In 2024, China has accelerated its formulation of carbon emission standards, shifting from long-term planning to specific target-oriented policies. Since May 2024, China has released an average of one carbon emission standard per month, a frequency that far exceeds the previous annual rate. A total of 37 new national carbon-related standards were introduced and implemented in 2024 alone, surpassing the total introduced over the past decade.
The development of corporate carbon emission accounting standards (41 standards) has outpaced the quantification standards for product carbon footprints (6 standards), with the latter slowing down. The latest planning calls for accelerated development of standards for key export products such as new energy vehicles, photovoltaics, and lithium batteries between 2024-2025, in preparation for stricter international carbon regulations from 2026 onwards. The 2023 target aims to establish approximately 50 key product carbon footprint quantification standards by 2025.
Note: Corporate carbon emission accounting tracks the emissions from a company's operations, whereas product carbon footprint quantification follows the emissions from a product's entire lifecycle. These standards provide rules for calculation and quantification, not limits on emission levels.
Impact on the Petrochemical Industry: The implementation of national standards provides a technical foundation for integrating the petrochemical industry into the national carbon emission trading market (the National ETS). These standards cover carbon emission accounting scope, methods, measurement, and detection requirements. Over 30 refining and petrochemical enterprises under CNPC, Sinopec, and CNOOC have already been incorporated into the mandatory national carbon market. It is anticipated that before 2030, the entire petrochemical sector will be fully included in the carbon market. In the long term, rising emission reduction costs will likely force inefficient, high-emission companies to exit the market.
Eliminating inefficient, high-emission capacity has been a key target for the petrochemical industry in recent years. By the end of 2025, refinery capacity below the benchmark level is to be eradicated, with about 15% of capacity currently not meeting energy efficiency benchmarks. Next year is expected to see an acceleration in upgrading and phasing out inefficient capacities and outdated processes, with a focus on eliminating crude distillation units (CDUs) of 2 million tonnes per year and below.
The above content is the major conclusions and highlights extracted from China (Energy Transition) Policy Perspective. To get detailed full text, send an email to glconsulting@mysteel.com.
