Guangdong Province releases new Allocation Plan, adapting to national ETS expansion
On 11 March 2025, the Department of Ecology and Environment of Guangdong Province (DEEG) published its new allocation plan for the 2024 emissions year in the Guangdong ETS, introducing significant changes to the region's carbon market. The new plan, which will be implemented starting in March, adjusts the province’s emission allocations in response to the expansion of China's national ETS. The compliance deadline for the 2024 emissions year is set for 20 July 2025.
The Guangdong ETS, launched in December 2013, has grown to become the largest of China's pilot carbon markets, covering around 40% of the province's emissions including the cement, steel, aviation, data centers, and paper-making sectors. In 2025, the Chinese government announced that the national ETS will include the cement, steel, and aluminum industries retroactively from 2024. In response to this development, Guangdong’s new allocation plan now excludes cement and steel companies from its ETS.
The exclusion of two sectors, will significantly reduce the total allowance amount from 297 million to 94 million. To broaden participation within its own market, Guangdong has added the public building sectors on a voluntary basis. Public buildings can join if they emit at least 10,000 tCO2 per year or consume 5,000 tce of energy annually. The list of eligible companies has been published alongside the allocation plan.
The new allocation plans further introduces more stringent benchmarks for domestic aviation, data centers, and paper-making for the 2024 emissions year. Additionally, the annual reduction factor for historical allocations has been adjusted from 100% to 98%, signaling a gradual tightening of allowances over time. All sectors will now receive 95% free allocation — a change from the varied percentages in 2023. Meanwhile, new entrants will be eligible for 90% free allowances, down from 94% in 2023. New entrants must purchase the remaining 10% before commencing production, with half of this amount required to be obtained through government auctions.
Guangdong is also taking proactive steps to address surplus allowances as sectors transition to the national ETS. Entities from the power, cement, and steel sectors meeting specific criteria may convert their surplus allowances into "Special Guangdong allowances (S-GDEA)". On 21 March 2025, DEEG further published the offset rules for the 2024 emissions year, allowing the use of offset credits to cover up to 10% of verified emissions. The eligible credits include national CCER, Guangdong PHCER, and S-GDEA. To ensure regional emissions reductions, 70% of CCER and PHCER credits must come from projects within Guangdong. S-GDEA can be used, but must be bundled with CCER and PHCER, and are limited to 30% of the total surrendered amount.
Guangdong is the first pilot ETS to publish the detailed transition plan for the sectors transferring from a pilot ETS to the national ETS.
