China Carbon Market Expansion to Foreign Participants (2026)
Published: May 1, 2026
Executive Summary
China's national carbon emissions trading market was expanded in May 2026 to include eight new industrial sectors and, for the first time, allow qualified foreign institutional investors to participate in carbon credit trading. This opens new opportunities for foreign financial institutions and creates compliance obligations for foreign manufacturers.
Key Points
Eight new sectors added: petrochemicals, chemicals, building materials, steel, non-ferrous metals, paper, domestic aviation, and data centers
Foreign institutional investors: QFII-licensed entities can now trade carbon allowances on the Shanghai Environment and Energy Exchange
Carbon credit market: China Certified Emission Reduction (CCER) program restarted with international verification standards
Compliance obligations: foreign manufacturers in covered sectors must surrender allowances annually
Carbon border mechanism study: government announced feasibility study for carbon border adjustment mechanism (CBAM)
EU ETS linkage talks: preliminary discussions with EU on potential carbon market linkage