China's national carbon market saw carbon prices surge in July, driven by policy support, with prices climbing back above the 90 yuan/t platform and approaching the 100 yuan/t threshold.

Carbon prices showed a strong one-way upward trend throughout July, opening with a gap up at 83.90 yuan/t at the start of the month, steadily climbing to around 87 yuan/t in the first half, breaking through the 90 yuan/t mark in the second half and closing at 93.58 yuan/t at month-end, the highest level of the month, with no significant pullback observed.

The average daily closing price of CEA in July was 88.31 yuan/t, up approximately 7.38% from June's average of 82.24 yuan/t.

CCER prices also continued their upward trend in July, with the average transaction price reaching 86.99 yuan/t, up 2.75% from the previous month. Cumulative CCER transaction value surged to 232 million yuan ($34.17 million) in July, with cumulative volume of 2.67 million tonnes. The highest single-day average price of 94.92 yuan/t was recorded on July 31.

The national carbon market's comprehensive price range for July was 99.50 yuan/t at the high and 83.55 yuan/t at the low, with the closing price up 18.30% from the previous month (July 31).

Trading volumes

Trading volumes remained active, with average daily CEA volume reaching 642,600 tonnes in July, up about 4.5% from June's 614,700 tonnes. Total CEA volume reached 17.26 million tonnes in July, up 33.70% month on month, with listed contract transactions at 5.84 million tonnes, up 18.61%, and bulk contract transactions at 11.42 million tonnes, up 43.01%.

Total transaction value for the month reached 1.52 billion yuan, up 46.15% month on month, with listed contracts at 532 million yuan, up 31.27%, and bulk contracts at 989 million yuan, up 55.65%.

From January 1 to July 31, cumulative CEA volume reached 70.22 million tonnes with transaction value of 5.61 billion yuan. As of July 31, 2026, cumulative CEA volume since market launch stood at 935.09 million tonnes, with cumulative transaction value of 63.27 billion yuan.

Policies

In policy developments, the State Council released the 15th "Five-Year Plan" carbon peak action plan on July 9, targeting a 17% reduction in carbon dioxide emissions per unit of GDP by 2030 compared with 2025 levels, with non-fossil energy consumption reaching 25%.

The European Commission proposed revisions to the EU Emissions Trading System on July 17, aiming to ease decarbonization pressure on companies while ensuring the EU achieves its 2040 climate target of reducing net greenhouse gas emissions by 90%. The proposal would adjust the linear reduction factor to 3.7% for 2031-2035 and further to 1.7% for 2036-2040, down from the current 4.3%.

China's Ministry of Ecology and Environment released a draft plan on July 27 for carbon allowance allocation for the power sector for 2025-2026 and for steel, cement and aluminum smelting sectors for 2026, with public comment period ending August 5. The plan tightens allowances through lower benchmarks, stricter compensation, cancellation of carryovers and introduction of paid allocation.

The ministry also jointly released the national climate change plan for the 15th "Five-Year Plan" period with 18 other departments on July 29.

August  Forecast

For August, Fudan University's Sustainable Development Research Center projects CEA buy prices at 87.91 yuan/t and sell prices at 94.16 yuan/t, with a mid-price of 91.04 yuan/t. CCER buy prices are expected at 87.33 yuan/t and sell prices at 96.00 yuan/t, with a mid-price of 91.67 yuan/t.