China Unveils a Policy to Enhance the Emission Rights Trading Systems

On May 14, 2025, China’s central government released a new policy, aimed at improving the market-based allocation of environmental resources. The guideline, titled the “Framework for the Market-Based Allocation of Environmental and Resource Elements,” is part of the country’s broader strategy to accelerate its green transition and enhance the efficiency of resource use.

The policy outlines mechanisms for trading carbon emission rights, water use rights, and pollutant discharge permits, with the goal of fostering new productive forces and coordinated environmental improvements — including decarbonization, pollution reduction, greening, and economic growth.