China to expand carbon market to major industries by 2027

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🗞️ Driving the news: China has announced plans to significantly expand its national carbon market to cover major industrial sectors by 2027
• The move, outlined in a new policy document from the Communist Party Central Committee and the State Council, aims to help fulfil President Xi Jinping’s pledge to peak national carbon emissions by 2030
• The plan also introduces a shift toward setting absolute emissions caps, replacing the current intensity-based limits

🔭 The context: Launched in 2021, China’s carbon market currently applies only to the power sector, which accounts for over 40% of the country’s emissions
• Its expansion has long been seen as critical to aligning the world's largest emitter with global climate goals
• The new guidelines signal a step change in Beijing’s approach, moving toward more stringent regulation and international best practices for carbon accounting

🌍 Why it matters for the planet: A fully operational and comprehensive Chinese carbon market could become the world’s largest emissions trading system, influencing global carbon pricing and abatement strategies
• Introducing absolute caps marks a significant tightening of climate policy, potentially curbing total emissions growth
• However, success depends on market integrity, robust monitoring, and enforcement across diverse industries

⏭️ What's next: By 2027, key sectors such as steel, cement, and chemicals are expected to be integrated into the trading system
• Policymakers will also develop a voluntary reduction market by 2030, with international alignment in standards and transparency
• The implementation process will likely include phased rollouts, regulatory adjustments, and stakeholder consultations to ensure industry compliance and market stability

💬 One quote: “These reforms signal a stronger commitment to absolute emission reductions and global cooperation on climate policy,” said Li Shuo, Director of the China Climate Hub at the Asia Society Policy Institute

📈 One stat: China’s power sector emitted approximately 4.5 billion tonnes of CO₂ in 2023 — more than the entire EU economy

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