China to Expand Carbon Market to Major Industries
(Bloomberg) -- China will accelerate the expansion of its carbon market to incorporate major industries by 2027, according to guidelines issued by top policymakers.
By 2030, China hopes to have in place “a transparent, standardized, and internationally aligned voluntary reduction market,” according to a document on Monday from the Communist Party Central Committee and the State Council. The measures will help deliver President Xi Jinping’s pledge to peak China’s emissions by the end of the decade.
The plan also calls for setting absolute limits on emissions, a tougher standard than the current system, which imposes caps based on carbon intensity and allows emissions to rise over time.
China has become the world’s biggest carbon polluter after rapid economic expansion pushed up its emissions. The plan to add more industries by 2027 is three years ahead of schedule and highlights the government’s determination to meet its climate targets. It should also help breathe life into an often sluggish carbon market.
The new industries will “definitely help to spur demand, which is what the government hopes to see,” said Camille Wee, an analyst at BloombergNEF. “Hopefully, this means a slightly more aggressive emissions pathway for China,” she said.
China’s carbon market was launched four years ago, covering only power generators, the country’s main source of emissions. Three other heavily polluting industries — steel, aluminum and cement — will be added this year, although they’ll be subject to less stringent rules in their first two years of inclusion.
President Xi in April committed the country to more rigorous curbs on greenhouse gas emissions over the next decade, and pledged to show global leadership on the issue after the US under the Trump administration retreated from its obligations.
The carbon market’s accelerated timeline is more closely aligned to policy moves in the European Union, which will impose a carbon tax on industry from 2026. That will put the onus on Chinese firms to accurately account for and offset their carbon footprints to avoid levies when they export to Europe.
(Corrects year of EU’s carbon tax in last paragraph)
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