China expands compliance carbon market to steel, aluminum, and cement sectors

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China’s Ministry of Ecology and Environment (MEE) released a work plan on March 26 to expand the national compliance emission trading scheme (ETS) to the aluminium, steel, and cement sectors, without imposing significant costs on these sectors in the first compliance cycle ending Dec. 31, 2025.

In 2025, the amount of compliance emission allowances issued to individual aluminium, steel, and cement producers will be equivalent to their verified 2024 emissions, the work plan showed, which means these producers will not need to buy any emission allowance during their first compliance cycle.

The work plan provided a clear signal to these sectors that have very limited experience in carbon trading and worry about the ETS' financial impacts on their businesses.

However, the relatively loose ETS regulation could also impede investments in decarbonization solutions in these hard-to-abate sectors.

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