Abstract:The industry baseline method is adopted to allocate carbon allowances in China's nationalcarbon market, neither considering its huge inner regional disparity, nor exhibiting enough flexibility topromote renewable energy. The origination, development and regional imbalance were discussed, and aproject-based carbon trading of trans-regional cooperation mechanism was proposed under the directionof theories of carbon trading, trans-regional coordination and ecological compensation. In the proposedmechanism, allowance re-allocation is suggested under the principle of responsibility sharing betweenproducing and consuming areas, and the reduction volume produced through the trans-regional invest⁃ment projects can be allowed to offset the investor′ s carbon allowance compliance. Based on the analy⁃sis, we pointed out that this flexible mechanism could help achieve a win - win situation betweenEastern and Central & Western China. Suggestions to establish the mechanism were given, includingthe methodology probing, the institutional designing, and the pilot-program raising. Close-