Carbon Markets and Green Finance
China's carbon pricing and green finance infrastructure is among the world's most ambitious. Here's how it works and where it's headed.
National Emissions Trading System (ETS)
China's ETS, launched in July 2021, is the world's largest carbon market by covered emissions:
| Aspect | Current State | 2026 Target |
|---|---|---|
| Sectors Covered | Power generation (2,162 companies) | 20+ sectors including steel, cement, aluminum, chemicals |
| Annual Emissions Covered | ~5 billion tonnes CO₂ | ~8 billion tonnes CO₂ |
| Carbon Price | ¥60–80/tonne (~$8.50–11) | ¥100–150/tonne (~$14–21) |
| Trading Volume | ~400M tonnes (2024) | 1B+ tonnes annually |
The ETS uses a cap-and-trade model where the NDRC sets sector-specific emission allowances. Companies exceeding their allocation must purchase permits; those with surplus can sell it. Price signals have risen significantly as caps tighten.
Green Finance Infrastructure
China has built a comprehensive green finance ecosystem:
Green Bonds
- 2024 Issuance: ~¥300B RMB (~$42B USD) in green bonds
- Target: ¥1T RMB annually by 2026
- Shenzhen and Shanghai Green Finance Reform Pilots lead innovation
- Mature products include green project bonds, transition bonds, and sustainability-linked loans
Cross-Border Green Finance
- Shenzhen-Hong Kong Carbon Exchange facilitates international trading
- Beijing Green Exchange connects domestic ETS with global markets
- CARB (China Aviation Renewable Bond) enables aviation sector decarbonization financing
Banking Sector Green Credit
- All major banks report to CBIRC green finance frameworks
- Green credit balance: ~¥40T RMB (2024)
- Regulatory requirements mandate minimum 10% green credit for systemically important banks
"China's green finance infrastructure ranks 2nd globally in development, behind only the EU. The country is now the world's largest issuer of green bonds outside Europe."
Technology Deployment Funding
China's technology deployment fund — managed by the NDRC and Ministry of Ecology and Environment — allocates:
- CCUS (Carbon Capture, Utilization, and Storage): ¥50B RMB (~$7B) fund for commercial-scale projects
- Green Hydrogen: ¥20B RMB for production and infrastructure
- Energy Storage: ¥15B RMB for grid-scale battery and pumped hydro projects
Last updated: 2025-11-17. For official data, visit NDRC.