China to Improve Market-Based Allocation System for Resource and Environmental Factors

On May 14, 2025, the Opinions of the General Office of the CPC Central Committee and the General Office of the State Council on Improving the Market-Based Allocation System of Resource and Environmental Factors (the “Opinions”) was officially made public, making clear that the main objectives are: by 2027, the trading systems for carbon emission rights and water rights will be basically improved, and the trading system for pollutant discharge rights will be established and improved. The Opinions took effect on May 14, 2025.

The Opinions emphasise that market supervision will be increased. Strengthen the supervision of resource and environmental factors trading institutions, trading entities, third-party service providers, etc., to investigate and deal with data forgery, illegal trading, market manipulation and other acts in accordance with the law. Strengthen the whole-process supervision of water rights trading and enhance the supervision of third-party impacts and ecological impacts of water rights trading activities; improve the financial support system. Actively and steadily promote financial institutions’ participation in the construction of resource and environmental factors trading markets, and guide financial institutions to develop green financial products and services related to resource and environmental factors, such as green credit, green insurance, and green bonds, under the premise of legality, risk control, and commercial sustainability. Promote financial institutions to standardise the disclosure of information related to green finance. Promote the unified registration and publication of guarantee businesses related to carbon emission rights, water rights, and pollutant discharge rights.