WANG Ke: Using Market Mechanisms to Optimize the Allocation of Resource and Environmental Factors

Recently, the General Office of the CPC Central Committee and the General Office of the State Council issued the Opinions on Improving the Market-Based Allocation System of Resource and Environmental Factors, marking a new phase of systematic reform in China’s green and low-carbon transition. This document puts forward a series of measures aimed at building an efficient carbon market.

Total Emissions Control: The national carbon emissions trading system will shift from intensity-based control to a total quota-based control, laying a scientific foundation for carbon pricing.

Allowance Allocation: The allocation scheme will be optimized by steadily promoting a combination of free and paid allocations, gradually increasing the proportion of paid allocations to enhance the incentive for enterprises to reduce emissions.

Market Expansion: The coverage of industries will be gradually expanded, trading entities and product types will be diversified, and market vitality will be improved.

Financial Empowerment: Financial institutions will be guided to develop green credit and related products, fostering a multi-level green finance ecosystem.

Institutional Coordination: Greater integration will be promoted between green certificates, energy use rights, and the carbon market to avoid double benefits and overlapping compliance.

These measures aim to address key challenges in the carbon market, such as fragmentation, excessive administrative control, lack of liquidity, and weak financial support. By leveraging market-based mechanisms, China seeks to channel resources into low-carbon sectors, support the achievement of its “dual carbon” goals (carbon peaking and carbon neutrality), and build a carbon market that is more effective, dynamic, and internationally influential.

(The above views are excerpted and translated from an article by WANG Ke, Associate Dean of the School of Ecology and Environment and Researcher at the National Academy of Development and Strategy, Renmin University of China, published on China.com titled “What Does the CPC Central Committee’s Proposal for Market-Based Allocation of Resource and Environmental Factors Mean?”)

Original article link: http://www.china.com.cn/opinion2020/2025-06/03/content_117907407.shtml

Translator: ZHANG Yuqing

Editor: ZHANG Jingjing