China

Implementation period: 2025-2028 Funding amount: US$5 million Window: Implementation

China has committed to ambitious climate targets, aiming to peak carbon emissions by 2030 and achieve carbon neutrality by 2060—with carbon pricing policies playing a key role to support this transition. The country has made significant progress in carbon market development, evolving from eight pioneering subnational Emissions Trading Systems (ETSs) launched since 2013 to the full operationalization of a national ETS in 2021.  Initially covering the power sector, the national ETS—the world’s largest—expanded in March 2025 to include key industrial sectors such as steel, cement, and aluminum, now covering approximately 8 billion tons of CO2 equivalent or 60% of the country’s carbon emissions.  On the voluntary carbon market, China relaunched its domestic crediting mechanism, the China Certified Emissions Reduction Program (CCER), in 2024. In August 2025, the government issued a guideline to further advance carbon market development, setting out that by 2027 the national ETS will cover all major industrial sectors and implement an absolute emissions cap, with auctioning to be introduced by 2030.  

Objectives & Activities

The PMI Program in China supports the country in enhancing the effectiveness, scale, and international integration of its carbon pricing instruments, with technical assistance focused on:

• Strategic Policy Analysis on Carbon Pricing: Provide analytical support on the role of carbon pricing in achieving carbon neutrality, and assess its interactions with sectoral policies (e.g., industrial decarbonization, energy transition).
• Strengthening the Design and Implementation of the National ETS and CCER: Support improvement of the ETS through cap setting methodologies, sector expansion, auction design, and innovation on tradable products; advance the development of CCER new methodology, and strengthen the linkage of ETS and CCER; facilitate international collaboration and market interoperability, and conduct carbon tax feasibility studies.
• Enhancement of Registry and Monitoring, Reporting, and Verification (MRV) System:  Support the refinement and improvement of registry, trading infrastructure, and MRV systems for both national ETS and the CCER; conduct revisions of MRV technical guidelines, and developing a rigorous verifier screening and acceptance procedure; pilot innovative monitoring technologies and implement robust data quality assurance and control measures to ensure accuracy, transparency, and reliability across the systems. 

Additional Resources

• Progress Report of China’s National Carbon Market (2024)
• Work Plan for the Inclusion of the Cement, Iron & Steel, and Electrolytic Aluminum Industries into National ETS (Chinese)
• Infographics on the National ETS Expansion (Chinese)
• Interim Regulation on the Carbon Emissions Trading Administration (Chinese)
• Notice on Issuing the Work Plan for Accelerating the Establishment of a Dual Control System for Carbon Emissions (Chinese)
• China Country Climate and Development Report