Carbon Neutrality Focus | Ushering in a New Era for the Carbon Market! Opinions from the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council on Promoting Green and Low-Carbon Transformation and Strengthening National Carbon Market Development

Abstract: The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council have released China's first top-level design document on carbon market planning at the central level, marking China's move to elevate the national carbon market to a core position as a strategic policy tool for the country.

Opinions of the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council on Promoting Green and Low-Carbon Transformation and Strengthening the Construction of the National Carbon Market

JIRAN GREEN TECH

(May 24, 2025)

The carbon market is a crucial policy tool that leverages market mechanisms to proactively address climate change and accelerate the comprehensive green transformation of our economy and society. Currently, China has established a national carbon emissions trading market, which mandates key emission entities to fulfill their mandatory reduction obligations, as well as a national voluntary greenhouse gas emission reduction trading market designed to encourage society to take independent action in cutting emissions. To further develop a national carbon market that is more effective, dynamic, and globally influential, with approval from the Party Central Committee and the State Council, we now present the following recommendations.

I. General Requirements

Uphold Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as our guiding principle, thoroughly implement the spirit of the 20th National Congress of the Communist Party of China and the Second and Third Plenary Sessions of the 20th Central Committee. Comprehensively embrace Xi Jinping’s economic thought and Xi Jinping’s thought on ecological civilization, while maintaining the overarching principle of pursuing progress while ensuring stability. Strive to balance the needs of green and low-carbon transformation with those of economic growth, upholding the fundamental role of an efficient market and a proactive government. Firmly uphold the carbon market as a key policy tool for controlling greenhouse gas emissions, accelerate the development of a unified national carbon trading system, and systematically expand its scope and broaden participation in a phased manner. This will foster a more equitable, transparent, and open market environment, aiming to optimize the efficiency of carbon emission resource allocation and maximize economic benefits. Simultaneously, drive deep transformations in traditional industries, nurture the development of new, high-quality productivity, and unleash society’s intrinsic momentum for green and low-carbon growth—thereby providing crucial support for steadily advancing peak carbon emissions and carbon neutrality goals, and for building a beautiful China.

The main objectives are: By 2027, the national carbon emissions trading market will essentially cover the major emission-intensive industries across the industrial sector, while the national voluntary greenhouse gas reduction trading market will achieve full coverage in key areas. By 2030, a nationwide carbon emissions trading system will be largely established—built on total quota control and combining both free and paid allocation mechanisms. At the same time, a robust national voluntary greenhouse gas reduction trading market will be developed, characterized by integrity, transparency, standardized methodologies, broad participation, and alignment with international practices. This will ultimately lead to the creation of a carbon pricing mechanism that delivers significant emission reductions, features a well-rounded regulatory framework, and maintains appropriately balanced price levels.

II. Accelerate the Development of the National Carbon Emissions Trading Market

(1) Expand the coverage of the national carbon emissions trading market. Based on industry development trends, contributions to carbon reduction and pollution mitigation, the quality of underlying data, and carbon emission characteristics, we will systematically expand the scope of covered industries and the types of greenhouse gases.

(2) Improve the carbon emission quota management system. Establish a carbon emission quota management system that is clearly defined, open, and transparent, while ensuring policy stability and continuity. Comprehensively consider factors such as economic and social development, industry characteristics, and the costs associated with the low-carbon transition, and set clear medium- to long-term carbon emission quota targets for the market. In alignment with national greenhouse gas emission control objectives and dual-control requirements for carbon emissions, carefully balance these goals with energy security, the safety of industrial and supply chains, and public livelihood needs. Scientifically determine the overall quota ceiling, gradually shifting from intensity-based controls to total-volume-based management. By 2027, prioritize the implementation of total-volume quota controls in industries where carbon emissions remain relatively stable. Steadily promote a blended approach to carbon emission quota allocation—combining free distribution with paid auctions—and progressively increase the proportion of paid allocations. Additionally, establish quota reserves and market adjustment mechanisms to strike a balance between supply and demand, enhancing market stability and liquidity. Finally, rationally set the ratio of certified voluntary emission reductions allowed to offset carbon emission quota settlements.

(3) Strengthen guidance and supervisory management of the carbon emissions trading pilot markets. Coordinate the national carbon emissions trading market with the carbon markets currently being piloted in various regions. Existing pilot carbon trading markets should be standardized and operated in accordance with relevant guidelines, helping to drive green and low-carbon transformations across different areas. Pilot carbon trading markets are encouraged to take the lead in exploring innovative approaches—such as expanding coverage, refining market regulation mechanisms, introducing advanced oversight tools, and promoting the healthy and orderly development of carbon finance—to accumulate valuable experience for building the nationwide carbon emissions trading system. A regular evaluation and exit mechanism will be established, and no new local or regional carbon trading markets will be created going forward.

III. Actively Develop the National Voluntary Greenhouse Gas Emission Reduction Trading Market

(4) Accelerate the development of voluntary emissions reduction trading markets. Establish a scientific and comprehensive methodology system, accelerating the development of methodologies in key areas that demonstrate significant sustainable development benefits, enjoy high societal expectations, and deliver both social and ecological advantages. This will effectively support society in achieving autonomous emission reductions and realizing the value of ecological products. Strengthen full-chain management—including the development, validation, implementation, and verification of emission reductions—for voluntary emission reduction projects. Project proponents and validation/verification bodies must uphold the principle of integrity, rigorously fulfill their commitments, and proactively embrace public oversight. Additionally, enhance nationwide coordination and management of carbon-reduction resources, ensuring standardized operations for all types of voluntary emission reduction trading activities.

(5) Actively promote the application of certified voluntary emission reductions. Advocate and encourage Party and government agencies, enterprises, social organizations, and others to actively utilize certified voluntary emission reductions to offset carbon emissions in areas such as green supply chain management, large-scale event implementation, corporate social responsibility initiatives, and promoting a green, low-carbon lifestyle. Party and government agencies at all levels, along with state-owned enterprises, should take the lead in setting an example. Furthermore, refine the rules governing the use of certified voluntary emission reductions for offsetting purposes, enhance their international recognition, and proactively support relevant industry players in meeting global compliance requirements and achieving product carbon neutrality.

IV. Focus on Enhancing the Vitality of the Carbon Market

(6) Enrich trading products. Steadily and prudently advance financial institutions in exploring and developing green financial products and services related to carbon emission rights and certified voluntary emission reductions, while significantly strengthening support for greenhouse gas emission reductions. Establish comprehensive policy frameworks—including mechanisms for carbon pledging and carbon buybacks—to standardize financial activities linked to carbon emission rights, and broaden channels for corporate carbon asset management. Centered around the national carbon market, refine and完善 the carbon pricing mechanism, fully leveraging the market’s price-discovery function to provide robust price signals that effectively guide financial support for green and low-carbon development.

(7) Expand trading entities. Support financial institutions such as banks to standardize their carbon-pledge financing operations, and steadily advance the participation of qualified financial institutions in the national carbon market trading—provided it is conducted in strict compliance with laws and regulations and under controllable risk conditions. Additionally, non-compliance entities will be introduced at an appropriate time. Meanwhile, the national voluntary greenhouse gas emission reduction trading market will gradually allow eligible individuals to participate in trading activities.

(8) Strengthen market transaction supervision. Standardize the release of major policy information, refine market transaction risk prevention, early warning, and handling procedures, conduct nationwide tracking and assessment of carbon market prices, and promote the establishment of fair and reasonable trading prices. Strengthen oversight of trading activities, and rigorously crack down on behaviors that disrupt market order or manipulate the market. Establish a risk assessment, early warning, and management system for key emission entities to proactively address compliance risks. Additionally, enhance supervision and regulation of carbon finance activities, guiding financial institutions to provide sound financial services in accordance with market-oriented and rule-of-law principles, while firmly safeguarding against systemic financial risks.

V. Comprehensively Strengthen Capacity Building for the Carbon Market

(9) Improve the management system and support framework. Establish and improve a management system that aligns with the development stage of the national carbon market, promotes stronger unified supervision and management, ensures clear allocation of responsibilities, and enhances operational efficiency. Strengthen capacity-building for managing the national carbon market. Drive the development of a comprehensive, digital, and intelligent national carbon market management system, along with its registration and trading platforms, while reinforcing service capabilities and safeguarding data security.

(10) Strengthen carbon emission accounting and reporting management. Establish a sound corporate greenhouse gas emission reporting system. In conjunction with the development of the national carbon market, accelerate the revision of guidelines for greenhouse gas accounting and reporting by key industry enterprises, and transition these guidelines into national standards once conditions are ripe. Implement categorized management of carbon emission accounting, refine the accounting framework based on the emission factor method, and explore the adoption of automated monitoring systems for carbon emission calculations. Strengthen the procurement, deployment, and management of critical measurement instruments for carbon emissions, ensuring they undergo legal verification or calibration as required. Additionally, develop standardized metrological technical specifications and conduct comprehensive carbon emission measurement audits. Finally, mandate monthly documentation and archiving of key parameters for major emitting entities.

(11) Strictly standardize carbon emission verification. Improve the technical guidelines for verification in key industries, clearly defining verification priorities and requirements, and standardizing the verification process. Encourage certification and verification bodies to strictly adhere to the principles of objectivity, independence, integrity, fairness, and professional rigor, ensuring a comprehensive and accurate review of carbon emissions to guarantee the accuracy and credibility of certification and verification results. For key emission entities that consistently maintain high-quality carbon emission reports, verification procedures can be streamlined based on their specific circumstances.

(12) Strengthen comprehensive oversight of carbon emission data quality throughout the entire process. Strengthen the primary responsibility of key emission entities in fulfilling carbon emission accounting and reporting obligations, and encourage enterprises to establish robust internal management systems to ensure the quality of their carbon emission data. Local ecological environment and market supervision authorities, together with relevant departments, will enhance daily oversight and management of carbon emission data, leveraging advanced technologies such as big data, blockchain, and the Internet of Things to elevate regulatory standards. Additionally, efforts will be intensified to investigate and address violations, with strict crackdowns on any acts of fraud or falsification.

(Thirteen) Strengthen regulation of technical service institutions. Implement qualification management for verification institutions in the national carbon emissions trading market, clearly defining entry requirements, codes of conduct, and exit mechanisms. Strengthen the management of inspection and testing organizations related to carbon emissions, and establish a mechanism to remove non-compliant entities from the market. Actively foster technical service industries such as consulting, inspection and testing, validation, and verification, while conducting regular assessments to promote the healthy development of the third-party technical services market and cultivate more internationally recognized, specialized service providers. Additionally, encourage technical service institutions to enhance self-regulation within the industry.

(14) Enhance the information disclosure system. Key emission entities, registration and custody institutions, trading organizations, technical service providers, financial institutions, and others shall promptly disclose relevant information—such as emissions, compliance, transactions, and collateral—as required, thereby accepting public oversight. A data-sharing mechanism among carbon market-related departments will also be established. Furthermore, credit supervision and management of key emission entities, technical service providers, and financial institutions will be strengthened in accordance with the law.

6. Strengthen Organizational Implementation and Support

(15) Strengthen organizational leadership. Under the centralized and unified leadership of the Party Central Committee, all regions and relevant departments should earnestly implement these guidelines in light of their specific circumstances. Local Party committees and governments at all levels must strengthen organizational leadership, actively promote the green and low-carbon transition, enhance policy support for the construction and operation of the carbon market, and reinforce supervision and management of key emission entities. They should also ensure solid progress in critical areas such as quota allocation, compliance settlement, and data quality management for major emission units within their respective regions. Meanwhile, the Ministry of Ecology and Environment will play a pivotal role in coordinating and overseeing the overall development of the carbon market, organizing implementation, and conducting ongoing evaluations to systematically drive the successful execution of these tasks. Relevant departments, according to their respective responsibilities, should step up coordination, collaboration, and regulatory guidance to create synergies in their efforts. Any significant issues should be promptly reported to the Party Central Committee and the State Council in accordance with established procedures.

(Sixteen) Strengthen policy and regulatory support. Research and refine relevant laws and regulations to provide a robust legal framework for carbon market development. Conduct legislative studies on the management of voluntary greenhouse gas emission reductions and trading schemes. Establish a sound, long-term mechanism linking administrative law enforcement with criminal justice, and legally initiate public interest litigation in this area, intensifying joint efforts to crack down on illegal and criminal activities in the carbon market. Enhance the system of judicial guidelines to duly support administrative bodies in fulfilling their regulatory duties within the carbon market. Strengthen policy coordination and institutional alignment between the national carbon market and market-based mechanisms such as green electricity and green certificates. Formulate nationwide fee structures for registration, record-keeping, and trading activities in the carbon market. Optimize the national carbon market’s fund settlement system to boost efficiency, while simultaneously reducing the systemic transaction costs associated with the carbon market.

(17) Deepen international exchanges and cooperation. Actively participate in the formulation of carbon market mechanism rules related to the Paris Agreement on climate change, and promote a global green, low-carbon, and just transition. Strengthen international consultations, dialogue, and exchanges. Enhance cooperation and exchange in the carbon market field, fostering mutual recognition of technologies, methodologies, standards, and data across borders. Publicize China’s approaches and experiences in building its carbon market through multiple channels.

(Source: Xinhua News Agency)