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Abstract

This study examines the governance of building carbon markets in the context of China’s “dual-carbon strategy”, focusing specifically on the integration of Monitoring, Reporting, and Verification (MRV) systems. The study identifies critical challenges in China’s emissions-trading scheme (ETS), such as weak corporate compliance incentives, high regulatory costs, and concerns about third-party verification independence, which hinder the effectiveness of carbon pricing and technology adoption. Using a three-player evolutionary game model involving the government, carbon-emitting firms, and third-party verifiers, the study finds that moderate government supervision, performance-based incentives, and stronger penalties lead to long-term stability and optimal governance. Based on these findings, policy recommendations are made, including tiered penalties, targeted incentives for green technology adoption, and the strengthening of third-party verification mechanisms to enhance market governance and support China’s carbon-reduction goals in the building sector.