China’s nationwide emissions trading system (ETS) is expected to undergo a dramatic expansion over the next five years, according to a new report by the World Economic Forum (WEF) and Bain & Company. The analysis suggests the market could grow to as much as 33 times its 2024 size by 2030, fuelled by broader sectoral coverage and a shift to absolute emissions caps.
An aerial view of the Greater Khingan Forest, the largest forest in China, with endless coniferous trees stretching to the horizon. AI generated picture.
The report projects that the annual market value of the ETS could reach between RMB 400–600 billion ($56–84 billion) by 2030, compared with RMB 18.1 billion in traded value in 2024. ‘As coverage expands and prices rise, China’s ETS is on track to become a major tool for cutting emissions and driving innovation in low-carbon technologies by 2030’, the report said.
The forecast rests on several key assumptions. First, that coverage of the ETS will rise from 5.2 billion tonnes of CO2 equivalent (tCO2e) in 2024 to as much as 10.6 billion tCO2e by 2029. Second, that the government will overhaul the current carbon-intensity-based system into a cap-and-trade mechanism by 2030. Finally, the phase-out of free carbon allowance allocation is anticipated to begin after China reaches its peak emissions year, with a 5% annual reduction rate.
These changes could push the price of China Emission Allowances (CEAs) to RMB 200–300/tCO2e by 2030. For comparison, CEAs recently settled at RMB 63.28/tCO2e on the Shanghai Environmental and Energy Exchange, marking a two-year low.
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Despite the long-term growth outlook, the market is currently under pressure. Analysts cite a mix of bearish signals, including expectations that rules around surplus CEA carryovers may loosen, as well as a softer-than-expected approach to expanding coverage into new sectors this year. Lower electricity prices are also squeezing utility margins, prompting some power producers to sell off allowances.
By 2030, the WEF estimates that China’s ETS could facilitate trading of 2 billion CEAs annually—over ten times the 189 million allowances exchanged in 2024. Already the world’s largest carbon market in terms of emissions coverage, the system is set to widen further in 2025 when three additional industrial sectors join, bringing an extra 3 billion tCO2e under its umbrella.
If these projections hold, China’s ETS could become not only a cornerstone of the country’s decarbonisation strategy but also a critical driver of global carbon market dynamics.
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China’s drive to expand its carbon market underscores a global reality: Carbon pricing and reporting are becoming central to how economies compete and grow. For businesses, this shift signals more than compliance—it’s an opportunity to lead. At Green Earth, we help companies align with these emerging frameworks, offering practical tools to measure emissions, reduce footprints, and access high-quality carbon credits. Our experience shows that transparent reporting and real-world impact go hand in hand, unlocking capital, strengthening supply chains, and positioning businesses at the forefront of sustainable growth. The companies that act now won’t just adapt to change—they’ll define it. And with Green Earth, you can be one of them.
