Shanghai Municipal Government Office Notice on Issuing the “Shanghai Carbon Market Comprehensive Reform Action Plan (2026-2030)”
Shanghai Carbon Market Comprehensive Reform Action Plan (2026-2030)
To improve the green and low-carbon development mechanism, establish a carbon emission trading system that aligns with Shanghai’s carbon peak and neutrality goals, complements the national carbon market, and adapts to international carbon market rules, and to build a voluntary greenhouse gas emission reduction management system with sound regulations, transparency, and broad participation, this action plan is formulated to gradually form a carbon pricing mechanism centered on the carbon market, positioning Shanghai as an internationally influential hub for carbon trading, carbon finance, carbon pricing, and carbon innovation.
1. Enhancing the Efficiency of the Carbon Emission Trading Market
(1) Establishing a Sound Quota Management System. Reasonably determine the total carbon emission quota and establish a reserve quota adjustment mechanism. Implement a quota allocation system linked to dual controls on total carbon emissions and intensity, pilot total quota control for industries with stable emissions, and reserve development space for strategic emerging and future industries.
(2) Gradually Expanding Market Coverage. Expand market participation by lowering thresholds, broadening categories, and increasing types. From 2026, high-energy-consuming industries like petrochemicals and data centers will be included with an annual emission threshold of 10,000 tons of CO2 equivalent, while water transport will have an 80,000-ton threshold. From 2028, public institutions such as universities and hospitals emitting 10,000+ tons annually will be included, with gradual quota management. Research will explore including non-CO2 greenhouse gases like nitrous oxide and methane.
(3) Optimizing Greenhouse Gas Emission Accounting and Reporting Methodologies. Align with international carbon market accounting rules, shift industrial emission accounting from “organizational carbon” to “facility carbon,” and refine building sector methodologies. Encourage regulated entities to adopt “product carbon” accounting. Strengthen electricity-carbon coordination, establish sector-specific emission factor rules, and research accounting methods for sustainable aviation fuel, green methanol, and carbon capture technologies.
(4) Increasing Paid Allocation Proportion Gradually. Use paid quota allocation to incentivize compliance, setting industry-specific ratios based on emission reductions, pollution control, and energy measurement systems. By 2027, paid allocations will not exceed 8%; by 2030, the proportion will further increase.
(5) Standardizing Paid Quota Allocation and Carryover Mechanisms. Develop fair and efficient paid allocation and market adjustment mechanisms. Establish rules for quota auction revenue management and carryover, allowing surplus quotas from entities entering the national market to be phased into Shanghai’s market within three years.
(6) Improving Emission Reporting and Information Disclosure. Integrate energy use and emission reporting, lower reporting thresholds, and expand coverage. Enhance market transparency with annual quota allocation plans, regulated entity lists, and real-time trading data.
2. Encouraging Voluntary Greenhouse Gas Emission Reduction
(7) Promoting Corporate Carbon Reduction. Support companies in establishing carbon footprint systems, setting emission targets, and achieving net-zero through innovation and carbon credits. Encourage voluntary disclosure of emission data and green supply chains. Financial institutions should use disclosed data for green financing.
(8) Refining Carbon Inclusive Mechanisms. Develop voluntary reduction frameworks, prioritize green travel, energy savings, and recycling projects, and ensure transparency via blockchain-based carbon accounting.
(9) Innovating Carbon Inclusive Incentives. Link carbon credits to green finance and consumption, integrate carbon mechanisms with business models, and promote carbon offsetting initiatives.
(10) Advancing Carbon-Neutral Events. Guide large-scale events like exhibitions and sports to achieve carbon neutrality, leveraging government and corporate leadership for scalable models.
3. Strengthening Carbon Market Innovation and Collaboration
(11) Enhancing Regulatory Frameworks. Implement carbon market rules, improve data quality oversight, and explore automated emission monitoring. Develop guidelines for emission measurement equipment.
(12) Diversifying Carbon Financial Products. Support financial institutions in carbon trading and derivatives, explore cross-border RMB participation, and expand carbon asset collateral use.
(13) Aligning Carbon and Green Finance Markets. Foster information sharing, integrate carbon performance into credit ratings, and incentivize green investments.
(14) Developing Technical Service Providers. Support specialized agencies, encourage industry alliances, and establish certification systems for service providers.
(15) Expanding Professional Training.
