China to Impose Absolute Carbon Emissions Limitations by 2027
China Strengthens Carbon Market Efforts Amidst International Pressure
China is taking significant strides in its fight against climate change, as it continues to develop and expand its carbon market. The country currently operates a compulsory Emissions Trading System (ETS) for several industries, as well as a voluntary carbon market, known as the China Certified Emission Reduction (CCER) scheme.
The CCER programme was relaunched in January 2024 to complement the ETS, and the new carbon market system aims to decarbonise various sectors of the economy. This includes the chemical, petrochemical, papermaking, and aviation industries, which are expected to be added to the emissions caps by 2027.
The ETS, launched in July 2021 for the power sector, was expanded in 2025 to include steel, cement, and aluminium sectors. This expansion is part of China's plan to introduce absolute emissions caps for major industrial sectors by 2027.
The new system will combine free and paid carbon emissions allowances (CEAs), and the rise in carbon prices due to the emissions caps will increase the value of carbon assets, incentivizing investment in emissions-reduction measures.
This development is particularly important for Chinese exporters, as accurate emissions reporting and active participation in China's carbon market will become increasingly crucial due to international trade pressures, particularly the EU's Carbon Border Adjustment Mechanism (CBAM).
China's nationwide emissions trading scheme (ETS) is set to be established by 2030. Before this, the Chinese government is likely to integrate industries such as energy-intensive manufacturing and possibly others related to heavy industry into its national emissions trading system.
The new carbon market system will operate alongside a transparent, standardised voluntary carbon market aligned with international standards. This aligns with China's commitment to cooperate with other nations in addressing climate change and meeting its pledge under the Paris Agreement.
In conclusion, China's efforts to strengthen its carbon market are a significant step towards achieving its climate goals and aligning with international standards. As the world continues to grapple with the impacts of climate change, China's leadership in this area is particularly noteworthy.
Topics related to this story include Carbon & Climate, Cities, Energy, Policy & Finance, with a focus on China.
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