In a major move set to reshape global carbon markets, China has announced it will impose absolute carbon emissions caps across key industries starting in 2027. This marks a pivotal shift from the country’s current carbon intensity-based system, bringing the world’s largest emitter closer to its long-term climate goals.

Since launching its national emissions trading system (ETS) in 2021, China has relied on benchmark-based allowances, primarily targeting the power sector. While this system offered flexibility, it did not enforce hard limits on total emissions—limiting its overall impact on climate mitigation.

Beginning in 2027, the reformed ETS will introduce fixed, absolute emissions caps in industries with more stable emissions profiles. Heavy emitters such as steel, cement, and aluminum are expected to be among the first sectors affected. Over time, additional industries like chemicals, paper, and domestic aviation may also be brought under the cap-and-trade framework.

By 2030, China aims to establish a fully developed nationwide ETS that incorporates both free and paid allowances under an absolute cap system. This evolution is expected to significantly increase pressure on polluting industries to decarbonize, while boosting demand for clean technologies such as carbon capture and green hydrogen.

Experts see this as a critical step for China to meet its 2030 peak emissions and 2060 carbon neutrality goals. If implemented effectively, the new system could also accelerate innovation in climate tech, unlocking an emerging green market worth over $100 billion.

While this marks a bold leap forward, some analysts remain cautious, citing past concerns over transparency and allowance oversupply. Still, China’s commitment to enforce absolute emissions limits signals a clear intent to strengthen climate accountability on a global scale.

Source:

https://esgnews.com/china-to-impose-absolute-emissions-caps-from-2027-for-nationwide-carbon-market/