China's New Carbon Market Rules Aim to Reduce Oversupply.

China has released new rules for its national carbon market in an effort to reduce an oversupply of permits and encourage large polluters to transition to greener practices. The rules include stricter limits on carrying over unused permits from previous years and a ban on borrowing allowances from future years. These changes aim to create a "slight shortage" of allowances in the market, as opposed to the early years when an abundance of free allowances kept prices low and limited the incentive for power companies to reduce emissions. The market, which began trading in 2021, has faced criticism for its limited impact on emissions in the world's largest polluter. The new rules also set emissions targets for power utilities and require annual compliance reporting. The rules will not constrain power generation, will benefit the most efficient plants, and will continue to exempt gas-burning plants. The market price for allowances has risen since February in anticipation of tighter policies and an earlier compliance deadline. [Extracted from the article]