Asia's Carbon Markets Strategic Imperatives for Corporations 2025

Appendix The emission coverage of China’s ETS market depends on two variables: the total emissions volume trajectory of the industries to be covered and the sequence and speed of ETS expansion into new industries. Future ETS market coverage is the largest when both the total emissions and the expansion speed are high – indicated by scenario 1 below. On the contrary, if both total emissions and the expansion speed are low, that results in the smallest estimation of ETS emissions coverage, as indicated by scenario 2. Scenario 1 Total emissions from the eight industries are assumed to reach their peak during 2026-2027, with peak emissions of around 10.0-10.6 billion tonnes CO2. Total emissions are assumed to gradually reduce to around 9.5-10.0 billion tonnes CO2 by 2030. After encompassing power, steelmaking, electrolytic aluminium and cement by 2025, the ETS market is assumed to include the steel processing, oil refining and synthetic ammonia industries by 2026, the methanol industry by 2027, and the glass, copper smelting, ethylene, papermaking and aviation industries by 2029. Note that this is a relatively optimistic assumption of the pace of ETS expansion. Scenario 2 Total emissions from the eight industries are assumed to reach their peak during 2027-2028, with peak emissions of around 9.5-10.0 billion tonnes CO2. Total emissions are assumed to gradually reduce to around 8.5-9.0 billion tonnes CO2 by 2030. The ETS market is assumed to include the steel processing, oil refining, synthetic ammonia and methanol industries by 2028 and the copper smelting, ethylene, papermaking and aviation industries by 2030. Model assumptions on China’s ETS market outlook Asia’s Carbon Markets: Strategic Imperatives for Corporations 47