Three additional industries added to carbon trading market

China will expand its national carbon trading market this year to include three additional major carbon-emitting industries as the country accelerates efforts to curb greenhouse gas emissions, the Ministry of Ecology and Environment announced on Wednesday.

Launched in July 2021, China's carbon trading market is already the world's largest. It currently covers 2,200 coal-fired power generation companies that emit about 5 billion metric tons of carbon dioxide annually.

The expansion will add about 1,500 companies in the steel, cement and electrolytic aluminum sectors, ministry spokesman Pei Xiaofei said at a news conference.

Carbon trading allows designated emitters to buy and sell allowances to emit greenhouse gases. In the coal-fired power generation sector, for example, emission limits are set for each unit of electricity produced. After meeting the benchmark, operators can sell surplus carbon allowances. Those exceeding their limits must buy additional allowances.

Pei said the steel, cement and electrolytic aluminum industries collectively emit the equivalent of about 3 billion tons of carbon dioxide per year, accounting for 20 percent of China's total carbon dioxide emissions.

With the expansion, China's national carbon market will cover more than 60 percent of the country's total carbon dioxide emissions.

The ministry said it aims to further explore carbon trading as a cost-effective tool for reducing emissions in seven major industries: power generation, chemicals, construction materials, steel, nonferrous metals, paper manufacturing and civil aviation.

China has made significant progress in using carbon trading to promote a green, low-carbon transition in the coal-fired power generation sector, the ministry said in a statement. Over the past four years, the carbon intensity of electricity generation, or carbon dioxide emissions per unit of electricity, has fallen by 8.78 percent, reducing emission control costs by an estimated 35 billion yuan ($4.8 billion).

By the end of last year, more than 630 million tons of carbon emission allowances had been traded on China's national carbon market, with a total transaction value of nearly 43 billion yuan.

Pei said the ministry has completed extensive preparations for the expansion, including conducting greenhouse gas emission accounting and verification for steel, cement and electrolytic aluminum producers and other high-emission industries. It has also issued six technical specifications, upgraded the management platform for carbon trading and enhanced systems for allowances registration and transactions.

The ministry has organized a series of training sessions to support the expansion, Pei said.

"All the preparations for the expansion are complete," he said. "These efforts have laid a solid foundation and provided a guarantee for the market's growth."