China's Ministry of Ecology and Environment has released an allocation plan for carbon emission allowances covering the power sector for 2025-2026 and the steel, cement and aluminium smelting industries for 2026.

The plan sets out the scope of allowance distribution, calculation methods, issuance and compliance procedures for the covered sectors.

According to the plan, quota totals and allocation schemes will be formulated based on national greenhouse gas emission control targets and the path toward carbon peak and carbon neutrality, while taking into account macroeconomic conditions, historical emission levels, market adjustment needs and carbon data management foundations.

The scheme will gradually align with production capacity replacement and output adjustment policies, strengthening carbon emission controls on outdated and non-compliant capacity as well as self-owned power plants, to promote orderly and safe emissions reduction across industries.

The plan emphasizes the market's decisive role in resource allocation, aiming to create a fair, competitive and open market environment guided by the principle of "rewarding the efficient and penalizing the laggards" — the lower the carbon emissions per unit of product, the higher the allowance surplus rate.

Enterprises are encouraged to integrate carbon emission management into strategic planning and operations, supporting the application of green and low-carbon technologies such as energy efficiency improvements, raw material and fuel substitution, and process innovation, to achieve emission reduction targets at lower societal cost.

The ministry issued the plan on September 1, 2026.

Annex: Plan on the Total Amount and Allocation of Allowances for the Power Generation Sector for 2025 and 2026, and for the Steel, Cement, and Aluminum Smelting Sectors for 2026 under the National Carbon Emissions Trading Market (Chinese Version)