The regulations aim to provide a legal framework for China’s carbon allowance trading market by strengthening requirements and designating responsibilities.

On January 25, 2024, Chinese Premier Li Qiang signed a decree of the State Council, introducing the Regulations on the Administration of Carbon Allowance Trading (the Regulations). Effective from May 1, 2024, the Regulations provide a legal framework for the operation of China’s emissions trading scheme (ETS), which initially commenced operations in July 2021 under ministry-level management rules without a higher-level legal foundation. The Regulations fill in the regulatory vacuum that has existed since 2021.