China to add steel and aluminium to carbon market in late 2024

China will expand its national carbon trading market to include the steel, aluminium and cement industries at the end of this year, Bloomberg reports.

The country will thus push polluting sectors to reduce emissions, a move the market had been expecting.

The deadline was announced at an industry conference by China’s Minister of Ecology and Environment Huang Zhongqiu. As a result, Chinese steel, aluminium and cement producers will soon face additional costs for carbon emissions. At the same time, the country’s authorities hope that the reduction in emissions will help cushion the blow from the European Carbon Border Adjustment Mechanism (CBAM).

Currently, the mandatory market covers about 2,200 energy companies, but polluters are in no hurry to change their policies due to low prices and carbon taxes. The expansion of the carbon market will pave the way for the inclusion of seven additional sectors – Beijing aims to cover 70% of its total emissions by 2030.

In July this year, China updated its roadmap for achieving carbon neutrality in the steel industry. The country is committed to reducing carbon dioxide emissions in the steel industry by 40% in 2040, 85% in 2050 and 95% in 2060.

The China Steel Industry Expert Committee added information on the European CBAM, low-carbon steel, emissions trading and low-carbon finance to the roadmap. The latest document also contains a list of 51 technologies covering six ways to reduce carbon emissions.

Challenges to decarbonisation for Chinese steelmakers include limited investment cycles and expensive energy (natural gas and hydrogen), which are needed in the long term.