Carbon Market Outlook in the Context of Global Carbon Neutrality

In response to the serious challenge of climate change, the international community has reached a consensus on green, low-carbon and sustainable development, where carbon markets will become an important tool to achieve low carbon emission. Currently about 16% of greenhouse gas emissions come from the market that is forced to reduce emission. In the EU carbon market, which has the highest liquidity and turnover, the EU carbon price has risen sharply in recent years, driven by increased efforts to reduce greenhouse gas emissions, ESG attracting more capital to the carbon markets, increased substitution of coal for natural gas in power generation, and more active trading of financial derivatives. China has set up eight pilot carbon markets since 2013 and officially launched a national carbon market in 2021. On the whole, China’s carbon market has a small turnover, poor liquidity, and a market-oriented mechanism that needs to be improved. It is recommended that China strengthens data quality supervision and operational management, steadily expand the coverage of the carbon market, include more types of trading entities, and create a favorable carbon market trading environment.