China Vows to Expand Carbon Market in Push to Control Emissions

(Bloomberg) -- China’s top leaders pledged to expand the nation’s emissions trading system to cover more industries amid a wider push to accelerate efforts to limit greenhouse gas pollution.

The world’s largest emitter “will speed up the establishment of a framework for controlling the total amount and intensity of carbon emissions and expand the coverage of the China Carbon Emission Trade Exchange to more sectors,” Premier Li Qiang said in his report on the government’s work to the National People’s Congress on Wednesday

Trading in the market, which currently covers only power plants, has picked up since its launch in 2021, though prices remain far lower than in Europe and are seen as insufficient to push major polluters to take action. 

China’s government has signaled it plans to add steel, aluminum, and cement producers by the end of 2025 to ensure the market covers a larger share of the country’s total emissions.

Prices in the emissions market touched a record high of 105.65 yuan ($14.54) a ton in November, though have since declined as polluters have sought greater clarity on potential policy reforms.  

China will launch initiatives for carbon emissions statistics and accounting, along with developing carbon labeling and certification, Li said in the report. The nation will also “take active steps to respond to green trade barriers,” he said.

Construction of clean energy bases in the nation’s deserts — a key driver for wind and solar power growth — will be accelerated, and more will be done to integrate renewables into local grids. Offshore wind and grid construction would also be a focus, along with zero-carbon industrial parks and factories, he said. Coal-fired power plants will be targeted with trials of low-carbon upgrades.

Li also confirmed China intends to continue to play a key role in diplomacy on emissions reduction, as the US retreats from international cooperation. “We will develop a package of major projects for climate change response and actively engage in and steer global environmental and climate governance,” he said in the report.

Still, China’s most important climate-related target was underwhelming. Beijing is targeting a 3% reduction in energy use per unit of gross domestic product, well below the 3.8% mark it hit last year.

The miss was “due to rapid growth in the energy consumption in industries and the civilian sector as a result of post-Covid economic recovery and frequent extreme weather events,” China’s top economic planning agency, the National Development and Reform Commission, said in a separate report.

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