What’s new: China’s national emissions trading scheme (ETS) is set to expand to cover the electrolytic aluminum sector, Caixin has learned, as the compulsory carbon market pushes ahead to expand beyond the power sector and include more heavy emitters.
Preparations are underway for the “imminent inclusion” of the sector, one official familiar with the matter told Caixin, without giving further details.
The China Nonferrous Metals Industry Association and relevant departments had finished drafting regulations for the electrolytic aluminum industry to join the ETS, its deputy director Chen Xuesen told the Economic Information Daily in February.
These will include setting an emissions cap, allocating emissions quotas, and calculating and verifying emissions data, he said, adding the expansion could cover more than 80 aluminum factories.
After the expansion is announced, transactions could initially be conducted through a simulation mechanism to ease pressure on electrolytic aluminum makers, one person familiar with the carbon market told Caixin.
The background: The Chinese government has been working to expand the mandatory ETS to support its “dual carbon” goals. It had hoped to incorporate two to three new sectors into the national ETS in 2022 and for the scheme to cover eight high-emitting sectors by 2025.
But expansion had been slow due to reasons including data quality issues, Zhang Xiliang, a leading carbon market expert, previously told Caixin.
Electrolytic aluminum, which involves extracting aluminum from aluminum oxide via electrolysis, emits the most carbon in the non-ferrous metals sector in China. It was responsible for 4.5% of the national total carbon emissions in 2020, according to Guosheng Securities Co. Ltd.
Cement, the third-largest carbon-emitting sector in China in 2020 after power and steel, is another industry expected to be included in the ETS soon.
You Xiaoying contributed to the story.
Contact reporter Kelsey Cheng (kelseycheng@caixin.com)
