The carbon market in China has established itself as one of the fundamental pillars of the country's strategy in its journey towards reducing greenhouse gas emissions and combating climate change. Since its inauguration in July 2021, the market has seen significant growth, both in volume and value, highlighting its importance on the global stage. With the entry into force of new regulations in May 2024, the Chinese carbon market reached a significant milestone, with the trading of approximately 465 million tons of carbon emissions, which corresponds to a financial turnover of 27 billion yuan, or approximately 3.8 billion dollars.
This remarkable growth is illustrated by the appreciation of carbon credits over the years. The closing price per ton of carbon, which was 48 yuan on the day the market was launched, has more than doubled to 91.6 yuan in July 2024. This increase reflects growing demand and strong confidence in the cap-and-trade system implemented by the Chinese government, which has been gradually expanded to include sectors other than power generation. The expansion of cap-and-trade to new sectors is a clear demonstration of China’s commitment to using market mechanisms to promote environmental sustainability and responsible economic development.
One of the most notable aspects of the Chinese carbon market is the partial integration between the regulated market, known as the Compliance Carbon Market (CCM), and the Voluntary Carbon Market (VCM). This integration allows entities participating in the CCM to offset up to 5% of their emissions using credits obtained in the voluntary market, which involves the issuance and trading of China Emission Reduction Certificates (CCERs) by companies and individuals. This hybrid model provides additional flexibility for companies, while also encouraging participation in voluntary projects that promote carbon reduction.
Projects eligible to obtain carbon credits in the Chinese market must meet strict criteria to ensure the authenticity of emissions reductions. These criteria include transparency, third-party validation and verification, and the need to avoid double counting of credits. Additionality of projects, meaning that emissions reductions must be greater than what would occur in a baseline scenario, is another key requirement. In addition, the principle of conservatism is applied, ensuring that emissions reduction estimates are conservative, which contributes to the integrity of the market.
In an international context where legal issues regarding the nature of carbon credits are still being debated, China has been active in discussions, expressing concerns about the application of different legal systems, such as civil law and common law, in the context of carbon markets. These discussions reflect the complexity and growing importance of the carbon market in the global context, where China plays an increasingly central role.
In addition to national initiatives, China is also focusing on implementing regional carbon reduction targets, which will be piloted by the end of 2025. These targets will be complemented by provincial targets for renewable energy consumption and a multi-year plan to strengthen the country’s electricity infrastructure. The regionalized approach allows each province and municipality to adapt their strategies according to their local realities, promoting more balanced and sustainable development across China.
Finally, the expansion of the cap-and-trade system to other sectors and the implementation of regional targets reinforce China’s commitment to using the carbon market as an essential tool in reducing global emissions. The country continues to position itself as a leader in the fight against climate change, using the carbon market not only as a regulatory mechanism, but as a driver for innovation, sustainable development and the transition to a low-carbon economy.
In this international context, Amazon Connection Carbon, headquartered in the Amazon, stands out as a company specialized in managing carbon credit projects. With a focus on environmental sustainability and respect for local communities, the company integrates itself into the global market through the creation and development of projects that contribute to the reduction of carbon emissions, using advanced technologies and transparent practices.
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