Core Insights - The national carbon market in China has completed three compliance cycles by the end of 2025, with a total trading volume of 865 million tons and a transaction value of 57.633 billion yuan, indicating a stable and gradually improving market operation [1] Group 1: Market Expansion and Characteristics - The most significant highlight of the national carbon market in 2025 is the first expansion, which includes the steel, cement, and aluminum smelting industries into quota management, enhancing market effectiveness [2] - The number of covered enterprises increased from approximately 2,200 to about 3,700, and the covered emissions rose from around 5 billion tons to over 8 billion tons, accounting for about 66% of national CO2 emissions [2] - The types of greenhouse gases under control have expanded to include perfluorocarbons (CF4) and hexafluoroethane (C2F6), in addition to CO2 [2] Group 2: Voluntary Emission Reduction Market - The voluntary emission reduction trading market has made substantial progress, with 18 methodologies published covering various sectors, providing methodological support for project development and emission reduction accounting [3] - By the end of 2025, 33 voluntary reduction projects were registered, with a total reduction volume exceeding 17 million tons and a cumulative transaction of 9.2194 million tons, reflecting a stable market price expectation [3][4] Group 3: Carbon Price Trends - In 2025, despite an increase in trading scale, carbon prices fell, with a total quota transaction volume of 235 million tons, a year-on-year increase of about 24%, but a transaction value of 14.630 billion yuan, down approximately 20% [5] - The average carbon price in 2025 was 62.4 yuan per ton, a decrease of 37% from 99.4 yuan per ton in 2024 and a 17% drop from 75.2 yuan per ton in 2023 [5] - Factors contributing to the decline in carbon prices include the introduction of a quota transfer mechanism and reduced expectations of quota scarcity due to transitional arrangements for newly included industries [6] Group 4: Future Market Optimization Suggestions - To enhance market vitality and international connectivity, it is suggested to stimulate trading activity among state-owned enterprises and optimize the quota transfer mechanism [7][8] - Recommendations include establishing clear long-term reduction targets, exploring multi-year quota allocations, and improving the trading structure and risk management tools [8] - Additionally, it is advised to actively engage with global carbon pricing mechanisms and cross-border reduction rules to enhance international cooperation [9]

Report Title - "National Carbon Market: One Thing Gains While Another Loses, Aftershocks Still Linger — Outlook for the Annual Market of the National Carbon Market in 2026" [1] Report Industry Investment Rating - Not provided in the report Core Views of the Report - The macro - emission reduction target will provide an important reference for the downward adjustment path of the power generation industry's quota benchmark value. If 2025 is the peak - year, the average annual emission reduction rate of carbon dioxide from 2026 to 2035 needs to reach about 0.7% - 1.0%. In the neutral power generation growth scenario, the power generation emission intensity in 2026 needs to be reduced by at least about 1.1% - 1.4% compared with 2025. The estimated quota gap rate of the power generation industry in 2025 may expand to about 1.1% - 1.4%, corresponding to an annual gap of about 0.6 - 0.7 billion tons [2]. - The supply capacity of CCER will continue to expand in 2026, which will weaken the upward driving force of carbon prices. The total supply of "new supply + inventory" of CCER in 2026 is expected to reach about 25 - 32.5 million tons. If the CCER price returns to the normal range of "discount to CEA" in 2026, key emission units may use CCER on a large scale to replace quotas or fill compliance gaps [3]. - In 2026, the market will continue to digest the past quota surpluses, but the decline in surpluses is limited. Under the existing policies, the carbon price is expected to rise moderately, but it is difficult to return to the historical high. If new policies can give the market a clear expectation of the emission reduction path, the carbon price is expected to break through the historical high [3]. - The annual strategy is to go long on dips below 70 yuan/ton and take profit above 90 yuan/ton [3] Summary by Relevant Catalogs 2025 Review Carbon Price Breakdown and Limited Rebound - In 2025, the price of China's national carbon market carbon emission allowances (CEA) showed a downward trend, with the price center shifting down by about 35% year - on - year. As of December 5, 2025, the average transaction price of the whole market was about 61.48 yuan/ton, a year - on - year decline of about 35%. The price trend can be divided into three stages: sharp decline in the first three quarters, a sharp drop and then a rebound in October, and a rise and then a fall in mid - November [8]. - The older the year - label of the quota, the firmer the quota price. As of December 5, 2025, the average transaction price of CEA24 was the lowest at about 59.04 yuan/ton, while CEA19 - 20 had the highest average transaction price at 75.13 yuan/ton [13] Nearly 9% Annual Turnover Rate and Increased Share of Listing Transactions - Thanks to "advance allocation" and "quota carry - over", the market trading activity continued to improve. As of December 5, 2025, the cumulative trading volume was about 194.23 million tons, the cumulative turnover was about 11.9 billion yuan, and the annual turnover rate was nearly 9%. The cumulative trading volume increased by about 53% year - on - year, and the turnover rate increased by 5.3 percentage points [15]. - Bulk agreement transactions still dominated, but the share of listing agreement transactions increased significantly, rising by about 11 percentage points year - on - year. The one - way call auction trading introduced in July was relatively inactive due to the rule setting and the market decline [17][19]. - CEA24 was the main trading target in 2025, accounting for about 71% of the trading volume as of December 5, 2025 [19] Four Key Policy Nodes Affected Market Trading Rhythm - The "rectification and volume increase" expectation in February was falsified as the 2023 compliance completion rate was high. The release of the expansion plan in March led to the release of forced - circulation quotas. The pre - allocation of quotas in April and the stable recovery of carbon prices doubled the market trading scale. The final allocation of quotas in August led to the largest concentrated trading volume of the year. The release of the quota plan for newly - included industries in November increased the potential demand, but the actual procurement demand was limited [21][24][25] 2026 Supply - Demand Outlook Power Generation Industry: Disassembling Macro - Emission Reduction Targets to Anchor the Downward Adjustment Path of Benchmark Values - China's attitude towards achieving the 2030 intensity target is relatively prudent, leaving room for policy adjustment. When setting the 2035 emission target, China took a relatively cautious attitude, leaving necessary strategic space for the implementation of the 2030 intensity target [33]. - Assuming 2025 as the peak - year, the average annual emission reduction rate of carbon dioxide from 2026 to 2035 needs to reach about 0.7% - 1.0%. In the neutral power generation growth scenario, the power generation emission intensity in 2026 needs to be reduced by at least about 1.1% - 1.4% compared with 2025. The estimated quota gap rate of the power generation industry in 2025 may expand to about 1.1% - 1.4%, corresponding to an annual gap of about 0.6 - 0.7 billion tons [38][39][44] CCER: Expanding Supply Capacity and Weakening the Upward Driving Force of Carbon Prices - The CCER market restarted in January 2022, but the project development rhythm was slower than expected in the early stage due to factors such as methodological disputes and the slowdown of project review and verification by the regulatory authorities [45]. - The CCER supply in 2025 was about 15 million tons, and about 5 million tons were used for 2024 compliance. The estimated market surplus at the end of 2025 was about 10 million tons [47][49]. - It is estimated that the new supply of CCER in 2026 will be 15 - 22.5 million tons, and the total supply of "new supply + inventory" is expected to reach about 25 - 32.5 million tons. If the CCER price returns to the normal range of "discount to CEA", it may significantly weaken the annual supply - demand contradiction in the national carbon market [52][53] 2026 Market Outlook - In 2026, the quota gap in the power generation industry may expand, but it will be partially offset by the increase in CCER supply. The market will continue to digest the past quota surpluses, but the decline in surpluses is limited [55]. - In the first half of 2026, the market may be in a "near - stagnant" state. The carry - over rule will still have a residual impact on the market, and the market confidence needs to be restored before the introduction of new policies [55][56]. - Under the existing policies, the carbon price is expected to rise moderately, but it is difficult to return to the historical high. If new policies can give the market a clear expectation of the emission reduction path, the carbon price is expected to break through the historical high [58]

江西瑞昌，一台台发电机组矗立在群山之上。近年来，瑞 昌市大力发展绿色清洁能源，促进节能降耗、低碳减排。 魏东升摄（人民图片） 刚闭幕不久的第十五届全国运动会不仅是体育的盛会，也是一场由大型赛事带动的绿色实践。场馆使用 绿色低碳设计与材料，无废理念贯穿赛事全程，中国南方航空公司专门推出"低碳全运会"主题航班，使 用国家核证自愿减排量（CCER）抵消当次航班碳排放，实现绿色飞行。 货轮在湖北宜昌加注液化天然气。加气站建成投运，为减 少长江流域碳排放提供了条件。 魏启扬摄（人民图片） 无人驾驶矿卡行驶在海南定安县大岭花岗岩矿项目现场。 该项目建立全过程碳排放管控体系，助力绿色矿山向数字 化、智能化、无人化转型升级。 新华社记者 张丽芸摄 为何CCER可以抵消碳排放？这里不得不提到中国的碳市场。在这样一个市场里，碳减排量可以像日常 商品一样被交易。 为何要加快建设碳市场 从启动到现在，中国的碳市场不断完善。今年8月底，中共中央办公厅、国务院办公厅印发《关于推进 绿色低碳转型加强全国碳市场建设的意见》（以下简称《意见》），碳市场建设迈入了新阶段。 为何要加快建设这样一个市场？ 这要从我们面临的形势说起。 2024年全球 ...

Core Viewpoint - The article discusses the recent guidelines issued by the central government regarding the establishment and expansion of a national carbon market, emphasizing the transition from intensity control to total volume control and the shift from free to paid quotas [3][5][8]. Summary by Sections Carbon Market Development - The central government has outlined a clear roadmap for building a national carbon market, aiming for comprehensive coverage of major industrial sectors by 2027 and a fully established trading market by 2030 [3][5]. - The guidelines aim to clarify the role of various participants in the carbon market, addressing previous uncertainties [3]. Transition from Intensity to Total Volume Control - The current system is based on intensity control with free quota distribution linked to production levels, but this will shift to total volume control during the 14th and 15th Five-Year Plans [5][6]. - By 2027, industries with stable carbon emissions will be prioritized for total volume control, with a gradual increase in the proportion of paid quotas [5][6]. Carbon Pricing and Market Dynamics - The national carbon market has seen a price fluctuation, with the closing price at 69.69 yuan per ton, down from an average of 72 yuan per ton [10]. - The carbon price has risen from an initial 48 yuan per ton to a peak of 105 yuan per ton, indicating a trend towards higher prices as the market expands [10]. International Cooperation and Market Integration - The guidelines encourage participation in international carbon market mechanisms and the establishment of standards for global cooperation [12][13]. - There is a potential for Chinese companies to leverage their carbon market experiences in international projects, enhancing China's influence in global carbon markets [12]. Future Directions - The guidelines suggest a need for more high-quality carbon credits and a gradual opening of the market to financial institutions to optimize resource allocation [11][12]. - The focus will be on ensuring that companies do not face excessive costs while promoting effective actions towards emission reduction [11].

Core Viewpoint - The carbon credit system under the Paris Agreement facilitates the cross-border flow of climate funds, achieving carbon reduction goals at lower costs and higher efficiency [1][11]. Development of China's Carbon Market - China's carbon market has evolved from the Clean Development Mechanism (CDM) to a comprehensive system that includes mandatory and voluntary trading markets, ensuring a healthy and orderly operation [4][5]. - The voluntary carbon market has experienced fluctuations, with significant developments starting from 2012, including the establishment of the national certified voluntary emission reduction (CCER) program [4][5]. - The national carbon market has seen a significant expansion, with the launch of the national power quota market in 2021 and the voluntary emission reduction trading system in 2023 [5][6]. Market Performance and Mechanisms - In 2024, the national carbon market's trading volume reached 189 million tons, with a transaction value of 18.114 billion yuan, marking a new high since its inception [6][7]. - The trading price in the carbon market has shown a steady increase, with the closing price in the fourth quarter stabilizing between 97 yuan/ton and 106 yuan/ton [7]. - The market's trading activity has significantly increased, with a turnover rate of 3.5% in 2024, compared to approximately 2.0% in previous years [6][7]. Policy Recommendations for Market Development - To enhance market vitality, it is essential to diversify trading products, participants, and methods, encouraging participation from financial institutions and individual investors [9][18]. - Implementing a paid quota usage mechanism, similar to the EU carbon market, is recommended to internalize costs and improve price discovery [9][18]. - Strengthening environmental information disclosure and building a robust integrity system are crucial for ensuring data quality and market credibility [10][18]. International Cooperation and Market Expansion - Attracting participation from countries involved in the Belt and Road Initiative can enhance the quality and openness of China's carbon market, promoting international carbon asset transactions settled in yuan [1][11]. - Active participation in international rule-making is necessary to establish a legal, international, and modern carbon market, increasing its global attractiveness and influence [1][11].