China Climate Compass #1
China's 2025 green transition plan, voluntary GHG reduction trading, low-carbon hydrogen: the most recent news & discussions on China's environmental dynamics
I am humbly introducing a new column of the newsletter to you — China Climate Compass, through which I decide to deliver weekly updates, ranging from news to discussions with industrial experts, on China's environment and relevant issues.
China is now emitting more carbon dioxide than any other country, and I believe you may want to stay informed about the country's environmental dynamics, for whatever reason.
Your feedback is truly important, so feel free to leave comments anytime.
And also, please do me a favor — if you like this column, click the 'like' button to let me know. Your support gives me even greater motivation to keep moving forward.
— Yuzhe
Today's China Climate Compass consists of two sections: News Feed and Speech Pool.
News Feed features three most recent news items:
A press conference held on January 3, 2025 by the National Development and Reform Commission of China, in which the achievements of China's green transition in 2024 and the work plan for 2025 were outlined.
A document titled "Charging Items and Standards for National Voluntary Greenhouse Gas Emission Reduction Trading" issued on January 2, 2025 by the China Beijing Green Exchange.
A plan for accelerating the application of clean and low-carbon hydrogen in the industrial sector jointly released on December 31, 2024 by three ministries.
Speech Pool features a speech by Mei Dewen 梅德文, Vice President of the China Beijing Green Exchange and Secretary-General of the Beijing Green Finance Association, delivered on December 15, 2024, at the “Caijing Annual Conference 2025: Forecasts and Strategies.” In his speech, he primarily discussed the three major trends in the international carbon market: expanding industry coverage, increasingly strict cap control, and higher quota auction ratios, as well as China's response strategies.
News Feed
On January 3, 2025, the State Council Information Office held one of the press conferences in the "Achievements of China's High-Quality Economic Development" series. One of the questions addressed China's next steps in responding to climate change:
新黄河客户端记者:
New Yellow River under Ji'nan Times
当前各方普遍认为，国际形势的变化可能对全球应对气候变化的合作产生不利影响。我想问，是否会影响中国绿色转型和实现“双碳”目标的决心和力度？2024年的工作进展如何？下一步有什么工作安排？谢谢。
Currently, many agree that changes in the international landscape might negatively impact global cooperation on climate change. My question is: Will this affect China's commitment and efforts toward green transition and achieving the dual goals of carbon peak and carbon neutrality? What achievements have been made, and what are the next steps? Thank you.
赵辰昕:
Zhao Chenxi, Vice Chairman of the National Development and Reform Commission (NDRC) of China:
谢谢这位记者的提问，这个问题我来回答。您关心的是中国绿色转型、实现碳达峰碳中和的决心和力度，我想告诉大家这样一个情况，习近平总书记强调，实现“双碳”目标，不是别人让我们做，而是我们自己必须要做。我们坚定不移地认为，推进经济社会发展全面绿色转型、实现碳达峰碳中和，是推动高质量发展的内在要求。所以我们一定会坚持不懈，始终如一地把这件事做好。与此同时，我们也积极参与全球环境和气候治理，以实际行动向国际社会展示“言必行、行必果、说到做到”的“中国承诺”。
Thank you for your question. I'd like to address China's dedication to green transformation and reaching its dual goals of carbon peak and carbon neutrality. As General Secretary Xi Jinping has emphasized, achieving the "dual goals" is our own initiative, not something imposed by others. We firmly believe that transitioning our economy and society toward sustainability and attaining these carbon goals are essential for high-quality development. Therefore, we remain steadfast and committed to accomplishing this mission. Additionally, we are actively engaging in global environmental and climate efforts, demonstrating China's commitment to the international community through our actions.
按照“双碳”目标任务和政策体系总体安排，2024年，我们委会同有关方面，推动绿色低碳发展迈出很多新步伐、取得很多新成效。一是绿色转型加快推动。出台了加快经济社会发展全面绿色转型的意见，压茬推进近200项具体举措。印发绿色低碳转型产业指导目录，发布推广112项绿色技术和47个绿色低碳先进技术示范项目。
In 2024, aligned with the overall "Dual Goals" and policy framework, the NDRC, together with relevant departments, made significant progress in advancing green and low-carbon development, achieving numerous new milestones.
First, we accelerated our green transformation by introducing guidelines to fully transition our economy and society toward sustainability. We implemented nearly 200 specific measures, released a green low-carbon industry directory, and promoted 112 green technologies along with 47 advanced green low-carbon technology demonstration projects.
二是节能降碳大力推进。制定节能降碳2年行动方案，出台7个行业节能降碳专项行动计划，开展了一系列卓有成效的行动。预计全年能耗强度下降3%以上、超额完成年度目标任务。
Second, we made strong strides in energy saving and carbon reduction. We developed a two-year action plan and launched seven industry-specific initiatives focused on energy efficiency and carbon reduction. These efforts are expected to decrease our energy intensity by over 3% for the year, surpassing our targets.
三是能耗双控向碳排放双控全面转型新机制加快建立。一体推进地方碳考核、行业碳管控、企业碳管理、项目碳评价、产品碳足迹，推动有关方面出台“双碳”领域国家标准194项，指导地方逐步建立碳排放预算管理制度。
Third, we established new mechanisms to shift from assessing the total amount and intensity of energy consumption to assessing the total amount and intensity of carbon emissions. This included advancing local carbon assessments, industry-level carbon management, enterprise-level carbon oversight, project-level carbon evaluations, and product carbon footprinting. We issued 194 national standards in the "Dual Carbon Goals," guiding localities to gradually implement carbon emission budgeting systems.
四是资源节约和生态环境保护不断加强。出台粮食节约和反食品浪费、发展节水产业、废弃物循环利用等政策，安排了600多亿元政府投资支持环境基础设施、“三北”等生态系统保护和修复重大工程建设。出台《生态保护补偿条例》，中央及地方年均生态保护补偿资金增加到近3000亿元。
Fourth, we enhanced resource conservation and environmental protection by introducing policies on food conservation, combating food waste, developing water-saving industries, and promoting waste recycling. We allocated over 60 billion yuan in government investments to support environmental infrastructure and major ecosystem protection and restoration projects, such as the Three-North Shelterbelt Forest Program. Additionally, we implemented the Ecological Protection Compensation Regulations, increasing central and local ecological protection funds to nearly 300 billion yuan annually.
五是全力做好“两新”工作。2024年安排3000亿元超长期特别国债支持“两新”，2024年前11个月，全国设备工器具购置投资同比增长15.8%，对全部投资增长的贡献率达到65.3%。在以旧换新活动中，超过60%的消费者选择购买新能源汽车，推动新能源乘用车国内市场渗透率连续6个月超过50%。
Fifth, we fully supported our “Two New” initiatives, namely large-scale equipment upgrades and consumer goods trade-in programs, by allocating 300 billion yuan in special long-term bonds in 2024. In the first eleven months of 2024, national investment in equipment and tool procurement grew by 15.8%, contributing 65.3% to total investment growth. In trade-in programs, over 60% of consumers chose to purchase new energy vehicles, maintaining a domestic market penetration rate of over 50% for six consecutive months.
2025年是习近平总书记提出“绿水青山就是金山银山”理念20周年，也是作出“双碳”重大宣示5周年。国家发展改革委将会同有关方面，以“双碳”工作为引领，继续协同推进降碳、减污、扩绿、增长，加紧经济社会发展全面绿色转型。具体将做好以下几方面工作：
Looking ahead to 2025, which marks the 20th anniversary of General Secretary Xi Jinping's philosophy of "lucid waters and lush mountains are invaluable assets" and the fifth anniversary of our significant “Dual Carbon Goals” commitment, the NDRC will continue to lead our "Dual Carbon Goals" efforts. We will coordinate carbon reduction, pollution control, green expansion, and economic growth to accelerate the comprehensive green transformation of our society and economy. Specifically, we plan to:
一是打好能耗双控收官战，努力完成“十四五”目标任务。二是统筹谋划“十五五”碳达峰行动，研究综合评价考核办法，推进国家碳达峰试点建设，加快建立一批零碳园区。三是进一步健全财税、金融、投资、价格等政策和标准体系，支持绿色低碳产业进一步健康发展。四是持续推进环境基础设施建设水平提升行动，实施生态系统保护和修复重大工程，深化探索生态产品价值实现机制。五是推动“两新”工作取得更大成效，大家可能已经关注到袁达同志作的重大发布，我这里再强调一下，2025年，“两新”政策会增加资金规模、扩大覆盖范围、优化实施方式、放大撬动作用，我们将会同有关部门，通过实际行动让人民群众和更多的企业了解政策、享受政策。这个问题我就回答这些，谢谢。
1. Complete our efforts in controlling both the volume and intensity of energy use and strive to achieve the targets set in the 14th Five-Year Plan.
2. Plan our carbon peak actions for the 15th Five-Year Plan, develop comprehensive evaluation and assessment methods, promote national carbon peak pilot projects, and accelerate the establishment of zero-carbon zones.
3. Enhance our financial, tax, investment, and pricing policies and standards to support the healthy development of green and low-carbon industries.
4. Continue improving environmental infrastructure, implement major ecosystem protection and restoration projects, and deepen the exploration of ecological product value mechanisms.
5. Achieve greater success in our “Two New” initiatives by increasing funding, expanding coverage, optimizing implementation methods, and amplifying their impact. We will collaborate with relevant departments to ensure that the public and more businesses understand and benefit from these policies.
Thank you.
On January 2, 2025, the China Beijing Green Exchange issued a document titled “Charging Items and Standards for National Voluntary Greenhouse Gas Emission Reduction Trading,” to regulate the charging practices of national voluntary greenhouse gas emission reduction trading and to protect the legitimate rights and interests of trading participants.
According to the document, there are three types of fees: account opening fees, annual fees, and transaction fees. At the current stage, the national voluntary greenhouse gas emission reduction trading market charges an account opening fee of 2,000 yuan per account and an annual fee of 1,000 yuan per year. During the initial phase, key emission units included in the national and local carbon emission trading markets are temporarily exempt from these fees. The transaction fees for listed agreement trades are charged bidirectionally at 0.6‰ of the transaction amount.
On December 31, 2024, the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the National Energy Administration jointly released the "Implementation Plan for Accelerating the Application of Clean and Low-Carbon Hydrogen in the Industrial Sector 《加快工业领域清洁低碳氢应用实施方案》." Explanations from the relevant officials were provided on the official website, and I have selected a portion of them:
《氢能产业发展中长期规划（2021—2035年）》明确，氢能是未来国家能源体系的重要组成部分，是用能终端实现绿色低碳转型的重要载体，是战略性新兴产业和未来产业重点发展方向，要求逐步探索工业领域替代应用，积极推动试点示范。
The Medium and Long-Term Development Plan for the Hydrogen Energy Industry (2021–2035) clearly states that hydrogen energy is a crucial component of the future national energy mix. It serves as an essential carrier for achieving green and low-carbon transformation at energy consumption terminals and is a key focus for strategic emerging and future industries. Efforts are called for the gradual exploration of alternative applications in the industrial sector and the active promotion of pilot demonstrations.
（一）氢气生产平稳增长，可再生能源制氢潜力大。2023年，我国氢气产量超3500万吨，同比增长约2.3%，占全球产量1/3左右。我国可再生能源装机规模全球第一，利用可再生能源制氢潜力巨大。据有关单位测算，截至2024年6月，我国可再生能源制氢产能突破10万吨/年，规划及在建产能约800万吨/年。
(1) Steady growth in hydrogen production with significant potential for renewable energy-based hydrogen production. In 2023, China’s hydrogen production exceeded 35 million tonnes, marking a year-on-year increase of approximately 2.3% and accounting for about one-third of global production. China leads the world in renewable energy installed capacity, offering immense potential for hydrogen production using renewable energy sources. According to relevant estimates, by June 2024, China's renewable energy-based hydrogen production capacity surpassed 100,000 tonnes per year, with planned and under-construction capacities totaling approximately 8 million tonnes per year.
（一）拓展多元应用场景。结合资源禀赋特点和产业布局，有序发展可再生能源制氢，推动工业副产氢就近消纳，扩大清洁低碳氢供给。支持先进技术装备市场化应用，遴选推广氢能新技术、新装备、新材料。支持工业企业、工业园区开展氢能供给、消纳相结合的一体化应用，推进产业链上下游协同发展，提升氢能综合利用效能。
(1) Expand Diverse Application Scenarios. Aligning with resource endowments and industrial layouts, China will systematically develop hydrogen production from renewable energy sources, promote the localized utilization of hydrogen by-products from industrial processes, and expand the supply of clean and low-carbon hydrogen. Support the market-oriented application of advanced technologies and equipment by selecting and promoting new hydrogen technologies, new equipment, and new materials. Encourage industrial enterprises and industrial parks to implement integrated hydrogen supply and utilization applications, foster collaborative development across the upstream and downstream of the industrial chain, and enhance the comprehensive utilization efficiency of hydrogen energy.
（二）加强技术装备攻关。着力提升高效制氢电解槽、大功率长寿命燃料电池、高压氢气储氢容器等重点产品性能指标和批量化生产能力，推进产品迭代升级。加快突破纯氢冶金、合成氨宽负荷柔性生产工艺、氢电耦合全流程协同控制等关键技术工艺。
(2) Strengthen Technological and Equipment Breakthroughs. Focus on improving the performance indicators and mass production capabilities of key products such as high-efficiency hydrogen electrolyzers, high-power long-life fuel cells, and high-pressure hydrogen storage containers, and advance the iterative upgrading of these products. Accelerate breakthroughs in key technological processes, including pure hydrogen metallurgy, flexible wide-load production processes for ammonia synthesis, and full-process collaborative control for hydrogen-electric coupling.
Speech Pool
Mei Dewen 梅德文, Vice President of the China Beijing Green Exchange and Secretary-General of the Beijing Green Finance Association, delivered a speech on December 15, 2024, at the “Caijing Annual Conference 2025: Forecasts and Strategies.” In the speech, he primarily discussed the three major trends in the international carbon market and China's response strategies.
Below is the full translation of the original Chinese provided by Caijing Annual Conference.
***
I'm honored to be here today. I'll be covering two main topics: the development of the carbon market and its impact on ESG (Environmental, Social, and Governance).
First, let’s discuss the development of the carbon market.
Since the establishment of the Chicago Climate Exchange (CCX) in 2003, the carbon market has grown significantly over the past two decades. Today, carbon markets are active in regions such as the European Union (EU), the Eastern and Western United States, New Zealand, China, and South Korea. Last year alone, the global carbon market saw transactions exceeding 10 billion tonnes and a trading volume of 881 billion euros, nearing one trillion dollars. Notably, the EU carbon market dominates, representing over 80% of the global market.
When it comes to pricing, the EU carbon market leads with the highest prices. In 2021, the average price was 56 euros, which rose to 80 euros in 2022 and nearly 90 euros in 2023. Currently, prices are stabilizing around 60-70 euros. Regarding liquidity, the EU carbon market demonstrated strong performance in 2023. The primary market size was approximately 1.5 billion tonnes, while the secondary market reached nearly 10 billion tonnes. This resulted in liquidity exceeding 600%, indicating a highly liquid and robust market.
There are three key mechanisms shaping the international carbon market today: the mechanism introduced in the Article 6 of the Paris Agreement, Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) introduced by the International Civil Aviation Organization (ICAO), and the EU's Carbon Border Adjustment Mechanism (CBAM).
First, Mechanisms introduced in the the Paris Agreement’s Article 6.2 and 6.4. In November, the COP29 in Baku sent a strong signal by making significant progress on the negotiations of Article 6 of the Paris Agreement. While some details are still being ironed out, the development of bilateral voluntary carbon markets under Article 6.2 and a unified voluntary carbon market under Article 6.4 are becoming increasingly clear. This advancement is reminiscent of the Kyoto Protocol’s market mechanisms, such as the International Emissions Trading (IET), Joint Implementation (JI), and the Clean Development Mechanism (CDM). To put it simply, if the market mechanisms under the Kyoto Protocol were version 1.0 of the international carbon market, the Paris Agreement’s mechanisms represent version 2.0.
Second, the ICAO is set to make CORSIA compulsory starting in 2027. Since 2021, the scheme is voluntary for major airlines in all countries. Experts estimate that between 2027 and 2035, there will be a demand for approximately 2.5 billion tonnes of carbon credits. This initiative represents the international community’s effort to establish a unified, industry-based carbon market.
Third, the CBAM introduced by the EU, which can be seen as, to some extent, a spillover effect generated by its carbon market. Officially taking effect on January 1, 2026, CBAM will impose carbon tariffs on carbon intensive products, which is expected to have a certain impact on China's steel and aluminum electrolysis industry.
There are three major trends in the international carbon market: expanding industry coverage, increasingly strict total control, and higher quota auction ratios.
First, the scope of industries covered by the carbon market is expanding. Initially, the focus was primarily on high-energy sectors like electricity and heavy industries. However, as the mechanisms mature, we’re now seeing inclusion of sectors such as construction, transportation, and aviation. This broadening enhances the overall emission reduction capacity of the carbon market and accelerates the green transformation across various industries.
Second, there is a tightening of total emission caps. With global emission reduction targets becoming more ambitious, countries are imposing stricter controls on the total allocation of carbon market quotas. By implementing long-term plans to gradually reduce the supply of carbon allowances, governments can more effectively achieve their emission reduction goals and guide businesses in planning their long-term transition strategies.
Third, the shift from free allocation to auctioning of carbon permits is becoming more pronounced. Initially, to encourage participation, most carbon markets distributed allowances for free. However, the trend is moving towards paid allocations, such as auctions. This change not only generates revenue for governments but also enhances market liquidity, leading to more accurate pricing that truly reflects the cost of emissions. For example, the EU’s carbon market currently auctions about 57% of its permits, and this could increase to 100% between 2027 and 2034.
In the long-term operation of the carbon market, it’s essential to address details like quota allocation and price fluctuations. As governments, businesses, and other stakeholders gain a deeper understanding and acceptance of its mechanisms, the global carbon market is rapidly advancing. Countries are developing more comprehensive market rules and policy frameworks, which will enhance the carbon market’s role in promoting global green development and achieving carbon neutrality goals.
This is the overall trend of the international carbon market. Even though the United States might withdraw from the Paris Agreement, the international carbon market is primarily led by the European Union. Some experts believe that the U.S. pulling out of the Paris Agreement is perhaps unlikely to significantly impact the development of the global carbon market.
Let's take a closer look at the state of China's carbon market. The development of China’s carbon market has gone through three phases. From 2005 to 2012, it was focused on the Clean Development Mechanism (CDM). Then, from 2013 to 2020, China experimented with regional carbon trading pilots. Since 2021, the country has been operating a nationwide unified carbon trading market alongside regional markets.
Currently, China's national carbon trading market handles approximately 5 billion tonnes of CO₂ emissions annually, making it the largest in the world by emission coverage. Overall, the carbon market has successfully completed two compliance periods smoothly and orderly. Prices have remained stable and even shown an upward trend, trading activity has become more robust, and the pricing mechanism is beginning to take shape. As a developing country, China has achieved remarkable progress, significantly contributing to global climate change efforts, which is highly commendable.
Going forward, China will accelerate the development of its national carbon market. This includes steadily expanding the range of covered industries, continuously optimizing the allocation mechanisms and methods for carbon allowances, strengthening data quality management, and diversifying trading entities, products, and methods. Additionally, China aims to integrate its carbon market with international markets, fully leveraging its ability to promote low-cost emission reductions. Over time, the carbon market is expected to become more effective, dynamic, and internationally influential.
At this stage, there are two important signals regarding the development of China's carbon market. First, the expansion of the carbon market. Starting in 2025, three new industries will be included: steel, with an allocation of about 1.6 billion tonnes; cement, with around 1.12 billion tonnes; and aluminum electrolysis, with 70 million tonnes. Adding the existing power sector's 5 billion tonnes, China's mandatory carbon market will reach approximately 8 billion tonnes of allocations next year, making it over five times larger than the EU's carbon market.
The second key signal is the rising price of carbon. Since April 24, 2024, the allowance price in China's carbon market has historically surpassed 100 yuan/tonne. Both allowances and China Certified Emission Reduction (CCER) credits are now consistently around 100 yuan/t each. Experts from the Chinese Academy of Social Sciences note that China's macroeconomy is currently facing supply shocks, reduced demand, and weakened expectations. In this context, the carbon market has seen allowance prices double—from 48 yuan/t when the market launched on July 16, 2021, to about 100 yuan/t today. Similarly, CCER prices have tripled, rising from around 30 yuan/t in the first half of 2021 to approximately 100 yuan/t now. Objectively speaking, China's carbon market has achieved commendable success and has begun to serve certain investment and financing functions.
Secondly, I will talk about the impact of carbon markets on ESG. There's no doubt that carbon trading markets have proven to be effective, quantifiable, and international mechanisms over the past two decades. These markets influence ESG in three main ways. First, information disclosure. In the future, companies will need to disclose their carbon emissions data promptly, accurately, comprehensively, and transparently. Second, evaluation and rating. Businesses will rely on carbon markets to assess and rate their ESG performance in the era of carbon neutrality. While ESG encompasses many indicators, carbon emissions are among the most critical factors. Third, investment guidance. Last year, the international carbon market saw a trading volume of over 10 billion tonnes and a transaction value of one trillion dollars. In China, the primary market is approaching 8 billion tonnes, with the secondary market accumulating nearly 30 billion RMB in transactions. As China's carbon market continues to grow, we expect significant improvements in trading volume, pricing, liquidity, and investment functions. In this context, both international and domestic carbon markets will have a substantial impact on ESG-related investment and financing.
Host: Next, let's move into our discussion. First, I'd like to ask Mr. Mei about the three international trends in carbon markets and how China should respond or what impacts they might have.
Mei Dewen: Certainly. The international carbon market is experiencing three key trends: expanding industry coverage, increasingly strict total control, and higher quota auction ratios.
Despite these developments, some experts still have mixed opinions about carbon markets. It's true that any system or mechanism faces evaluation challenges. The most straightforward assessment involves weighing costs against benefits—how much we spend versus what we gain. Additionally, we must consider fairness and efficiency: Is the system fair? Is it effective?
Nobel Prize in Economic Sciences was awarded to Professors Daron Acemoglu, Simon Johnson from MIT, and James Robinson from the University of Chicago in 2024. They conducted an extensive study of 175 countries over fifty years, from 1960 to 2010, analyzing their successes and failures in development. Their findings indicate that countries with inclusive, incentive-based systems tend to succeed, while those with restrictive, extractive approaches ultimately fail.
Applying this to carbon markets, we can see that they represent an incentive-based, inclusive system focused on sharing benefits. This makes them more likely to succeed in the long term. In contrast, administrative measures like shutdowns and financial tools like taxes are restrictive and extractive. These approaches often come with high costs and low efficiency, making them less suitable for sustainable long-term development.
Let's delve deeper into the core principles and inherent tendencies of carbon markets. What are the foundational elements of these markets? First, Globalization. The Intergovernmental Panel on Climate Change (IPCC) has conclusively determined that climate change is a global reality. Its effects are consistent worldwide—what happens in one part of the world affects the entire planet. Simply put, emitting carbon dioxide anywhere has the same impact on Earth. This universality makes carbon markets a quintessentially international system. Second, Market mechanisms. Unlike administrative approaches such as mandatory shutdowns or financial measures like taxes, carbon markets offer a more cost-effective and efficient solution. Combining these two aspects, carbon markets represent an international market mechanism and institutional design. Given this context, transitioning our energy, economy, finance, and society to greener models is imperative. Therefore, it's crucial to understand and respond effectively to the three major trends and mechanisms shaping international carbon markets.
Additionally, I want to highlight three new mechanisms in the international carbon market that I've noted repeatedly:
First, Mechanisms introduced in the the Paris Agreement's Article 6.2 and 6.4. At COP29, there was a general consensus on Article 6 of the Paris Agreement. The Article 6.2 facilitates bilateral carbon markets, while the 6.4 aims to create a unified global carbon market. Both are now ready to be established. As the world's largest carbon emitter, China must adeptly navigate the emergence of this unified international carbon market. For instance, China can leverage the mechanism introduced in the Article 6.2 to engage in bilateral carbon trading with the Belt and Road Initiative partner countries, BRICS, and members of the Shanghai Cooperation Organization. This cooperation supports green development. The mechanism in the Article 6.4, on the other hand, will create a global voluntary carbon market that will both compete and collaborate with China Certified Emission Reductions (CCER). This will have a profound impact on the CCER market.
Second, the CORSIA developed by the ICAO. Currently in its voluntary phase, CORSIA allows large airlines to participate on a voluntary basis. However, starting in 2027, participation will become mandatory for all major airlines. This transition is imminent, with only two years left until full implementation.
Third, the CBAM developed by the EU. Starting January 1, 2026, the EU will officially implement its Carbon Border Adjustment Mechanism (CBAM). While China's steel and electrolytic aluminium exports to the EU are currently limited, this mechanism will still affect our outlook for exporting high-carbon products by requiring us to account for carbon costs. Additionally, it's anticipated that the UK and other OECD countries may introduce similar carbon tariffs in the near future.
In summary, as the world's largest carbon emitter and the biggest developing nation, China must strategically understand and address the three major trends and mechanisms in the international carbon market. This includes considering the expansion of industry coverage, stricter emission controls, and mechanisms for paid allocations. The global carbon market is clearly moving towards high-quality, unified development. Internationally, there is a gradual and orderly shift from supply to demand, from government-led initiatives to market-driven solutions, and from industry-focused approaches to financial strategies. This is building an internationally unified carbon pricing system based on carbon markets, and it's an unstoppable trend.
Therefore, as the largest developing country and carbon emitter, and as the world's manufacturing hub, China needs to explore the integration of its carbon market with international markets. We should fully utilize the low-cost, high-efficiency emission reduction capabilities of carbon markets to gradually develop a more effective, dynamic, and internationally influential carbon market. This will support China's green economic and social transformation, help address global climate change, and contribute to building a shared future for humanity.