Carbon Trading — Emissions Intensity or Absolute Emissions?

Original Published Date on Medium: October 12th, 2025

Reference: https://medium.com/@virikajuneja/carbon-trading-emissions-intensity-or-absolute-emissions-3be409191ec0

China recently announced that they will be moving away from using Emissions Intensity, as a measure of capping carbon emissions, in their national Emissions Trading System (ETS). Instead they will be transitioning to Absolute Emissions.

Emissions Intensity measures how much pollution or Green House Gases (GHG) are created to make one unit of something. For a power plant, the Emissions Intensity is the tonnes of Carbon Dioxide (CO2) produced to generate One Megawatt-Hour of electricity. It represents the efficiency in producing GHGs for a unit of any product.

The ETS allocates Carbon Emissions Allowances (CEA) to each member entity. The CEA signifies the capping of carbon emissions in the form of emissions efficiency. This means that carbon heavy industries can continue to increase production and as a result GHG emissions but without increasing the emissions efficiency or Emissions Intensity.

If the goal is to reduce the overall GHGs emissions, Absolute Emissions is more effective measure. Absolute Emissions (e.g. tonnes of CO2) can be capped or frozen per entity or industry sector. It is easier to measure and track.

A simple way to think about this problem is although you make more numbers of something with less (increase efficiency), the actual goal is to reduce the numbers itself.