According to the Ministry of Ecology and Environment, China is seeking public input on a proposal to include cement, steel, and aluminium production in its carbon emissions trading scheme (ETS) by year-end.
Adding these sectors could increase the scheme’s coverage to 60% of the country’s total greenhouse gas emissions, surpassing the emissions of the US. Public consultation on the plan will be open until Sep 19.
China plans to expand the ETS in two phases, introducing participants to its processes between 2024 and 2026, and enhancing emissions data quality while reducing quota allocations from 2027.
Initially, carbon allowances, which permit companies to emit a certain volume of CO2, will be distributed to businesses for free, with no upper limit on emissions in the first stage. Firms emitting more will receive larger quotas.
Launched in July 2021, the China Carbon Emission Trading Exchange currently covers only the power sector as part of China’s aim to peak emissions by 2030 and achieve carbon neutrality by 2060. However, looming carbon tariffs from the European Union are pressuring China to decarbonise heavy industries faster.
Starting in 2026, EU tariffs will require steel, cement, fertilisers, and chemicals importers to pay levies based on the carbon footprint of the goods they purchase.