{"id":7959,"date":"2025-09-08T11:49:17","date_gmt":"2025-09-08T10:49:17","guid":{"rendered":"https:\/\/www.greenairnews.com\/?p=7959"},"modified":"2026-02-16T14:50:23","modified_gmt":"2026-02-16T14:50:23","slug":"commentary-why-chinas-national-carbon-market-is-unlikely-to-include-aviation-in-the-near-term","status":"publish","type":"post","link":"https:\/\/www.greenairnews.com\/?p=7959","title":{"rendered":"COMMENTARY: Why China’s national carbon market is unlikely to include aviation in the near term"},"content":{"rendered":"\n

Despite growing momentum behind China\u2019s national carbon market expansion, the aviation sector remains unlikely to be included in the near term. While recent policy developments signal a clear trajectory toward broader sectoral coverage, aviation faces persistent structural, technical and regulatory hurdles that limit its readiness for integration. David Ma<\/em> argues that aviation\u2019s inclusion will require more than political will \u2013 it demands robust MRV infrastructure, stable emissions baselines and alignment with national priorities. In the meantime, voluntary offset mechanisms and regional pilot programmes offer a transitional pathway, but they are not substitutes for full ETS participation. Understanding these constraints is essential for shaping realistic expectations and strategic planning within the aviation industry.<\/strong><\/p>\n\n\n\n

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As global carbon market mechanisms continue to evolve, China\u2019s national emissions trading system is accelerating both sectoral expansion and institutional refinement. On August 25, the Chinese government released its new policy directive, Opinions on Promoting Green and Low-Carbon Transition and Strengthening the National Carbon Market (\u201cthe Opinions\u201d), which outlines a clear roadmap for the medium- and long-term development of the ETS. While market expansion is now a confirmed priority, aviation remains unlikely to be included in the national ETS in the short term due to regulatory design and sectoral positioning.<\/p>\n\n\n\n

The Opinions state that by 2027, China\u2019s ETS should \u201cbasically cover major emitting sectors in the industrial domain.\u201d This language signals a clear prioritisation: industrial sectors will be the first to enter, while transport-related sectors \u2013 including aviation \u2013 are not part of the near-term inclusion plan. Although aviation has mitigation potential, its emissions profile, data complexity and regulatory challenges have kept it off the priority list.<\/p>\n\n\n\n

Aviation plays a significant role in global climate governance. ICAO\u2019s CORSIA scheme already requires airlines to offset international flight emissions through carbon credits. However, integrating aviation into China\u2019s national ETS faces several hurdles:<\/p>\n\n\n\n

\u2022 Data quality and MRV infrastructure<\/strong> \u2013 Aviation emissions accounting involves complex variables such as flight segmentation, fuel burn and load factors. Accurate monitoring requires access to onboard data systems, flight logs and fuelling records, along with a dedicated monitoring, reporting and verification (MRV) framework. While the Opinions encourage monthly data archiving and automated monitoring, the only national-level aviation MRV guideline \u2013 published in 2015 \u2013 has not been updated. Moreover, China\u2019s Ministry of Ecology and Environment has mandated emissions reporting only for airport terminals, not airline operations, leaving a major gap in coverage.<\/p>\n\n\n\n

\u2022 Sector growth and ETS design<\/strong> \u2013 The Opinions emphasise sectoral inclusion based on development stage, mitigation contribution and data quality. The four sectors currently covered \u2013 power, steel, cement and aluminium \u2013 have largely peaked in emissions and are structurally suited for ETS integration. In contrast, China\u2019s aviation sector is still expanding. According to the Civil Aviation Administration of China\u2019s 2022 submission to ICAO, commercial aviation is expected to achieve carbon-neutral growth only by 2035. This implies rising emissions and unstable baselines, making ETS inclusion premature. For now, policy favours voluntary mechanisms like the China Certified Emission Reduction (CCER) programme over mandatory ETS participation.<\/p>\n\n\n\n

\u2022 Low emissions share and limited priority<\/strong> \u2013 Aviation accounts for roughly 2% of China\u2019s total GHG emissions, far below industrial sectors. In the early stages of ETS expansion, regulatory capacity is focused on high-emitting, data-rich sectors to maximise mitigation impact. From a cost-effectiveness standpoint, aviation does not present an urgent case for national inclusion. Instead, promoting high-quality voluntary offset projects and scaling sustainable aviation fuel deployment aligns better with current policy priorities.<\/p>\n\n\n\n

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Local pilots testing aviation integration<\/strong><\/p>\n\n\n\n

Despite national-level exclusion, several regional ETS pilots have begun experimenting with aviation inclusion. Guangdong\u2019s 2024 allocation plan includes aviation enterprises, categorised by transport type and service model. Full-service carriers receive allowances via a benchmark method based on aircraft type and transport turnover, while other carriers use historical intensity metrics.<\/p>\n\n\n\n

Shanghai has pioneered aviation MRV methodology and applies the historical intensity method for allowance allocation. The baseline is calculated using 2018, 2019 and 2023 emissions data, multiplied by verified 2024 business volume. Allowances are primarily distributed for free, typically at 99-99.5%, with performance-based bonuses of 0.3-0.5 percentage points. Airlines may offset up to 5% of emissions using CCER or Shanghai\u2019s SHCERCIR1 credits. If annual operating days fall below 92, no allowances are issued; partial-year operations receive proportionate allocations. This mechanism reflects Shanghai\u2019s precision in managing aviation emissions and incentivising performance.<\/p>\n\n\n\n

Beijing has also taken steps. In late 2022, it released its own aviation accounting standard and, by May 2025, formally included 11 aviation transport enterprises in its ETS registry.<\/p>\n\n\n\n

However, these local initiatives remain exploratory. The Opinions clearly state that national ETS expansion will prioritise industrial sectors. While regional pilots offer valuable insights, they are not sufficient to trigger national-level aviation inclusion in the short term.<\/p>\n\n\n\n

China\u2019s ETS expansion follows a deliberate path: \u201cindustry first, system maturity, unified inclusion.\u201d Until allowance allocation, MRV systems and compliance mechanisms are fully stabilised across industrial sectors, complex sectors like aviation will remain outside the national ETS.<\/p>\n\n\n\n

In the longer term, as MRV infrastructure improves and regulatory capacity grows, aviation may gradually be integrated into the national carbon market. In the meantime, the voluntary offset market \u2013 especially CCER \u2013 can serve as a transitional mechanism, enabling airlines to manage emissions and meet international obligations.<\/p>\n\n\n\n

Under the \u201cdual-carbon\u201d goals and global climate cooperation frameworks, aviation\u2019s inclusion in the national ETS may not be imminent, but its strategic relevance is undeniable. By leveraging local pilot experience, advancing methodological standards and strengthening data oversight, China can lay the groundwork for aviation\u2019s eventual integration \u2013 and a broader breakthrough in transport-sector carbon governance.<\/p>\n\n\n\n

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Photo: Airbus<\/strong><\/p>\n\n\n\n

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