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Perspective | Open Access

The development of China’s national carbon market: An overview

Xiliang Zhang1,2( ), Runxin Yu1,2, Valerie J. Karplus3,4
Tsinghua University-China Three Gorges Corporation Joint Research Center for Climate Governance Mechanism and Green Low-carbon Transformation Strategy, Beijing 100084, China
Institute of Energy, Environment, and the Economy, Tsinghua University, Beijing 100084, China
Department of Engineering and Public Policy, Carnegie Mellon University, Pittsburgh PA 15213, USA
Wilton E. Scott Institute for Energy Innovation, Carnegie Mellon University, Pittsburgh PA 15213, USA
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Abstract

The launch of China’s national carbon market has already doubled the global emissions covered by carbon pricing programs and become the world’s largest carbon market. It is expected to be a crucial supporting instrument for China’s climate targets of achieving CO2 peaking before 2030 and carbon neutrality by 2060. The design of China’s national carbon market incorporates economic theory and international experiences, and more importantly, it fully considers China’s situation. This is reflected in its key features, particularly for the rate-based design instead of a mass-based system, which is essentially a multi-sector tradable performance standard. This paper reviews the development of China’s carbon market, introduces the design and rationale of some critical features, describes its latest progress along with encountered challenges, and offers insights into its phased development outlook.

Keywords

Cap and tradetradable performance standardscarbon marketChina

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Energy and Climate Management
Volume 1 Issue 2,
June 2025
Article number: 9400015
DOI: 10.26599/ECM.2025.9400015
Cite this article:
Zhang X, Yu R, Karplus VJ. The development of China’s national carbon market: An overview. Energy and Climate Management, 2025, 1(2): 9400015. https://doi.org/10.26599/ECM.2025.9400015

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Received: 01 March 2025
Revised: 14 April 2025
Accepted: 16 April 2025
Published: 25 April 2025
© The author(s) 2025.

This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
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