China Expands National Carbon Market to Cover Over 65% of Emissions

China's national carbon emissions trading market has expanded to cover approximately 8.3 billion metric tons of carbon dioxide—representing more than 65 percent of the country's total carbon emissions—officials announced at the 2026 China Carbon Market Conference in Wuhan. Following its initial sectoral expansion, the compliance market now regulates 3,680 key emitting entities across power generation, steel, cement, and aluminum smelting. Cumulative trading volume reached 961 million tons valued at 65.7 billion yuan by the end of August, while authorities launched preparations to bring petrochemicals, chemicals, paper, and civil aviation into the fold.

By regulating 8.3 billion tons of carbon dioxide, China operates the world's largest carbon compliance market by covered emissions. Moving beyond the power sector into energy-intensive industrial manufacturing subjects heavy polluters to direct compliance costs and emissions benchmarks, anchoring China's decarbonization targets in market mechanisms.

China's national carbon emissions trading system has entered an accelerated expansion phase, regulating an estimated 8.3 billion metric tons of carbon dioxide and covering over 65 percent of the nation's total emissions, according to data released at the 2026 China Carbon Market Conference in Wuhan. By the end of August, cumulative trading volume in the mandatory emissions trading scheme reached 961 million tons with total turnover of 65.70 billion yuan, official reports published at the conference showed. The platform's annual trading activity experienced a substantial lift in 2025, operating across 243 trading days with transaction volumes rising 24.36 percent year-on-year to a record 235 million tons, valued at 14.63 billion yuan. The scale expansion follows the phased incorporation of major industrial polluters beyond the thermal power sector. With the formal onboarding of steel, cement, and aluminum smelting enterprises alongside electricity generators, the national market now encompasses 3,680 key emitting entities. Official disclosures also confirmed that preliminary technical and regulatory groundwork has begun to incorporate four additional sectors: petrochemicals, chemicals, papermaking, and civil aviation. Alongside the compliance system, China's parallel market for voluntary offset credits—the China Certified Emission Reduction (CCER) mechanism—is establishing transaction track records. By late August, the national voluntary greenhouse gas emissions reduction platform had recorded 41 registered projects, generating 21.71 million tons in cumulative trade worth 1.74 billion yuan. In March, regulators registered the voluntary market's first mangrove afforestation initiative in Fujian Province's Xiapu County, establishing an operational template for ocean-based blue carbon crediting. Speaking at the Wuhan conference, Minister of Ecology and Environment Huang Runqiu stated that regulatory authorities intend to steadily reinforce the market's emission-curbing role, widen the range of tradable products, welcome diverse market participants, and expand international exchanges to bolster the carbon market's domestic effectiveness and global footprint.