European lawmakers have voted to widen the bloc's carbon border tax, extending it from raw materials to finished goods like auto parts, appliances and hardware. The European Parliament's 464-50 vote marks the biggest expansion of the Carbon Border Adjustment Mechanism (CBAM) since it began in 2023, setting up trilogue talks with EU governments and raising the stakes for manufacturers exporting to Europe from China, Turkey and India.

Meanwhile, green finance is gathering pace elsewhere in Asia. Singapore and China wrapped up their fourth Green Finance Taskforce meeting with plans to expand taxonomy cooperation and boost panda bond issuance, as Beijing pushed forward cross-border carbon trading rules and unveiled a RMB 800 billion ($111 billion) support tool to help banks turn carbon allowances into financeable assets. The moves suggest green finance is shifting from blueprint to execution across both regions — though thornier questions around verification and market liquidity remain unresolved.

Read more on the week’s key developments:

1. Singapore-China 4th green finance cooperation meeting focuses on transition and adaptation finance

On 17 September, the Monetary Authority of Singapore (MAS) and the People's Bank of China held the 4th Singapore-China Green Finance Taskforce (GFTF) annual meeting in Nanning, Guangxi, co-chaired by MAS Chief Sustainability Officer Gillian Tan and PBOC Research Bureau Director Wang Xin, with over 50 regulatory and industry representatives from both countries. The two sides agreed to extend taxonomy interoperability cooperation from green activity mapping to transition activities, encourage green panda bond issuance, and use technology to promote sustainable financing solutions.

The meeting marks a shift in Singapore-China green finance cooperation from framework building to substantive expansion: transition finance, biodiversity credits, climate resilience and adaptation insurance, and cross-border carbon market connectivity all entered the agenda, with industry roundtables exploring business models and commercial financing pathways for climate-resilient infrastructure. Against the backdrop of globally non-unified transition finance standards, Singapore and China's pioneering exploration in taxonomy interoperability and cross-border carbon markets provides a demonstration model for regional green finance connectivity in Asia.

2. EU Parliament backs wider CBAM, bringing finished goods into carbon regime

On 15 September, the European Parliament adopted its negotiating position on expanding the Carbon Border Adjustment Mechanism (CBAM), with 464 votes in favour, 50 against and 159 abstentions. The proposed expansion would bring downstream steel and aluminium products, including screws, wire, springs and appliances, as well as auto parts, within the scope of CBAM and strengthen anti-circumvention rules. The EU Council agreed its general approach on 12 June. The two institutions will now enter trilogue negotiations, while CBAM is already in its definitive period, with certificate surrender requirements in effect since January 2026.

This would be the largest expansion of CBAM since the transitional period began in 2023, extending its reach from raw materials to finished products and bringing direct cost implications for manufacturing supply chains exporting to the EU, including auto parts, appliances and hardware. Major manufacturing exporters to Europe, including China, Turkey and India, would face greater exposure. Alongside the ten CBAM definitive-phase guidance documents published by the EU in September, the proposed expansion adds to compliance requirements around data verification and certificate surrender for non-EU installation operators. The final scope will depend on the outcome of trilogue

3. China moves closer to cross-border carbon trading as EU shifts carbon market policy

In mid-September, Zhang Xin, Deputy Director of the National Centre for Climate Change Strategy and International Cooperation, said at the 2026 China Carbon Market Conference that China’s Measures for the Administration of Cross-Border Carbon Trading had entered the consultation stage. The six-chapter, 29-article framework, prepared under the guidance of the Ministry of Ecology and Environment, is expected to become a departmental regulation. The Ecological Environment Code, which took effect on 15 August, along with recent Central Committee and State Council documents, provides the institutional basis. Separately, Lukas Visek, Head of Unit at the European Commission’s DG Climate Action, said the EU had shifted its approach to international carbon credit markets, moving from a planned 2031 pilot towards formal trading in 2036.

The developments point to a shift in carbon markets from rule-making towards implementation under Article 6 of the Paris Agreement. China’s proposed framework, alongside joint supervision and a cross-border trading platform being developed by the Beijing Green Exchange, could connect domestic voluntary emission reductions with international markets. The EU’s move towards formal international carbon credit trading could also create a larger pool of demand. However, data quality, mutual recognition of monitoring, reporting and verification (MRV) systems and legal ownership of carbon credits will remain important to whether cross-border trading can operate at scale.

4. PBOC combines RMB 800 billion carbon reduction tool with carbon allowance financing

On 16 September, PBOC Deputy Governor Zou Lan said at the China Carbon Market Conference that the PBOC had established an RMB 800 billion ($111 billion) carbon reduction support tool to provide low-cost relending to financial institutions and direct capital towards emission reduction activities. The central bank is also supporting banks in developing carbon allowance pledge loans and repo financing to help emissions-controlled companies mobilise their carbon assets. Launched in 2021, the carbon reduction support tool was expanded in early 2026 to cover energy-efficiency retrofits and green upgrades and has been extended until the end of 2027.

The measures seek to broaden the role of carbon assets in financing beyond their use for compliance. Lower-cost relending can support green lending, while pledge loans and repos could allow companies to use carbon allowances as collateral and improve liquidity in the carbon market. Wider adoption will depend on clear rules for ownership, registration and custody, as well as reliable valuation and management of carbon-price volatility, creating additional risk-control requirements for financial institutions.

5. ExxonMobil starts Nucor CCS operations as Rose storage project gains approval

On 16 September, ExxonMobil announced the start of carbon capture and storage (CCS) operations at Nucor’s direct reduced iron (DRI) plant in Convent, Louisiana. The facility will capture, transport and store up to 800,000 tonnes of CO₂ a year, making it the largest low-carbon DRI production capacity in North America. It is ExxonMobil’s third CCS project for a third-party customer and its second to begin operations in 2026. On the same day, the Texas Railroad Commission approved ExxonMobil’s Rose carbon storage project in Jefferson County, which will comprise three Class VI injection wells with capacity to store up to five million tonnes of CO₂ annually for 13 years.

The projects point to growing commercial activity around integrated carbon capture, transport and storage for hard-to-abate industries such as steel. Low-carbon DRI offers a route to reducing emissions from steelmaking, while dedicated storage projects such as Rose could expand the infrastructure needed to support CCS at scale. However, project economics remain linked to policy support, including the US 45Q tax credit, while capture costs, pipeline availability, storage capacity and long-term liability remain constraints on wider deployment.

6. Commercial banks in China accelerate green bond issuance as demand for green assets grows

In mid-September, commercial banks and other financial institutions in China stepped up green bond issuance. Industrial and Commercial Bank of China (ICBC) issued its 2026 Phase 1 green financial bond through Bond Connect on 15–16 September, with a base size of RMB 20 billion ($2.98 billion), comprising RMB 18 billion ($2.68 billion) in Tranche 1 and RMB 2 billion ($298 million) in Tranche 2. The issue was 1.4 times subscribed, allowing over-allotment. Huayou Cobalt issued a RMB 1 billion ($149 million) green technology innovation bond on 14 September with a 2.2% coupon, while Beijing Rural Commercial Bank issued a three-year green financial bond with a 1.56% coupon. Soochow Securities data showed that 20 new green bonds worth about RMB 21.999 billion ($3.28 billion) were issued across the interbank and exchange markets in the week of 7–11 September, up RMB 259 million ($38.6 million) from the previous week.

The increase in issuance points to continued demand for green assets amid ample liquidity, with bank green bonds offering relatively low-cost funding for clean energy, energy efficiency and decarbonisation projects. However, market growth also raises scrutiny over the use of proceeds and the measurement and verification of environmental benefits. Issuance remains concentrated in three-year maturities, while limited secondary-market liquidity could constrain market depth and investor diversification.

7. Huaneng breaks ground on "Rui Tan" molten salt storage and CO₂ power generation project

On 16 September, China Huaneng broke ground on "Rui Tan," China's first demonstration project combining molten salt storage with CO₂ power generation, at its Shandong Bajiao Power Plant. It is the largest such project in China and the world's first commercial demonstration of molten salt-coupled supercritical CO₂ cycle power generation. Phase 1 comprises a 50 MW supercritical CO₂ generating unit, with a working fluid temperature of 550°C, backed by a 100 MW/400 MWh molten salt storage system. The project is a carrier project under the National Science and Technology Major Project on CO₂ thermal batteries and is expected to be completed and operational in 2027.

The design pairs supercritical CO₂ cycle power generation, which offers higher thermal efficiency than conventional steam Rankine cycles, with long-duration molten salt storage, converting surplus electricity into stored heat during low-demand periods for an integrated storage-and-generation system. The groundbreaking marks China's shift from laboratory research to physical engineering in CO₂ power generation and energy storage integration, offering a new technology route for large-scale, long-duration storage and next-generation power systems. Localising supercritical CO₂ units, developing high-temperature materials and system integration remain key engineering challenges ahead.

8. China’s national carbon market turnover tops 970 million tonnes as prices hold at high level

China's national carbon market held steady at high levels this week. China Emission Allowances (CEAs) — the tradable units in China's national carbon market — closed at RMB 95.89/tonne ($13.32) on 16 September, down 0.35%, before trading flat at RMB 95.89/tonne on 17 September within a RMB 96.00–95.75 range. Data from China Carbon Emission Registration and Settlement Co. show cumulative national carbon market turnover reached approximately 973 million tonnes as of 14 September, with cumulative turnover value of RMB 66.886 billion ($9.29 billion). Fudan University's Sustainable Development Research Centre put September's expected CEA buy price at RMB 91.47/tonne ($12.70), sell price at RMB 98.84/tonne ($13.73) and mid-price at RMB 95.16/tonne ($13.22), with the buy price index up 4.05% month-on-month.

Prices holding near the RMB 95/tonne ($13.20) threshold reflect tightening allowance supply expectations and support from annual compliance demand. With steel, cement and aluminium smelting now included in annual allowance management for the first time, market coverage has expanded significantly, strengthening the carbon price signal's role in guiding low-carbon investment across the four covered sectors. Still, the market remains primarily compliance-driven, with limited liquidity and a narrow participant base. Broader financial institution participation awaits institutional breakthroughs — the PBOC's carbon allowance pledge and repo policy is aimed squarely at this bottleneck, as the carbon market develops along dual tracks of compliance and financialisation.

9. UN General Assembly's 81st session opens with SDG Moment and climate high on the agenda

The 81st session of the UN General Assembly opened on 8 September under the theme "Rebuilding Trust, Managing Change: A UN that Delivers for All." During High-Level Week, the SDG Moment was held on 18 September, showcasing global action to accelerate progress on the Sustainable Development Goals. The general debate is scheduled for 22–28 September, with climate action and accelerating sustainable development listed among the priority issues, as the UN Secretary-General has repeatedly called on countries to submit updated Nationally Determined Contributions ahead of COP31 in November.

With the 2030 Agenda entering its final four years and both global climate and SDG progress lagging behind schedule, this General Assembly has placed accelerating sustainable development and strengthening climate action among its priorities, offering the highest-level platform for building political consensus ahead of COP31. The SDG Moment emphasised just transition and systemic solutions, aiming to push countries to close the gap between commitments and implementation. The tone set during General Assembly High-Level Week is expected to directly influence the political atmosphere and strength of funding commitments heading into year-end climate negotiations.

10. China's renewable hydrogen capacity tops 1.4 million tonnes as green liquid fuel projects advance

China's National Energy Administration released its China Hydrogen Development Report (2026), showing that as of June this year, national built and under-construction renewable hydrogen production capacity exceeded 1.4 million tonnes/year, of which just over 270,000 tonnes/year is built and operational — leaving a gap against the 2030 target of 2 million tonnes/year set out in the 15th Five-Year Plan for Building a New Energy System. Green hydrogen industrialisation is advancing in parallel: the first batch of products from Inner Mongolia Xing'an League's green hydrogen-to-green methanol project, with a 1.45 million tonne capacity and one of the National Energy Administration's first green liquid fuel pilots, was delivered on 10 September, while Italy's Ansaldo Green Tech started production at its 300 MW AEM electrolyser line on 16 September.

The report outlines China's green hydrogen industry moving from demonstration to scale, though the gap between 1.4 million tonnes/year of capacity and just 270,000 tonnes/year built and operational points to utilisation and offtake bottlenecks. Price competitiveness and the coordinated development of downstream applications — including synthetic ammonia, green methanol and transport — will be key to breaking through. With the EU and Italy simultaneously ramping up electrolyser manufacturing, global competition in green hydrogen equipment is intensifying. Green hydrogen-to-green methanol and other "green liquid fuel" routes offer new outlets for renewable energy consumption, though the pace of industrialisation will depend on electricity pricing mechanisms, carbon markets and green certification support.

Sustainable Finance Weekly covers key developments in sustainable finance, focusing on institutions, capital mobilisation, transition risk and outcomes. Subscribe via LinkedIn.