Asia's Carbon Markets Strategic Imperatives for Corporations 2025

China’s ETS coverage and expansion projections, by industry sector (2024-2030) FIGURE 4 Estimated peak time of emissions (by year) and peak volume of emissions (billion tonnes)1Batch 1 for ETS coverage Batch 2 for ETS coverage Batch 3 for ETS coverage 5.5-5.8 ~0.4~0.2 ~0.15 ~0.25 ~0.15 (peak beyond 2030) ~0.2 ~0.25-0.3Power2024 2025 2026 2027 2028 2029 2030 SteelSteel making Steel processing Cement Glass Electrolytic aluminium Other² Oil refining Ethylene Synthetic ammonia MethanolPetrochemicals Chemicals Papermaking AviationNon-ferr ous metalsConstruction materials~0.2~1.6 ~1.2 0.2-0.3 Notes: 1. Peak time and peak emissions volume are estimated based on 2024 emissions levels and industry development trajectory outlook, considering speed of energy transition and tech improvement, demand change, production capacity, industry landscape and data infrastructure etc. 2. e.g. copper smelting. Sources: Ministry of Ecology and Environment of the People’s Republic of China, IEA, Euromonitor, Bain & Company analysis.20 China’s ETS market mechanism is evolving. Looking ahead, this expansion is estimated to cover 8.7–10.6 billion tonnes of emissions during peak years (2028–2029) (see Figure 5 and Appendix). After China reaches peak emissions, its national carbon market will shift from controlling carbon emissions intensity to setting caps on absolute carbon emissions. Free allowances will gradually be replaced by a mix of free and auctioned permits,21 with new one-way bidding models being explored.22 Research conducted for this report finds that China’s ETS could reach a market size of RMB 400-600 billion ($56-84 billion) by 2030, based on 2 billion tonnes of carbon traded at prices of RMB 200-300 ($28-42) per tonne,23 assuming free allowances are cut by 5% each year after peak emissions. 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. Asia’s Carbon Markets: Strategic Imperatives for Corporations 12