BEIJING (Reuters) -China released plans on Wednesday to expand its carbon trading market into the steel, cement and aluminium smelting industries, a move that will require an additional 1,500 firms to purchase credits to cover their emissions, the environment ministry said.
The expansion will bring the total volume of climate-warming carbon dioxide covered by the trading scheme to 8 billion metric tons, more than 60% of China’s total emissions, ministry spokesman Pei Xiaofei said at a briefing.
Incorporating new sectors into the scheme would not only support China’s climate goals but also create a market mechanism to help heavy industries close outdated, polluting plants and adopt low-carbon technologies, Pei said.
China’s emissions trading scheme, launched in 2021, currently covers around 5 billion metric tons of carbon dioxide emissions from more than 2,200 power companies.
Each firm included in the scheme is allocated a quota of free emission allowances based on government-set industry benchmarks. If their emissions exceed the quota, they must purchase additional allowances on the market.
For the new sectors, only the worst performers will have to buy additional allowances on the market during the implementation phase, with initial quotas set at levels high enough to cover all their 2024 emissions.
Quotas will be gradually reduced, but the gap will be kept within a small range in order to limit the economic impact, the environment ministry said in a separate note published on Wednesday.
(Reporting by Beijing newsroom and David Stanway in Singapore; Editing by Christian Schmollinger and Sherry Jacob-Phillips)
