Core Viewpoint - The carbon market is a crucial policy tool for addressing climate change and promoting green transformation in China, with significant growth and participation observed in recent years [1][3]. Market Overview - The national carbon market has been operational for four years, covering over 60% of China's carbon dioxide emissions, with a cumulative trading volume of 728 million tons and a transaction value of 49.83 billion yuan as of September 30, 2025 [1]. - The number of key emission units that have opened trading accounts has reached 1,277 as of August 2025, indicating an increase in market participants [3]. Market Changes and Opportunities - The expansion of the carbon market to include steel, aluminum smelting, and building materials has diversified market participants, enhancing trading opportunities and market development [3][5]. - The trading volume in the carbon market has increased by 40% compared to the same period last year, with significant growth in transaction numbers and active participants [5]. Local Market Dynamics - Local carbon markets, such as Shanghai's, are expected to play a supportive role in achieving local "dual carbon" goals while adapting to the national carbon market's expansion [6][7]. - Shanghai's carbon market has over 2,200 registered entities, including around 400 regulated enterprises, contributing to its trading activity [7]. Future Plans and Mechanisms - The Shanghai Environmental Energy Exchange is focusing on expanding industry coverage, researching paid allocation mechanisms, and enhancing market participant diversity [10][11]. - The transition to a "paid allocation + total control" model is anticipated during the "14th Five-Year Plan" period, with an emphasis on policy coordination to achieve national carbon reduction targets [12][13].

Core Viewpoint - The national carbon market in China has become the largest in the world, effectively managing over 60% of the country's carbon dioxide emissions, and is evolving towards a model of "paid allocation + total control" during the 14th Five-Year Plan period [1][10]. Market Development - The national carbon market has been operational for four years, with a cumulative trading volume of 728 million tons and a total transaction value of 49.83 billion yuan as of September 30, 2025 [1]. - The trading volume in the carbon market has increased significantly, with a 40% growth compared to the same period last year, and trading activity has improved with a 75% increase in transaction volume, number of trading enterprises, and transaction counts in the first half of 2025 compared to 2024 [2][3]. Market Structure and Participants - The inclusion of new key emission units has expanded the market's participant base to 1,277 entities, enhancing market diversity and creating more trading opportunities [2]. - The market now covers four major industries: power generation, steel, aluminum smelting, and building materials, which has diversified the market structure and improved trading dynamics [2]. Local Market Role - Local carbon markets, such as Shanghai's, are expected to continue supporting local "dual carbon" goals and green development, even as they face challenges from the national market's expansion [4][6]. - Shanghai's carbon market has over 2,200 registered entities, including around 400 regulated enterprises and 1,800 investment and financial institutions, contributing to high trading activity [5]. Future Directions - The Shanghai Environmental Energy Exchange is focusing on expanding industry coverage, researching paid allocation mechanisms, and promoting market participant diversification [8][9]. - The transition to a "paid allocation + total control" model is a key focus for the 14th Five-Year Plan, with an emphasis on policy coordination between industrial and carbon market policies [10].

Core Viewpoint - The issuance of the "Opinions on Promoting Green and Low-Carbon Transition and Strengthening National Carbon Market Construction" marks a significant step towards the comprehensive deepening and acceleration of the national carbon market, providing direction for institutional innovation and operational optimization, which is crucial for achieving carbon peak and carbon neutrality goals [1] Group 1: Carbon Market Structure - The national carbon trading market consists of a mandatory carbon trading market and a voluntary emission reduction market, which are interconnected through quota clearing and offset mechanisms, each with its own focus and independent operation [2] - The carbon pricing mechanism is central to the carbon trading market policy, with quota allocation being a key factor influencing carbon pricing [2] Group 2: Quota Allocation and Control - Currently, carbon quotas are primarily allocated for free, based on carbon emission intensity and actual production, to avoid limiting production and impacting economic growth [2] - As more carbon emitters are included in the market, the focus will gradually shift from controlling carbon intensity to controlling total carbon emissions, transitioning from free allocation to a combination of free and paid allocation methods [2] Group 3: Monitoring and Verification - A robust monitoring, reporting, and verification (MRV) system is essential for accurately determining historical carbon emissions and their changes over time, which supports the effective implementation of the carbon market [3] - Improving the quality of carbon emission data through comprehensive regulation and automated monitoring is a key direction for enhancing carbon accounting and reporting management [3] Group 4: Green Technology and Economic Transition - Companies can promote green technology research and application through low-carbon production methods, creating a virtuous cycle of emission reduction, revenue generation, and reinvestment in research [4] - The transition to low-carbon industries can be facilitated by eliminating outdated production capacity and fostering the development of clean energy, low-carbon equipment manufacturing, and carbon consulting [4] - The establishment of a comprehensive voluntary certification methodology for emission reduction projects will provide stronger momentum for achieving green and low-carbon goals in the future [4]

Group 1: Nationally Determined Contributions (NDC) Goals - China announced a new round of NDC goals aiming for a 7%-10% reduction in greenhouse gas emissions by 2035 compared to peak levels, with a target for non-fossil energy consumption to exceed 30% of total energy consumption [1] - The NDC goals detail China's commitments to climate change, providing strong support for global greenhouse gas reduction efforts [1] - The establishment of a national carbon market is expected to enhance efficiency in price discovery and control emissions in major high-emission industries [1] Group 2: Carbon Market Development - The national carbon market has been operational for over four years, covering more than 2,200 key emission units in the power sector, making it the largest carbon market globally in terms of greenhouse gas emissions coverage [2] - As of August 2024, the carbon market has recorded a cumulative trading volume of nearly 700 million tons, with a transaction value of approximately 48 billion RMB, marking a new annual high for 2024 [2] - The carbon market's design and policy framework have been continuously improved, with over 60% of total CO2 emissions effectively controlled [2][3] Group 3: Future Expansion and Industry Inclusion - By 2025, the carbon market will expand to include the steel, cement, and aluminum industries, adding over 1,300 new key emission units and increasing the controlled emissions by approximately 3 billion tons [7] - The Ministry of Ecology and Environment plans to gradually include additional sectors such as aviation, petrochemicals, chemicals, and paper manufacturing into the carbon market [7][8] - The carbon market aims to establish a total control system for emissions, with a focus on stabilizing emissions in certain industries by 2027 [4][6] Group 4: International Cooperation and Standards - China is actively working to enhance the international influence of its carbon market and participate in the formulation of global carbon market rules [9][10] - The upcoming COP30 in Brazil is seen as a critical point for advancing the implementation of the Paris Agreement, with China expressing a commitment to multilateral cooperation in climate action [9] - The success of China's carbon market is being recognized globally, with other developing countries looking to China as a model for their own carbon market development [11][12]