Beijing Sets a Date for Absolute Caps: China's Carbon Market Roadmap Targets Cap-and-Trade by 2030
At the end of August 2025 the General Offices of the Communist Party of China Central Committee and the State Council published an opinion on promoting the green and low-carbon transition and strengthening the construction of the national carbon market. The document sets out a roadmap for China's emissions trading system through 2030, and it answers one of the main questions hanging over the market since its launch in 2021: when China will move from intensity-based allocation to absolute caps.
According to the opinion, by 2027 the national compliance carbon market should cover the main industrial sectors, and absolute allowance caps will first be applied in sectors where emissions are relatively stable. By 2030, China aims to have a cap-and-trade system based on total allowance control, combining free and paid allocation, along with a voluntary carbon market that is mature and aligned with international practice. The National Energy Administration summarised the plan as a "double expansion": more sectors and more types of trading participants.
China's national carbon market began trading in July 2021 with the power sector only, covering more than 2,200 power companies and about 5 billion tonnes of carbon dioxide a year. Under an absolute cap, the government sets a fixed total number of allowances for a sector or for the whole market, and that total declines over time. The opinion indicates that caps will be introduced first where emissions are relatively stable. The opinion also refers to combining free and paid allocation by 2030.
Introducing auctions in China would be a significant change for power generators, most of which are state-owned and operate under regulated tariffs. China's stated goals are to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060. On 24 September, President Xi Jinping announced China's 2035 nationally determined contribution, which commits to cutting economy-wide net greenhouse gas emissions by 7% to 10% from peak levels by 2035. The opinion also addresses China's voluntary market, the China Certified Emission Reduction scheme, which was relaunched in January 2024 after a pause of several years. An absolute cap is only as credible as the emissions data behind it.