China’s Carbon Market Set for Significant Expansion: Steel, Cement, and Aluminium Industries to be Included by Year-End

China's carbon market is set to grow, incorporating steel, cement, and aluminium sectors by the end of the year. With the inclusion of these three high-emission industries, the trading program is projected to account for roughly 60 per cent of China's carbon emissions.

The expansion of the national emissions trading scheme (ETS) is projected to account for approximately 60% of China's carbon emissions, according to a draft proposal released for public feedback by the Ministry of Ecology and Environment (MEE) on Monday. Despite presently only encompassing the country's energy sector, the ETS already stands as the global leader in the carbon-trading market.

In this plan, businesses in the three industries will receive emission allowances for each facility, calculated based on the carbon emissions per unit of production. If they exceed their allocated limit, they have the option to purchase carbon credits. Conversely, if they successfully reduce their emissions below the designated limit, they can sell their surplus credits.

The MEE has stated that approximately 1,500 firms, each releasing an annual amount of carbon dioxide equivalent to over 26,000 tons, will be included in the ETS. This will expand the scheme's scope by approximately 3 billion tons of emissions.

"Following additional integration of the information, equipment, and regulatory bases of the cement, steel, and aluminium sectors, all preparatory tasks for expanding market penetration have been completed," the MEE stated in the preliminary plan.