China’s national carbon market has now traded 961 million tonnes of CO2 equivalent since launch, with cumulative turnover reaching RMB 65.7 billion ($9.71 billion) by the end of August 2026, according to a report released at the China Carbon Market Conference 2026 in Wuhan. Annual trading volume hit a record 235 million tonnes in 2025, up 24.36 percent year on year, in the first year the scheme covered steel, cement and aluminium alongside power generation. For buyers, traders and investors watching compliance demand grow outside Europe, the numbers confirm that the world’s largest ETS by covered emissions is also becoming a deeper, more liquid market.
Record Volumes, Wider Coverage
The 2025 figures mark the first full test of the expanded system. The market operated for 243 trading days last year, with transaction value reaching RMB 14.63 billion, according to the conference report. As of 2026, a total of 3,680 key emitters across the four covered sectors are inside the scheme.
The sector expansion is the structural story. Power generation alone made the Chinese ETS large but narrow. Adding steel, cement and aluminium brings in industries that sit directly in the supply chains of global construction, automotive and packaging markets, and that face rising carbon border scrutiny in export destinations. Coverage decisions in Beijing now translate into embedded-carbon data and abatement incentives for producers whose output trades worldwide.
What Aluminium’s Entry Changes
Aluminium is the most internationally exposed of the newly covered sectors. Smelters now carry a compliance obligation that creates a measurable carbon cost line, and that cost will increasingly show up in contract negotiations with overseas buyers, particularly those preparing for the EU’s carbon border adjustment mechanism, which already lists aluminium among its covered goods.
For the market itself, new sectors mean new allocation benchmarks, new abatement curves and new sources of allowance demand. The near-quadrupling of the covered entity base in one step is also an administrative stress test: monitoring, reporting and verification capacity has to scale with it, and the quality of that MRV layer will determine how seriously international counterparties treat Chinese carbon data.
The Global Context: 40 ETS, 26 Percent of Emissions
The Wuhan conference also produced a useful snapshot of the global compliance map. Angela Churie Kallhauge, executive vice president at the Environmental Defense Fund, told participants that 40 emissions trading systems are now operating worldwide, covering 26 percent of global greenhouse gas emissions, up from 23 percent in 2025. Counting carbon taxes, 87 carbon pricing instruments are in force, and seven more ETS are under construction. By 2030, Brazil, Chile, Colombia, Malaysia, Thailand and Turkey are expected to add further schemes.
On the credit side, 34 government-administered crediting mechanisms are operating, and 24 of the 40 running ETS allow some use of credits for compliance. Kallhauge’s condition list for integrating credits into ETS is worth quoting in substance: sound eligibility standards, interoperable MRV and registry systems, safeguards against double counting, quantitative limits and price signals that keep credits a complement to domestic abatement rather than a substitute.
EDF’s analysis adds a demand-side argument for Article 6, which conference reporting described as moving from rule design into implementation. Linking carbon markets internationally could cut the total cost of meeting current national climate pledges by 59 to 79 percent, and reinvesting those savings could nearly double cumulative abatement at the same cost. Meanwhile, integrity infrastructure is consolidating: 13 crediting programmes supply 95 percent of international credits, and 115 million credits now carry Core Carbon Principles labels, a framework the ICVCM’s chief executive, identified in conference reporting as Amy Merrill Steen, presented at the event.
Price Signals and the Financial-Institution Question
Chinese carbon allowances have stabilised around RMB 95 ($14.16) over the past week amid robust trading volumes, with Beijing sending stronger policy signals about allowing financial institutions into the market. That would be a meaningful design shift. Today’s liquidity comes almost entirely from compliance entities trading for surrender needs, which concentrates activity ahead of deadlines and limits price discovery. Admitting financial intermediaries would deepen continuous liquidity, enable forward curves and eventually support hedging products that industrial covered entities increasingly need.
What This Means for Buyers, Developers and Investors
For international buyers, the direct takeaway is about data, not yet about procurement. Covered Chinese producers in steel, cement and aluminium will generate increasingly standardised emissions records, which improves the quality of supplier-level carbon accounting for scope 3 and CBAM reporting.
For project developers, the open question is whether the expanded ETS widens the channels through which offset credits can be used for compliance. With 24 of the world’s 40 operating ETS already allowing some credit usage, a larger covered base with clear offset rules is the precondition for meaningful credit demand inside China.
For investors, the signal is institutional. Record volumes, a wider sector base, stable prices and an official push toward financial participation describe a market being prepared for a more financialised phase, similar to the path the EU ETS took in its second decade.
What to Watch
Three markers from here. First, the formal rules for financial institution participation, which will determine how fast liquidity deepens beyond compliance-driven trading. Second, benchmark tightening for steel, cement and aluminium, which decides whether the expanded ETS produces real scarcity or administrative surplus. Third, any move to link the Chinese system with Article 6 infrastructure, because with 26 percent of global emissions now under ETS coverage and linking economics showing 59 to 79 percent cost savings, the pressure to connect the largest system to international credit flows will only grow.
