Last year was a significant one for China's carbon market, with several milestones achieved amidst persistent challenges. The nation, home to the world’s largest compliance carbon market by emissions coverage, took substantial steps forward while grappling with key issues like oversupply and the expiration of older permits.
China’s emissions trading scheme (ETS) reached new heights in 2024, buoyed by regulatory advancements and growing demand. Prices averaged 98 RMB per ton—a 50% increase from 2023—highlighting the market’s strengthening foundation. Heavy industries such as cement, steel, and aluminum are expected to be included soon, potentially expanding coverage to 65% of China’s greenhouse gas emissions and accelerating progress toward the nation’s 2030 peak emissions and 2060 carbon neutrality goals.
A pivotal moment came in February when the State Council adopted new ETS regulations. As ClearBlue Markets' Principal Analyst Yan Qin shared with Carbon Herald, these regulations elevated the ETS in the policy hierarchy and introduced stricter non-compliance penalties. They also signaled future inclusion of civil aviation, aligning with international schemes like CORSIA and the EU ETS.
Another highlight of 2024 was the relaunch of China’s voluntary carbon market (CCER). While progress was slow due to regulatory scrutiny and overlapping policies, the renewed focus on quality offsets underscores the importance of integrity in the global voluntary carbon market.
Looking ahead, the outlook for 2025 remains promising. According to Yan Qin, while the market could see a moderated price rise due to existing surplus and generous initial allocations for new sectors, trading volumes are expected to grow. New carryover rules linking allowance banking to transaction volumes are set to enhance market liquidity.
For a deeper dive into these developments and insights into international impacts like the CBAM, join ClearBlue Markets’ webinar on January 22. Click here to register.