China Carbon & Energy Management Domain

China's National Carbon Emissions Trading Scheme (China ETS) is the central policy instrument for achieving the country's "dual carbon" goals, with online trading formally launched on July 16, 2021. It is the world's largest carbon market, launched with roughly 2,225 power-sector companies and initially based on free allocation, expanding in stages since then. With the EU's CBAM becoming fully operational in 2026, China is now rapidly extending coverage -- in a "Phase 2" expansion -- to high-emission manufacturing sectors such as steel, cement, and aluminum, making the scheme a central pillar of decarbonization for companies operating locally and for global supply chains.

China's "dual control" system is undergoing a historic transition from "energy consumption dual control" -- which simultaneously manages the total volume and intensity (consumption per unit of GDP) of energy use -- to "carbon emissions dual control," which simultaneously manages the total volume and intensity of carbon emissions. The former energy consumption dual control regime contributed significantly to energy-efficiency gains from the 11th Five-Year Plan (2006-2010) onward, but because renewable energy consumption was subject to the same uniform controls, it also constrained economic growth and contributed to sudden power-supply restrictions (including blackouts). From the 14th Five-Year Plan period (starting 2021), the Chinese government adopted a policy of excluding renewable energy and energy used as raw material from total-volume and intensity controls, shifting instead toward directly restricting carbon emissions themselves. In August 2024, the General Office of the State Council formally issued the "Work Plan for Accelerating the Establishment of a Carbon Emissions Dual Control System," establishing a national transition roadmap. Under the new system, the evaluation axis fundamentally shifts from "energy consumption" (the means) to "greenhouse gas emissions" (the outcome). For companies, since the use of non-fossil energy (renewables and nuclear) is effectively excluded from emissions-cap regulation, it becomes possible to pursue economic development and decarbonization simultaneously. The plan is to build infrastructure such as carbon emissions statistics and accounting systems by 2025, move to full implementation during the 15th Five-Year Plan period (2026-2030) with carbon-intensity management as the primary approach supplemented by total-volume management, and after peaking in 2030, transition in stages to a system centered on total-volume management of carbon emissions.

Released by China's State Council in October 2021, the "Action Plan for Carbon Peaking Before 2030" is the national-level master roadmap for achieving China's international pledges of peaking carbon emissions by 2030 and reaching carbon neutrality by 2060. The plan sets out ten major action areas — including transforming the energy mix, promoting energy efficiency, upgrading industrial structure, decarbonizing transport and construction, and developing the circular economy — with targets to cut CO2 emissions per unit of GDP by more than 65% from 2005 levels and raise the share of non-fossil energy consumption to around 25% by 2030. It functions as the overarching policy requiring all manufacturing and energy-intensive industries operating in China to adopt energy-saving technologies, expand renewable electricity use, and reduce emissions across their supply chains.