emission intensity of the power industry fell by 8.78%, demonstrating the positive role of the carbon market in promoting industry emission reduction and optimizing the energy structure. At the same time, the carbon market has nurtured a large number of professionals and technical service institutions specializing in carbon reduction and management, laying a solid foundation of talent and technology for achieving the "dual carbon" goals.
In terms of international cooperation, the construction and operation of China's national carbon market have attracted widespread attention. China's quota allocation method, based on carbon intensity control targets, has demonstrated the flexibility and applicability of the carbon market mechanism, contributing a "Chinese solution" to global carbon market innovation. Through multi-level exchanges and dialogues with countries and regions such as the European Union, Germany, and Norway, and project cooperation with international organizations like the World Bank, China is actively promoting the collaborative development of the global carbon market.
Looking ahead, China's national carbon market has broad development prospects. With the gradual expansion of covered industries, the diversification of trading methods and products, the enhancement of market activity, and the strengthening of data quality management, China's national carbon market will play an increasingly important role in promoting the achievement of the "dual carbon" goals. At the same time, by deepening international exchanges and cooperation and actively participating in the global climate governance process, China's national carbon market is expected to become a more effective, dynamic, and internationally influential carbon market.
The successful practice of China's national carbon market not only provides critical support for China's green economic transition but also sets a new benchmark for global low-carbon development. In the journey of addressing climate change, a common challenge for humanity, China is demonstrating its commitment as a major power through concrete actions, contributing wisdom and strength to building a community with a shared future for mankind. As the national carbon market continues to improve and develop, we have every reason to believe that this innovative mechanism will become a powerful engine driving the global green and low-carbon transition, injecting new momentum into achieving global sustainable development goals.
National Carbon Market Development Report (2024) - China - English version.pdf
Progress Report of China’s National Carbon Market (2024)
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