Executive Summary
Amidst the global call to mitigate climate change and reduce carbon emissions, numerous countries have established mature and viable carbon emissions trading systems. As carbon markets evolve, policy differences between nations increasingly impact businesses and individuals. Especially under the influence of carbon border adjustments (CBAM), a growing number of emerging economies are also prioritizing the implementation of carbon pricing tools. This white paper employs systematic review, comparative analysis, and multidimensional perspectives to comprehensively detail the history, mechanisms, and developmental landscape of both global and Chinese carbon markets. The research objectives extend beyond merely clarifying market structures and policy trajectories; they aim to reveal the unique positioning and strategic significance of China’s carbon market within the global framework, thereby furnishing a robust cognitive framework and practical guidance for decision-making for domestic policy formulation, market participation, and international dialogue.
This white paper aims to systematically summarize the development path and the current status of China’s carbon market, focusing on analyzing its positioning and characteristics within the global carbon market landscape. Chapter 1 outlines three key imperatives for studying carbon neutrality markets – international commitments, policy drivers, and investment trends – intended to establish the strategic relevance of the topic. Chapter 2 then traces the history of global carbon markets, discussing mechanisms such as Carbon Taxes, Emissions Trading Systems (ETS), Voluntary Carbon Markets (VCM), and CBAMs from an international perspective. Chapter 3 delves into the operational logic of China’s National Carbon Market, pilot markets, and the China Certified Emission Reduction (CCER) mechanism, while thoroughly exploring the foundational role of the MRV system in market operations. To deepen readers’ understanding of China’s carbon market development characteristics, Chapter 4 conducts comparative research across dimensions such as rulemaking, institutional positioning, coverage scope, and price signals. This analysis reveals both divergences and convergences in strategic choices between China and major markets like the EU, the United States, and South Korea. Finally, building on these findings, the report outlines key opportunities that China’s carbon market must seize and potential challenges it may encounter moving forward.
Looking ahead, the development of the global carbon market will exhibit three major trends: rule linkage (e.g. EU’s Carbon Border Adjustment Mechanism, CBAM), deepening financial instruments (e.g. gradual development of derivative markets like carbon futures and options), and regional market integration (e.g. Singapore’s initiative to establish a VCM hub).
Simultaneously, the development of China’s carbon market has entered a new phase of “intensive cultivation”, shifting from “scale expansion” to “quality enhancement”. Its long-term effectiveness will hinge on achieving systemic breakthroughs in key dimensions: consolidating data foundations (refining MRV systems), strengthening price signals (enhancing market liquidity and efficiency), expanding financial functions (developing carbon financial products), and deepening international collaboration (participating in rule dialogues and mutual recognition). Through continuous institutional innovation and active global engagement, China’s carbon market is poised not only to become the world’s largest emissions trading system but also to emerge as a pivotal force in driving green technological innovation, guiding low-carbon capital allocation, and shaping equitable and inclusive global climate governance rules.
The infographic below highlights key findings from the research.
