China Plans Carbon Market Expansion to Petrochemicals and Chemicals

China will expand its national carbon emissions trading market to include high-emission industries such as petrochemicals and chemicals during the 15th Five-Year Plan period, according to the Ministry of Ecology and Environment. Building on existing coverage of power generation, steel, cement, and aluminum smelting, the expansion is intended to bring roughly 80 percent of the country's national carbon dioxide emissions under regulatory control. Officials also reported that cumulative trading volume in the national carbon market surpassed 930 million tonnes by late July.

Broadening China's emissions trading scheme to heavy process industries like petrochemicals and chemicals represents a major step in the country's decarbonization architecture. By expanding market coverage to roughly 80 percent of domestic emissions, policymakers are increasing compliance costs for energy-intensive sectors, accelerating technology retrofits, and reinforcing domestic carbon footprint accounting ahead of tightening international carbon trade standards.

China will expand its national carbon emissions trading market to cover petrochemicals, chemicals, and other high-emission sectors, according to statements made by officials from the Ministry of Ecology and Environment at a State Council Information Office briefing. Speaking on the implementation of the 15th Five-Year Plan period, Vice Minister of Ecology and Environment Li Gao outlined that the national emissions trading scheme will build upon its current coverage—which spans power generation, steel, cement, and aluminum smelting—to encompass chemical manufacturing and refining. The expansion is designed to bring approximately 80 percent of China's total carbon dioxide emissions under regulatory oversight. According to data shared by the ministry and reported by People's Daily, cumulative trading volume in the national carbon market had exceeded 930 million tonnes by the end of July. Officials emphasized that market mechanisms will play a central role in guiding green investment and ensuring that emissions carry a tangible economic cost while low-carbon projects generate financial returns through the national voluntary reduction market. Alongside sector expansion, the ministry noted that work will accelerate on carbon footprint standards, verification infrastructure, and product-level labeling. These measures aim to support green supply chains and address emerging cross-border trade barriers linked to carbon intensity. The policy roadmap forms part of the State Council's broader 15th Five-Year Plan for Beautiful China. Ecology and Environment Minister Huang Runqiu noted that the upcoming five-year period marks a transition toward integrated pollution control, carbon reduction, and ecological management. Environmental indicators from January to July showed continued gains, with national average PM2.5 concentrations falling 6.2 percent year-on-year to 1.8 micrograms per cubic meter lower than the prior period, while the share of coal-fired electricity generation fell below 50 percent for the first time in the first half of the year.