Asia's Carbon Markets Strategic Imperatives for Corporations 2025

China’s ETS market volume forecast (2024-2030) FIGURE 5 Notes: 1. Depends on evolution of quota design mechanism; directional estimate based on assumption that % of free quota gradually declines by 5% a year from 100% as covered industries reach peak emissions. 2. Base scenario for industry emissions trajectory and ETS expansion pace is same as in Figure 4. Sources: Ministry of Ecology and Environment of the People’s Republic of China; ClearBlue Markets; IEA; Euromonitor; Bain & Company analysis.24 0 5 10 0.5 7.8 0.5 7.8 0.6 8.7 0.9 7.5 0.8 8.9 1.3 7.5 1.2 9.4 1.6 7.1 1.6 8.7 2.0 7.1 2.0 8.0 2.3 6.4 5.2 8.3 8.3 ETS market volume forecast² (billion tonnes) 8.4 9.6 8.8 10.6 9.3 10.3 9.1 10.0 8.7 8.7 2024 2025 2026 2027 2028 2029 2030 ~40-50% of total national emissions, mainly from the power sector + steel,cement, electr olytic aluminium + oil refining, synthetic ammonia, methanol + glass, ethylene, papermaking, aviationExpect China’s ETS market to cover ~8-10 billion tonnes of total emissions volume before 2030 Scenario 1: Rapid sector expansion with conservative industry emission estimate (higher emissions). Free volume Exposed to priced emissions¹ Free volume Exposed to priced emissions¹Scenario 2: Stable sector expansion with optimistic industry emission estimate (lower emissions). China’s voluntary carbon market – revitalization of CCER The 2024 CCER relaunch has revitalized China’s voluntary carbon market (VCM), complementing the ETS. Demand for voluntary carbon credits is driven primarily by the ETS’s expansion, which increases offset requirements at national and local levels. This report’s projections suggest 300-500 million tonnes of CCER demand potential by 2030, based on a 5% ETS offset limit on using emissions offsets.25 Additional demand stems from the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which enters its mandatory phase in 2027, as well as from corporate carbon neutrality commitments. On the supply side, six mitigation methodologies have been approved (see Box 1), with second- round solicitation closing in April 2025.26 However, only nine projects were approved from the relaunch in January 2024 up to March 2025, with an expected issuance of 9.48 million tonnes.27 300- 500 million tonnes of CCER demand potential by 2030. Asia’s Carbon Markets: Strategic Imperatives for Corporations 13