China unveiled its latest round of nationally determined contributions at the UN Climate Change Summit on September 24, committing to reduce economy-wide net greenhouse gas emissions by 7-10% from peak levels by 2035, with aspirations to achieve even greater reductions.

The comprehensive targets include raising non-fossil energy consumption to over 30% of total energy consumption, expanding wind and solar power generation capacity to more than six times the 2020 levels with an aim to reach 3.6 billion kilowatts, increasing forest stock volume to over 24 billion cubic meters, making new energy vehicles the mainstream choice for new vehicle sales, extending national carbon emission trading market coverage to major high-emission industries, and establishing a climate-resilient society.

Nationally Determined Contributions (NDCs) represent climate action targets set by countries based on their national circumstances and development stages. Industry experts indicate that the new NDC targets provide detailed commitments for China's climate action and will offer strong support for global greenhouse gas emission reductions. The carbon market serves as a crucial tool for industry emission control, and with total volume targets established, the national carbon market will achieve price discovery more efficiently.

**National Carbon Market Shows Strong Performance After Four Years**

The national carbon emission trading system has operated for over four years since launching on July 16, 2021. The market currently covers more than 2,200 key emission entities in the power sector, making it the world's largest carbon market by greenhouse gas emissions coverage. Through three compliance periods, the carbon market's institutional framework has continuously improved and market mechanisms have matured.

In 2025, the national carbon market achieved new breakthroughs with the inclusion of steel, cement, and aluminum smelting industries, while the first batch of certified voluntary emission reductions (CCER) was officially issued.

The "National Carbon Market Development Report (2025)" released during the recent "2025 China Carbon Market Conference" in Shanghai shows that by the end of August, the national carbon emission trading market had accumulated nearly 700 million tons in trading volume with a total transaction value of approximately 48 billion yuan. The 2024 annual trading volume reached a record high since the market's launch in 2021.

According to Sun Jinlong, Party Secretary of the Ministry of Ecology and Environment, China's carbon market has achieved steady startup and operation over four years, with improved top-level design and initial formation of a multi-level policy and institutional system. The market coverage has expanded further, with effective control over carbon dioxide emissions exceeding 60% of the total. Market vitality has increased with growing participation willingness among trading entities, and the incentive and constraint effects have become more apparent, enriching and improving the value realization mechanism for ecological products.

Sun indicated that the Ministry of Ecology and Environment will steadily expand carbon market industry coverage and trading entities, diversify trading varieties and methods, strengthen international cooperation in carbon market development, and accelerate the construction of a more effective, dynamic, and internationally influential carbon market.

**Total Volume Control System Needs Establishment**

In August, China's carbon market sector received its first central government document. The General Office of the CPC Central Committee and the General Office of the State Council issued "Opinions on Promoting Green and Low-Carbon Transformation and Strengthening National Carbon Market Construction," marking the first central document specifically addressing carbon markets and establishing a clear timeline, roadmap, and task list for medium and long-term development.

The document sets main objectives including basic coverage of major industrial emission sectors by 2027, with priority implementation of total quota control for industries with relatively stable carbon emissions. The voluntary emission reduction trading market should achieve full coverage of key areas. By 2030, the goal is to establish a carbon emission trading market based on total quota control, combining free and paid allocation.

Deputy Minister of Ecology and Environment Li Gao stated that China's carbon market has become a powerful tool for achieving carbon peak and neutrality goals and serves as the primary carbon pricing mechanism after four years of operation.

According to Li, the national carbon emission trading market scale reached historic highs in 2024. Daily average trading volume increased by approximately 44% compared to the previous compliance period, with annual trading value reaching 18 billion yuan, the highest level since market launch in 2021. The first half of this year saw quota trading volume approach 39 million tons, also a new high since market opening.

Chinese Academy of Engineering academician Wang Jinnan noted that while China's carbon market construction has achieved significant results, it remains in early development stages with gaps compared to high standards. Main issues include insufficient market vitality, relatively delayed quota allocation scheme releases, and missing regulatory tools such as paid auctions. The existing mechanism struggles to adapt to the transition from "controlling increments" to "reducing stock" during the "15th Five-Year Plan" period.

Wang recommended that relevant departments establish an expected target of net-zero growth in national carbon emissions during the "15th Five-Year Plan," create a total volume control system combining "carbon market + regional decomposition + national flexible reserves," formulate carbon market industry total volume targets, and achieve binding responsibility sharing for other industrial, construction, and transportation sectors through regional carbon reduction.

**Aviation, Petrochemical, Chemical, and Paper Industries to Be Included**

Following the introduction of the "Interim Regulations on Carbon Emission Trading Management" in 2024, the national carbon market achieved its first expansion in 2025, incorporating steel, cement, and aluminum smelting industries, with unidirectional competitive bidding added as a new trading method.

Li Gao explained that after the first industry coverage expansion, over 1,300 new key emission entities were added, increasing controlled greenhouse gas emissions by approximately 3 billion tons and raising the proportion of covered carbon dioxide emissions to well over 60% of the national total. By the end of August 2025, 1,277 newly included industry key emission entities had opened trading accounts.

Regarding aviation, petrochemical, chemical, and paper industries, these sectors will be included following a "mature one, include one" principle, considering industry development status, carbon and pollution reduction contributions, data quality foundations, and carbon emission characteristics to systematically expand coverage.

A Sinopec carbon emission management representative noted that 21 Sinopec enterprises participate in local pilot carbon markets while 17 captive power plants participate in the national carbon market, forming a comprehensive carbon asset management system. Sinopec has established specialized management departments and formulated carbon emission and trading management measures for unified management.

**Promoting International Recognition of Carbon Market Standards**

As 2025 marks the 10th anniversary of the Paris Agreement, China continues expanding its carbon market's international influence and participating in global carbon market rule-making. Over 150 countries have proposed carbon neutrality or net-zero emission targets during this decade.

The COP29 conference in 2024 adopted operational rules for Article 6 mechanisms, marking their entry into implementation phase and holding significant importance for promoting countries' use of market mechanisms to fulfill international emission reduction obligations.

The World Bank's "State and Trends of Carbon Pricing 2025" report shows that 37 countries and regions have established carbon emission trading mechanisms globally.

China is actively advancing cross-border carbon trading work, conducting related research, establishing cross-border carbon trading management systems, and exploring implementation pathways. The Ministry of Ecology and Environment will promote international recognition of China's carbon market technologies and standards to better demonstrate China's leadership role in global climate governance.

International Carbon Action Partnership (ICAP) Secretary-General Stefano De Clara noted that China's carbon market has achieved great success over four years by designing and improving market systems based on actual conditions, including continuous data quality improvement, increased trading activity, reduced carbon intensity in power production, and expansion to new industries.

As the world's largest carbon market by greenhouse gas coverage, China has proven that carbon market mechanisms can effectively achieve emission reductions in emerging economies. China's carbon intensity-based control innovation has been adopted by many countries including Turkey, Brazil, and Indonesia, providing important references for carbon market development in other developing countries.

Looking toward COP30 in Brazil and global climate governance processes, industry experts expect enhanced cooperation between China and Latin American countries in carbon market development, sharing experiences in emerging carbon market construction.