China’s Ministry of Ecology and Environment (MEE) unveiled that China will strive to expand its carbon trading market “as soon as possible”, according to the official website of the State Council on February 27. The ministry is working on incorporating seven major carbon-emitting industries, including steel, building materials, non-ferrous metals, petrochemicals, chemicals, papermaking, and aviation, into China’s national emissions trading scheme (ETS). Currently, the ETS exclusively encompasses the power generation sector, representing over 40% of the country’s total emissions, while the seven additional industries account for roughly 35% of the country’s total. Zhao Yingmin, the vice minister of the MEE, disclosed that the ministry has essentially completed drafts of a series of documents on the inclusion of new industries, the allocation of carbon emission allowances, and reports on carbon accounting verification.

The MEE reported significant increases in both the trading volume and carbon prices of the ETS. Specifically, during the second compliance period, where power companies accounted for their 2021 and 2022 emissions, the carbon market’s trade volume and turnover jumped 19% and 89% respectively compared to those for the first compliance period (covering 2019 and 2020 emissions data). In addition, the price for carbon emission allowances has also reached RMB80 per ton, rising from the initial RMB48 at the market launch. Before the attempt to expand the ETS to industries beyond the power sector, China had introduced new rules in February to enhance oversight of the ETS and crack down on the fabrication of emissions data in the market.

Sources:

https://english.www.gov.cn/news/202402/27/content_WS65dd450ac6d0868f4e8e4645.html

http://www.stdaily.com/index/h1t1/202402/0e37d2e2f8014b45b0fe7fa301540a62.shtml

http://www.cbimc.cn/content/2024-02/27/content_508921.html

https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/energy-transition/092023-china-lays-foundation-for-compliance-carbon-market-financialization-but-policy-uncertainties-remain#:~:text=In%20the%20first%20cycle%2C%20compliance,the%20end%20of%20this%20year.

https://www.scmp.com/business/china-business/article/3251011/china-strengthens-state-control-carbon-emissions-trading-cracks-down-data-fabrication-new-regulation