Better carbon pricing to bolster conservation

A national political adviser has called for enhancing China's carbon pricing mechanisms, underscoring their essential role in achieving the country's goals to have carbon emissions peak before 2030 and achieve carbon neutrality before 2060.

Meanwhile, China should deeply engage in the formulation of international carbon pricing rules and explore cooperation with regional carbon markets.

Zhang Xingying, a member of the 14th National Committee of the Chinese People's Political Consultative Conference and deputy head of the China Meteorological Administration's department of science and climate change, made the remarks ahead of this year's two sessions.

Zhang proposed upgrading the country's carbon pricing framework and gradually increasing the proportion of paid carbon quotas in order for prices to better reflect the cost of emission reductions.

With domestic carbon prices hovering around $11.8 per metric ton, compared with the European Union's $49.6 per ton in 2024, "companies lack the financial incentive to drastically cut emissions", Zhang said.

He said the move would also help safeguard the country's exporting enterprises against potential international trade barriers.

The EU's Carbon Border Adjustment Mechanism, which took effect on Jan 1, imposes tariffs on carbon-intensive imports. By 2028, the tariffs are set to expand to cover machinery and auto parts, potentially putting China's manufacturing sector at a disadvantage globally.

In August 2025, China unveiled a guideline to accelerate its green and low-carbon transition and strengthen the construction of the national carbon trading market. The document calls for establishing and improving a carbon pricing mechanism with reasonable price levels.

To address the challenge, Zhang proposed a comprehensive upgrade to China's pricing framework by gradually increasing the proportion of paid carbon emission quotas — government-issued permits allowing companies to emit a specific amount of greenhouse gases.

He also recommended expanding the national market to include other high-energy sectors such as petrochemicals and paper, as well as greenhouse gases beyond carbon dioxide, including methane and nitrous oxide.

China's mandatory carbon trading market, established in 2024, currently covers high-energy sectors including power generation, steel, cement and aluminum.

In addition, Zhang advocated for the integration of financial tools such as carbon emission pledge loans and bolstering the voluntary emission reduction trading market.

"By allowing companies and individuals to earn and trade carbon credits, the country can turn environmental conservation into an economic asset," he said.

According to the Ministry of Ecology and Environment, a total of 3,378 key emission units were included in quota management under the carbon emissions trading market. As of last year, cumulative trading volume in the national carbon market reached 865 million tons, with a total transaction value of 57.66 billion yuan ($8.35 billion).

Beyond shaping domestic policy, Zhang serves as the Chinese government's representative to the Intergovernmental Panel on Climate Change. China's timeline to reach carbon neutrality has drawn international praise, he said.

"Current IPCC chair Jim Skea has highlighted China's role as a benchmark for low-carbon development and renewable energy deployment,"Zhang said.

Despite that recognition, he said international collaboration should be strengthened to promote mutual recognition of carbon accounting standards.

"As the world's largest carbon market, China should deeply engage in the formulation of international carbon pricing rules and enhance the design and leadership of these rules," he said.

China will explore linking with regional carbon markets or carbon credit mechanisms, including those involved in the Belt and Road Initiative and ASEAN, to advance cross-regional carbon pricing cooperation, he added.