China’s ETS: steady expansion The national ETS, operational since July 2021, was initially focused on the power sector but expanded in 2025 to include steel, cement and electrolytic aluminium industries. The system’s robustness continues to improve by strengthening data integrity and compliance via a sophisticated measurement, reporting and verification (MRV) framework, with monthly verifications and a three-tier auditing structure across national, provincial and municipal levels. Trading performance also reflects growing maturity (see Figure 3): by 2024, cumulative trading volumes reached 630 million tonnes, valued at RMB 43 billion, with carbon prices rising from an average of RMB 46.6 per tonne in 2021 to over RMB 100 per tonne in 2024.18China’s ETS is set to grow to a relatively mature stage by 2027 and expand coverage to eight high-emission sectors by 2030, adopting a phased approach to balance economic growth and decarbonization. Figure 4 details the phased expansion of China’s ETS across these sectors from 2024 to 2030, highlighting the varying projected carbon peaking timeframes and peak emissions volumes in eight industrial sectors (see Appendix for model assumptions).By 2024, cumulative trading volumes in China’s ETS reached 630 million tonnes valued at RMB 43 billion, with carbon prices rising from RMB 46.6 per tonne in 2021 to over RMB 100 in 2024. Operational performance of China’s national ETS (2021-2025) FIGURE 3 Sources: Ministry of Ecology and Environment of the People’s Republic of China, Wind Financial Database.19 Composite price for market closing Daily transaction volume 0246810121416182022 020406080100120 24 Closing price (RMB/tonne)Transaction volume (million tonnes) July 2021 April 2025 December 2021 December 2022 October 2023 December 20241st compliance cycle (16 July 2021 - 31 December 2021)2nd compliance cycle (1 January 2022 - 31 December 2023) Asia’s Carbon Markets: Strategic Imperatives for Corporations 11

Asia's Carbon Markets Strategic Imperatives for Corporations 2025