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China — national ETS expansion, CBAM and EUDR exposure

Updated 2026-08-17reviewed ESGOS9 sources

China's national ETS under State Council Order 775, its expansion to steel, cement and aluminium, the current compliance calendar, and EU CBAM and EUDR reach.

This is editorial market intelligence compiled from public sources on the dates shown. It is not legal, tax or compliance advice, and it does not change any organisation's verification status on ESGOS.

China requires key emitting units in power, steel, cement and aluminium smelting to report their emissions annually, have those reports verified by the provincial authority and surrender allowances against the verified result. Two European Union rules reach Chinese exporters on top of that: the carbon border adjustment mechanism and the deforestation regulation.

What is in force

The legal base is the Interim Regulations on the Administration of Carbon Emissions Trading (State Council Order No. 775), adopted on 5 January 2024 and in force since 1 May 2024.1 Covered gases and sectors are proposed by the Ministry of Ecology and Environment (MEE) with the development and reform and other departments, and implemented after State Council approval.1 The criteria for key emitting units and the annual lists compiled by provincial departments are published, and allowances are allocated free of charge, with a gradual move to a mix of free and paid allocation.1 After the Regulations took effect no new regional carbon markets may be established, and key emitting units in the national market no longer trade in regional markets for the same gases and sectors.1

The sector expansion rests on the Work Plan issued with MEE notice 环气候〔2025〕23号, dated 20 March 2025, which records that, with State Council approval, steel, cement and aluminium smelting are brought into the national market. The covered gases are CO2 for steel and cement, and CO2, CF4 and C2F6 for aluminium smelting, and units with annual greenhouse-gas emissions of 26,000 tonnes CO2e or more are key emitting units — adding roughly 1,500 units and about 3 billion tonnes CO2e of coverage.2 The Plan sets a launch phase covering compliance years 2024 to 2026, with 2024 as the first controlled year and the first surrender to be completed before the end of 2025. Allowances for 2024 equal verified emissions, and 2025 and 2026 allowances are allocated on a carbon-intensity basis tied to output.2

MEE notice 环办气候函〔2026〕32号, dated 27 January 2026, sets the 2025 compliance calendar. Annual emission reports are due by 31 March 2026, provincial verification of power-sector reports by 30 June 2026 and of steel, cement and aluminium reports by 31 July 2026, allocation of 2025 allowances by 30 September 2026, and surrender of 2025 allowances in full by 31 December 2026.3

What is coming

The Work Plan describes a deepening phase from compliance year 2027 with a transparent mechanism for gradually and moderately tightening sector allowance totals.2 The January notice instructs provincial departments to publish by 31 October 2026 their 2027 lists of key emitting units in the power, steel, cement and aluminium smelting sectors with annual direct emissions of 26,000 tonnes CO2e or more. It also has units set their 2027 data quality control plans by 31 December 2026, and record data monthly within 40 calendar days after each month.3

The same notice brings a further group into a reporting-only regime. It covers petrochemical, chemical, flat glass, copper smelting, pulp and paper and civil aviation enterprises with annual greenhouse-gas emissions of 26,000 tonnes CO2e or more, together with steel and cement enterprises not yet listed whose annual direct emissions reach the same figure. Their 2025 reports are due by 31 March 2026. Provincial checks of the reports of the six other sectors are to be completed by 31 December 2026 and of the unlisted steel and cement enterprises by 31 July 2026.3 This is a reporting instruction, not an expansion decision.

On 22 July 2026 MEE opened consultation on a draft allowance total and allocation plan for power for 2025 and 2026 and for steel, cement and aluminium smelting for 2026, with comments due by 5 August 2026; it remained a draft at the retrieval date.4

Regulation (EU) 2023/956 (CBAM) lists cement, electricity, fertilisers, iron and steel, aluminium and hydrogen in Annex I; its reporting-only transitional period ran from 1 October 2023 to 31 December 2025.5 Applications for authorised CBAM declarant status opened on 31 December 2024, and from 1 January 2026 goods may be imported into the customs territory of the Union only by an authorised CBAM declarant, with the annual declaration, certificate and penalty articles applying from that date. The quarterly certificate-holding requirement in Article 22(2) applies from 1 January 2027.6 Regulation (EU) 2025/2083, in force from 20 October 2025, introduces a de minimis exemption of 50 tonnes cumulative net mass per importer per calendar year across iron and steel, aluminium, fertilisers and cement (electricity and hydrogen excluded). It also moves the annual declaration and surrender to 30 September of the year following importation, so the first is due 30 September 2027.7

Regulation (EU) 2023/1115 (EUDR) applies to cattle, cocoa, coffee, oil palm, rubber, soya and wood and to the derived products in Annex I, which include tyres and other rubber articles, sawn wood and panels, wooden furniture, and pulp and paper.8 Regulation (EU) 2025/2650 replaces Article 38 so that the core EUDR obligations apply from 30 December 2026, and from 30 June 2027 for natural persons and micro or small undertakings established as such by 31 December 2024. It adds a downstream operator category and a simplified declaration for micro or small primary operators, and deletes printed products from Annex I.9

Who it binds

The national ETS binds key emitting units in power, steel, cement and aluminium smelting on the provincial lists, selected at the 26,000 tonnes CO2e threshold.23 For enterprises in the reporting-only sectors the notice sets a reporting and provincial-check step, but no allocation or surrender step.3

CBAM binds the EU importer as authorised declarant, not the Chinese producer, whose exposure is indirect through the importer’s need for embedded-emissions data on Annex I goods above the de minimis threshold.7 EUDR binds EU operators and traders, and reaches Chinese suppliers of wood, furniture, paper and rubber goods through their obligations.9

Verification requirements

The Regulations require a key emitting unit to keep and execute a data quality control plan, use verified or calibrated instruments, prepare and submit an annual emission report for the previous year, publish its emissions, facilities and accounting method, and retain original records for at least 5 years. The unit is responsible for the truthfulness, completeness and accuracy of its data.1 The provincial department verifies the report to confirm actual emissions, may commission a technical service institution for the technical review, and publishes the results; an institution may not both prepare reports and review them within the same province.1 The Work Plan adds monthly recording of key parameters through the national platform, subject to national, provincial and municipal review, with verification results as the basis for allocation and surrender.2

A unit surrenders allowances in full against the verified result within the MEE deadline and may use certified emission reductions for surrender under national rules.1 The Regulations set fines of 50,000 to 500,000 yuan for reporting, publication and record-keeping failures, and of 500,000 to 2,000,000 yuan (or 5 to 10 times illegal gains) for falsified reports, with a 50 to 100 percent cut in the following year’s allowances on refusal to correct. Failure to surrender draws 5 to 10 times the average market price in the month before the deadline, plus an equal deduction from the following year’s allowances.1

What an organisation on ESGOS can do

An organisation operating in China can find its listing in the directory and claim it from its profile page, or get listed and submit evidence: a published annual emission report and provincial verification result for a key emitting unit, or embedded-emissions data for CBAM goods. Where CBAM applies, a compliance profile on the listing shows an EU importer which Annex I goods an exporter supplies and what emissions data exists. The verifiers directory lists accredited verification bodies drawn from national accreditation registers; verifiers accredited for CBAM are not yet published by the Commission, so the directory does not hold them. The exposure check shows which of the three regimes reach a given product and market.

Footnotes

  1. 碳排放权交易管理暂行条例 (Interim Regulations on the Administration of Carbon Emissions Trading), State Council Order No. 775, State Council of the People’s Republic of China. ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8

  2. Notice issuing the Work Plan for covering the steel, cement and aluminium smelting sectors in the national carbon emissions trading market, Ministry of Ecology and Environment. ↩ ↩2 ↩3 ↩4 ↩5

  3. Notice on the national carbon emissions trading market work for the current year, Ministry of Ecology and Environment, General Office. ↩ ↩2 ↩3 ↩4 ↩5

  4. Consultation on the draft allowance total and allocation plan for the power, steel, cement and aluminium smelting sectors, Ministry of Ecology and Environment, General Office. ↩

  5. Regulation establishing a carbon border adjustment mechanism, EUR-Lex, Official Journal of the European Union. ↩

  6. Regulation (EU) 2023/956 — consolidated text 02023R0956-20251020, EUR-Lex. ↩

  7. Regulation simplifying and strengthening the carbon border adjustment mechanism, EUR-Lex, Official Journal of the European Union. ↩ ↩2

  8. Regulation on certain commodities and products associated with deforestation and forest degradation, EUR-Lex, Official Journal of the European Union. ↩

  9. Regulation amending the deforestation regulation as regards certain obligations of operators and traders, EUR-Lex, Official Journal of the European Union. ↩ ↩2

Regimes referenced

From the ESGOS regimes table — facts as recorded there, not a summary of this article.

  • China national ETS (power, steel, cement, aluminium)carbon compliancejurisdiction CNeffective 2024-05-01Date is the application of the Interim Regulations on Carbon Emissions Trading Management (State Council Order 775), which have applied since 1 May 2024 under Art. 33. The steel, cement and aluminium smelting sectors were brought into the market by MEE notice 环气候〔2025〕23号, signed 20 March 2025, whose work plan states 相应新增重点排放单位约1500家 — roughly 1,500 additional key emitting units, adding about 3bn tCO2e of covered emissions. Trading began before the Regulations, on a date the sourced record does not carry. The 26,000 tCO2e criterion is not in Order 775; it is cited in the threshold to the instruments that state it, the second being https://www.mee.gov.cn/xxgk2018/xxgk/xxgk03/202503/t20250326_1104736.htmlthreshold — key_emitting_unit: 26,000 tCO2e/yr (年度温室气体排放量达到2.6万吨二氧化碳当量) — Interim Measures for the Administration of Carbon Emissions Trading (MEE Order No. 19 of 5 January 2021), Art. 8(2). For the steel, cement and aluminium smelting sectors the MEE work plan of 20 March 2025 applies the same figure and limits coverage to direct greenhouse gas emissions from fossil fuel combustion and industrial processes, expressly excluding indirect emissions from purchased electricity and heat.Source
  • EU CBAM definitive phase (exports to the EU)tradejurisdiction EUeffective 2026-01-01The first CBAM declaration and certificate surrender are due by 30 September 2027 for goods imported in 2026.threshold — certificate_price: average of EU ETS auction closing prices (Art. 21(1)); for 2026, the quarterly average for the quarter of importation (Art. 21(1a)) · de_minimis: 50 t cumulative net mass per importer per year (Art. 2a), excluding electricity and hydrogen · verification: actual embedded emissions verified by an accredited verifier (Art. 8(1))Source
  • EU Deforestation Regulation (exports to the EU)tradejurisdiction EUeffective 2026-12-30Regulation (EU) 2025/2650 sets 30 December 2026 for operators and traders generally (Art. 38(2)). By Art. 38(3) the later date of 30 June 2027 applies only to operators that are natural persons or micro or small undertakings within the meaning of Art. 3(1) or Art. 3(2), first subparagraph, of Directive 2013/34/EU and that were established as such by 31 December 2024, and it does not apply at all to products covered by the Annex to Regulation (EU) No 995/2010. Separately, Art. 4a gives "micro or small primary operators" as defined in Art. 2(15a) a one-time simplified declaration in place of the full due diligence statement; that is a different population from the one Art. 38(3) defers. Deforestation-free means produced on land not subject to deforestation after 31 December 2020 (Art. 2(13)). The Regulation sets no volume or value de minimis.Source

Organisations on ESGOS

Directory listings matching this article's category and market, in the directory's own order. A tier badge means the organisation has claimed its own listing and had submitted evidence verified. Most listings here carry verifications from public registers and no badge — read the record, not the badge.

Manufacturing in China

See all Manufacturing in China →

Grid & storage in China

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Recycling in China

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Sources

  1. 碳排放权交易管理暂行条例 (Interim Regulations on the Administration of Carbon Emissions Trading), State Council Order No. 775, State Council of the People's Republic of Chinaretrieved 2026-08-17
  2. 关于印发《全国碳排放权交易市场覆盖钢铁、水泥、铝冶炼行业工作方案》的通知 (Notice issuing the Work Plan for covering the steel, cement and aluminium smelting sectors in the national carbon emissions trading market), Ministry of Ecology and Environmentretrieved 2026-08-17
  3. 关于做好2026年全国碳排放权交易市场有关工作的通知 (Notice on the national carbon emissions trading market work for 2026), Ministry of Ecology and Environment, General Officeretrieved 2026-08-17
  4. 关于公开征求《全国碳排放权交易市场2025、2026年度发电行业以及2026年度钢铁、水泥、铝冶炼行业配额总量和分配方案（征求意见稿）》意见的通知 (Consultation on the draft allowance total and allocation plan), Ministry of Ecology and Environment, General Officeretrieved 2026-08-17
  5. Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism, EUR-Lex, Official Journal of the European Unionretrieved 2026-08-14
  6. Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism — consolidated text 02023R0956-20251020, EUR-Lex, Publications Office of the European Unionretrieved 2026-08-17
  7. Regulation (EU) 2025/2083 amending Regulation (EU) 2023/956 as regards simplifying and strengthening the carbon border adjustment mechanism, EUR-Lex, Official Journal of the European Unionretrieved 2026-08-14
  8. Regulation (EU) 2023/1115 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation, EUR-Lex, Official Journal of the European Unionretrieved 2026-08-14
  9. Regulation (EU) 2025/2650 amending Regulation (EU) 2023/1115 as regards certain obligations of operators and traders, EUR-Lex, Official Journal of the European Unionretrieved 2026-08-14
What this article states, and where it comes from
StatementSourceRetrievedConfidence
The Interim Regulations on the Administration of Carbon Emissions Trading (State Council Order No. 775) were adopted by the State Council executive meeting on 5 January 2024 and have applied since 1 May 2024.[1]2026-08-17high
Under the Regulations, the gases and sectors covered by the national market are proposed by the State Council ecology and environment department with the development and reform and other departments and implemented after State Council approval; the criteria for key emitting units and the annual lists compiled by provincial departments are published; allowances are allocated free of charge, with a gradual move to a mix of free and paid allocation.[1]2026-08-17high
The Regulations require a key emitting unit to adopt and execute a greenhouse-gas data quality control plan, use verified or calibrated measuring instruments, prepare an annual emission report for the previous year, submit it to the provincial ecology and environment department, publish the reported emissions, facilities and accounting method, and keep original records and ledgers for at least 5 years; the unit is responsible for the truthfulness, completeness and accuracy of its data.[1]2026-08-17high
The provincial ecology and environment department verifies the annual emission report to confirm actual emissions, may commission a lawfully established technical service institution to conduct the technical review through government purchase of services, and publishes the verification results; a technical service institution may not both prepare annual emission reports and conduct technical reviews within the same province.[1]2026-08-17high
A key emitting unit surrenders allowances in full according to the verified result within the deadline set by the State Council ecology and environment department, may buy or sell allowances on the national market, and may use certified greenhouse-gas emission reductions for surrender under national rules.[1]2026-08-17high
The Regulations set fines of 50,000 to 500,000 yuan for failing to keep a data quality control plan, submit reports, publish information or retain records; fines of 500,000 to 2,000,000 yuan (or 5 to 10 times illegal gains) for falsified accounting or reports, with a 50 to 100 percent cut in the following year's allowances on refusal to correct; and, for failure to surrender, a fine of 5 to 10 times the average market price in the month before the surrender deadline plus an equal deduction from the following year's allowances on refusal to correct.[1]2026-08-17high
After the Regulations took effect no new regional carbon markets may be established, and key emitting units in the national market no longer trade in regional markets for the same gases and sectors.[1]2026-08-17high
The Work Plan issued with MEE notice 环气候〔2025〕23号, dated 20 March 2025, records that with State Council approval the steel, cement and aluminium smelting sectors are brought into the national carbon market; the covered gases are CO2 for steel and cement, and CO2, CF4 and C2F6 for aluminium smelting; and units in these sectors with annual greenhouse-gas emissions of 26,000 tonnes CO2e or more are key emitting units, adding roughly 1,500 units and about 3 billion tonnes CO2e of coverage.[2]2026-08-17high
The Work Plan sets a launch phase covering compliance years 2024 to 2026, with 2024 as the first controlled year for the three sectors and the first surrender to be completed before the end of 2025; 2024 allowances are allocated equal to verified actual emissions, and 2025 and 2026 allowances are allocated on a carbon-intensity basis tied to output; a deepening phase from compliance year 2027 is to bring a transparent mechanism for gradually and moderately tightening sector allowance totals.[2]2026-08-17high
The Work Plan requires key emitting units to record key parameters monthly through the national carbon market management platform, subject to national, provincial and municipal review, and provincial departments to verify the annual reports, with the verification results serving as the basis for allocation and surrender.[2]2026-08-17high
MEE notice 环办气候函〔2026〕32号, dated 27 January 2026, instructs provincial departments to publish by 31 October 2026 their 2027 lists of key emitting units in the power, steel, cement and aluminium smelting sectors with annual direct emissions of 26,000 tonnes CO2e or more, and to have units set their 2027 data quality control plans by 31 December 2026, with monthly data recording within 40 calendar days after each month.[3]2026-08-17high
The same notice sets the 2025 compliance calendar: annual emission reports by 31 March 2026; provincial verification of power-sector reports by 30 June 2026 and of steel, cement and aluminium reports by 31 July 2026; allocation of 2025 allowances by 30 September 2026; and surrender of 2025 allowances in full by 31 December 2026.[3]2026-08-17high
The notice also brings petrochemical, chemical, flat glass, copper smelting, pulp and paper and civil aviation enterprises with annual greenhouse-gas emissions of 26,000 tonnes CO2e or more, and steel and cement enterprises not yet on the lists with annual direct emissions of 26,000 tonnes CO2e or more, into a reporting-only regime, with 2025 reports due by 31 March 2026; provincial checks of the reports of the six other sectors are to be completed by 31 December 2026 and of the unlisted steel and cement enterprises by 31 July 2026.[3]2026-08-17high
On 22 July 2026 MEE opened consultation on a draft allowance total and allocation plan for the power sector for 2025 and 2026 and for steel, cement and aluminium smelting for 2026, with comments due by 5 August 2026; the plan was a draft at the retrieval date.[4]2026-08-17high
Regulation (EU) 2023/956 lists cement, electricity, fertilisers, iron and steel, aluminium and hydrogen in Annex I, and its transitional period ran from 1 October 2023 to 31 December 2025 with quarterly reporting only.[5]2026-08-14high
Under Article 36(2) of Regulation (EU) 2023/956 as amended by Regulation (EU) 2025/2083, Articles 5, 10, 14, 16 and 17 — including the application for authorised CBAM declarant status — apply from 31 December 2024; Article 2(2) and Articles 2a, 4, 6 to 9, 10a, 15, 19 and 21, Article 22(1) and 22(3), and Articles 23 to 27 and 31 apply from 1 January 2026; Article 22(2) applies from 1 January 2027; and Article 20(1), (3), (4) and (5) applies from 1 February 2027.[6]2026-08-17high
Regulation (EU) 2025/2083, in force from 20 October 2025, introduces a de minimis exemption of 50 tonnes cumulative net mass per importer per calendar year across iron and steel, aluminium, fertilisers and cement, excludes electricity and hydrogen from that exemption, and moves the annual CBAM declaration and surrender to 30 September of the year following importation, so the first declaration is due 30 September 2027.[7]2026-08-14high
Regulation (EU) 2023/1115 applies to cattle, cocoa, coffee, oil palm, rubber, soya and wood and to the derived products listed in Annex I, which include tyres and other rubber articles, sawn wood and panels, wooden furniture, and pulp and paper.[8]2026-08-14high
Regulation (EU) 2025/2650 replaces Article 38 so that the core EUDR obligations apply from 30 December 2026, and from 30 June 2027 for natural persons and micro or small undertakings established as such by 31 December 2024; it introduces a downstream operator category with trader-level obligations and a simplified declaration for micro or small primary operators, and deletes printed products from Annex I.[9]2026-08-14high

This is editorial market intelligence compiled from public sources on the dates shown. It is not legal, tax or compliance advice, and it does not change any organisation's verification status on ESGOS.