Under the mandatory market in which the emission cap is regulated, governments set reduction targets and issue allowances to regulated targets for carbon trading, such as the EU Emissions Trading System (EU ETS), Chinese national carbon trading scheme, and the Californian Cap-and-Trade Program.
Update: March 3, 2023
EU
In February 2023, the EU's carbon price reached a record high of €101 per tonne, indicating that companies or factories will have to bear higher costs for greenhouse gas emissions, while spurring investment in carbon reduction and renewable energy development. The EU carbon market saw its highest prices in 18 years during this time, as traders opposed the EU's plan to auction off carbon allowances early. Prices are expected to remain high in the short term, as the April deadline for companies to surrender their allowances approaches, which results in strong demand. It is worth noting that the economic outlook for 2023 is fragile, which is a critical factor in whether prices will reach new highs in the future.
China
CEA prices showed little movement until mid-February, with only an increase in trading volume. Meanwhile, China's Ministry of Ecology and Environment released new guidelines on the management of emission reports for power generation facilities, mandating regional authorities to strengthen the monitoring of power companies' data reports to avoid carbon market data falsification, which is expected to help improve the market mechanism. After mid-February, prices rose slightly following two large transactions that increased liquidity in the market. Despite the price increases, clearer policy directions are still needed to boost market sentiment.