In the wave of global environmental change and green transformation, China, as a major carbon emitter, is accelerating the construction and optimization of its own carbon trading system. After a transition from initial exploration to deep development, China's carbon market has achieved a leapfrog upgrade from 1.0 to 2.0.
This transformation not only demonstrates China's firm stance on carbon reduction, but also demonstrates China's positive attitude and innovative capabilities in global climate change response. Next, let's explore the evolution of the carbon trading market together.
In the 1.0 stage of the carbon trading market, China's carbon emission market construction mainly went through two major periods: local pilot projects and national operation. The local pilot phase started in 2011 and ended in June 2021, covering eight provinces and cities including Shenzhen, Shanghai, and Beijing. During this period, the country gradually established the framework of carbon emission trading market through a series of policy documents and launched carbon emission trading pilot projects in multiple places.
During the pilot period, the trading volume and value of the carbon trading market continued to increase. Among them, Hubei and Guangdong have the largest trading scale, while Beijing has shown outstanding performance in reducing carbon intensity, effectively utilizing market mechanisms to promote energy conservation and emission reduction.
In July 2021, the national carbon market officially entered the national operational phase, known as Carbon Market 1.0. This is the launch of the national unified carbon emission trading market, marking a new stage for China's carbon emission trading system. However, despite achieving certain results, the 1.0 stage of the national carbon market still faces issues such as insufficient trading activity, lack of liquidity, limitations in allocation methods, and difficulty in regulation.
To address these issues, China's carbon market has begun to move towards the 2.0 stage. On January 22, 2023, the launch of the National Greenhouse Gas Voluntary Emission Reduction Trading Market (CCER) marks the further improvement of China's carbon trading market system.
The carbon market 2.0 phase has achieved significant improvements in multiple aspects. Firstly, quota allocation pays more attention to dynamic adjustment to adapt to the country's low-carbon development goals and market operations. Secondly, the participation of more diverse entities, including small and medium-sized enterprises and financial institutions, has enriched the market structure. In addition, the trading varieties are also more diverse, including financial derivatives such as carbon futures and carbon options, as well as innovative products such as carbon asset securitization. At the same time, the establishment of a unified national carbon emission monitoring, reporting, and verification standard (MRV) has improved the accuracy and real-time performance of carbon emission data.
However, the carbon market 2.0 stage still faces many challenges. The complexity of policy coordination and balance requires close collaboration and scientific decision-making among various government departments. The fluctuations in the international carbon market also have an impact on China's carbon market, and it is necessary to adjust policies and mechanisms in a timely manner. In addition, insufficient public awareness and social participation are also major issues, and it is necessary to strengthen the promotion and education of carbon market knowledge.
Overall, the upgrade from Carbon Market 1.0 to 2.0 reflects China's determination and actions in addressing climate change and promoting green and low-carbon transformation. In the future, China will continue to improve its carbon market system, address various challenges, and promote the healthy development of the carbon market.