Shanghai has unveiled a sweeping action plan to revamp its carbon market, aiming to establish an internationally recognized carbon trading hub between 2026 and 2030.

The initiative outlines a series of measures designed to refine the existing carbon emissions trading system and incentivize voluntary greenhouse gas reductions.

The plan seeks to align Shanghai's carbon emissions trading system with the city's carbon peaking and neutrality goals, to complement the national carbon market, and to adhere to international standards. It also aims to create a transparent and reliable system for managing voluntary greenhouse gas emission reductions.

Starting in 2026, the plan will lower the carbon emission threshold for market inclusion, bringing high-energy-consuming industries such as petrochemicals, chemical manufacturing, and data centers into the system if their annual emissions exceed 10,000 metric tons of carbon dioxide equivalent. The threshold for water transportation will decrease to 80,000 tons.

By 2028, public institutions, including universities and hospitals emitting 10,000 tons or more of carbon dioxide equivalent annually, will also be subject to carbon emission allowance management. The plan further considers incorporating non-carbon dioxide greenhouse gases, such as nitrous oxide and methane, into market management.

Shanghai is committed to improving greenhouse gas emission accounting and reporting methodologies. The city plans to align with international carbon market accounting standards and transition the accounting methods in key industrial sectors from organizational carbon to facility-level carbon.

To enhance transparency, the plan encourages regulated entities to voluntarily calculate their product carbon footprint and strengthen coordination between electricity and carbon management by establishing mechanisms to determine, publish, and update carbon emission factors for public services.

The city intends to gradually increase the proportion of allowances allocated on a paid basis. Differentiated ratios, adjusted based on factors such as annual carbon emission reductions and the implementation of energy or carbon measurement systems, will be set for different industries in line with Shanghai's carbon peaking and neutrality targets.

By 2027, the proportion of allowances allocated on a paid basis will remain below 8 percent, with further increases planned by 2030.

The plan emphasizes encouraging enterprises to proactively reduce carbon emissions. Businesses are encouraged to establish product carbon footprint management systems, set greenhouse gas emission control targets, and achieve net-zero emissions through technological innovation and improved management practices.

The initiative also promotes the establishment of a voluntary greenhouse gas emission information disclosure mechanism, encouraging companies to independently publish details regarding carbon emission reduction targets, total carbon emissions, and control measures.

To ensure the integrity of the carbon market, Shanghai plans to establish a comprehensive management platform for carbon emissions. This platform will strengthen dynamic tracking and supervision of carbon emission data quality, enhance the credit management of all carbon market participants, and improve the standardization, digitalization, and intelligent management of the carbon market.

Source: General Office of the Shanghai Municipal People's Government

Note: The above content is for reference only. In case of any discrepancies, the Chinese version shall prevail.