The Party Central Committee and the State Council issued the Opinions on Improving the Market-Based Allocation of Resources and Environmental Factors. The opinions aim to establish basic trading systems for carbon emission, water use and pollution discharge rights by 2027. To achieve the targets, key measures include improving the price formation mechanism for carbon emission and other environmental resources, improving the national emissions trading scheme (ETS), and expanding the trading systems for water use, energy use and pollution discharge permits gradually at the national level.

Our take:

China aims to give greater room for market forces to drive greener, more efficient, and high-quality economic growth. In addition to the national ETS, China will expand trading markets for other environmental resources and gradually increase pricing pressure for companies in the long run. For now, this effort will not result in tight oversight of businesses, but German companies should still monitor potential market changes in the near future.

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中共中央办公厅 国务院办公厅关于健全资源环境要素市场化配置体系的意见