Shanghai has recently rolled out a comprehensive blueprint aimed at transforming itself into a globally recognized carbon trading hub by the end of the decade. The plan, unveiled with detailed measures, is designed to refine the existing carbon emissions trading system and stimulate voluntary reductions in greenhouse gas emissions.

The initiative aligns Shanghai's carbon market with the city's broader goals of achieving carbon peak and neutrality, complementing the national carbon market while adhering to international standards. It envisions a transparent and reliable framework for managing voluntary greenhouse gas reductions, promoting accountability and trust.

Starting in 2026, the plan will broaden the scope of the carbon market by lowering the emission threshold for participation. High-energy-consuming sectors such as petrochemicals, chemical manufacturing, and data centers will be included if their annual emissions exceed 10,000 metric tons of carbon dioxide equivalent. The threshold for water transportation will be set at 80,000 tons.

By 2028, public institutions like universities and hospitals emitting over 10,000 tons of carbon dioxide equivalent annually will also come under carbon emission allowance management. The city is exploring the inclusion of non-carbon dioxide greenhouse gases, such as nitrous oxide and methane, into the market framework.

Shanghai is committed to enhancing the accuracy of greenhouse gas emission accounting and reporting. The city will align its accounting methods with international standards, transitioning from organizational to facility-level carbon accounting in key sectors. Regulated entities will be encouraged to voluntarily calculate their product carbon footprint, fostering transparency and consumer awareness.

The plan also introduces a gradual increase in the proportion of paid carbon allowances, with differentiated ratios based on factors like annual emission reductions and the implementation of energy or carbon measurement systems. By 2027, the paid allowance ratio will remain below 8 percent, with further increases planned by 2030.

To drive corporate engagement, businesses are encouraged to establish carbon footprint management systems, set emission control targets, and achieve net-zero emissions through innovation and improved practices. A voluntary disclosure mechanism for greenhouse gas emissions will be promoted, enabling companies to independently publish their reduction targets and achievements.

Shanghai will establish a comprehensive carbon emissions management platform to ensure market integrity. This platform will enhance dynamic tracking and supervision of carbon data, strengthen participant credit management, and improve the standardization, digitalization, and intelligence of the carbon market.