China’s national ETS two years on: bullish on banking rules and compliance deadlines

July 2023 marks the second anniversary of the start of trading in the national ETS. Since then, both liquidity and prices of China Emission Allowance (CEA) have increased significantly. We explain two recent drivers of the trend toward higher prices and more trading: the regulatory updates regarding banking and borrowing rules released on 17 July 2023, as well as the impending compliance deadlines for the national ETS. While the bullish trend will likely continue in the short term, the effective implementation of borrowing and banking rules will play a role in keeping up liquidity in the longer term.