Chinese refiners face carbon trading risk

Beijing’s net-zero commitment means the refining and petrochemicals sector is likely to be included in the country’s ETS scheme sooner rather than later

China’s refining and petrochemicals sector—already squeezed by escalating lockdowns from a growing Covid outbreak—will need to contend with its eventual inclusion in the fledgling national carbon market, with smaller players operating older outdated plants at risk of being edged out of the industry. China—which accounted for one-third of global CO₂ emissions last year—launched its long-awaited emissions trading system (ETS) in July 2021 after repeated delays. Cumulative trading had reached 179mn t by the end of last year, with an aggregate transaction value of RMB8.1bn ($1.27bn). The system covers only the thermal power generation sector, but as this accounts for 40pc of the country’s carbon