China’s Carbon Emissions Trading Market: A Cornerstone of Global Climate Governance
Joanna Zhao
China’s national carbon emissions trading market (ETS), the world’s largest by traded greenhouse gas volume, has become a key tool in the country’s dual climate goals of peaking emissions by 2030 and reaching carbon neutrality by 2060. Since its 2021 launch, the market has seen cumulative carbon emission allowance (CEA) trades surpass 700 million tons and generate over ¥48 billion ($6.7 billion) in revenue. It is driving real emission cuts while encouraging green financial innovation. The ETS initially covered China’s power generation sector, which makes up nearly 40% of national emissions. However, recent policies aim to expand coverage gradually to include steel, cement, aluminum, and other high-emission industries by 2027, with full coverage of major sectors planned for 2030. This expansion supports the government’s strategy to improve carbon pricing and increase market liquidity.