China expands carbon trading market for steel, cement and aluminum

The environment ministry announced plans to expand the carbon trading market in China to include the steel, aluminum, and cement industries. This will require 1,500 additional firms to buy credits to cover their emission, it said.

At a press briefing, Pei Xiaofei, a spokesman for the Ministry of Environment, said that the expansion would bring the total volume covered by the scheme of climate-warming CO2 to 8 billion metric tonnes, which is more than 60% the total emissions of China.

Pei explained that incorporating new sectors would not only help China achieve its climate goals, but it would also create a mechanism for the market to assist heavy industries in closing outdated polluting facilities and adopting low-carbon technology.

China's emissions-trading scheme, launched in 2020, covers approximately 5 billion metric tonnes of carbon dioxide from over 2,200 power companies.

Each company included in the scheme receives a free quota based on benchmarks set by government. If they exceed their quotas, they will have to purchase additional allowances.

Only the worst performers in the new sectors will be required to purchase additional allowances during the implementation phase. Initial quotas are set high enough to cover their entire 2024 emissions.

The environment ministry published a separate statement on Wednesday that said quotas would be reduced gradually, but gaps will be kept to a minimum in order limit the impact of the economy.

(source: Reuters)