China plans to expand carbon market to include hard-to-abate sectors: China has issued plans to expand its carbon trading scheme to include steel, cement, and aluminium smelting industries, Reuters reported on Wednesday, citing an Environment Ministry statement. The expansion will bring the total volume of carbon traded in the country from 5 bn metric tons to 8 mn, which is equivalent to more than 60% of China’s total emissions, ministry spokesman Pei Xiaofei said.

How does it work? The move will require 1.5k more firms to buy credits to offset their emissions if they exceed the emissions allowance the government has set. The allowance will be set against 2024 emissions, but will be gradually reduced to encourage emissions reduction while minimizing economic disruption.

REMEMBER- China issued a comprehensive legal framework for its national emissions tradingscheme in February 2024. The country had resumed carbon trading after a seven-year hiatus on its national voluntary carbon trading market on the Beijing Green Exchange the month prior, and revealed four new decarbonization assets from which carbon credits can be generated, including forestation, mangrove cultivation, solar thermal power, and grid-connected offshore wind power projects.

Lithium outlook unstable on the short term, says Lopal: China-based Jiangsu Lopal Tech, a lithium production partner to the world’s major battery maker Contemporary Amperex Technology’s (CATL) — is forecasting volatility in the lithium market in the short term due to supply growth exceeding that of demand, Chairman Shi Jungfeng told Bloomberg in an interview on Monday. Prices could move between CNY 65k-85k per ton compared to current trading at around CNY 73k. In the medium term, prices will rise and stabilize at about CNY 100k per ton, which will help sustain the industry over the long term.

REFRESHER- Lithium prices were set to stabilize this year — two years after an 86% price decline — on the back of surging EV sales in China and shuttered mines and refineries helping manage oversupply. It was expected, however, that the price adjustment would be halted if mines reopened.

ICYMI: Lopal and CATL resumed operations at their joint lithium carbonate refinery in China in February after a five-month pause, making it difficult for lithium prices to recover from a market surplus and unstable EV demand.

China plans critical mineral reserve push: China’s National Food and Strategic Reserves Administration is looking to buy up cobalt, copper, nickel, and lithium amid rising demand for resources for the energy transition and geopolitical uncertainty, Bloomberg reported last week, citing unnamed sources. The move aims to alleviate pressure during crunch periods as well as balance supplies and make sure prices are stable. The authority has reportedly inquired about prices and made bids for some of the metals.

REMEMBER- Beijing took steps earlier this year to tighten its export controls on key technologies used in extracting and processing critical minerals to consolidate its control over EV supply chains worldwide. China targeted battery cathode tech and technology used in extracting and processing lithium, recycling batteries, and preparing phosphate, manganese, and lithium hydroxide and carbonate for battery production.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

  • Apple to launch USD 99 mn clean energy fund in China: Apple will set up a CNY 720 mn (c.USD 99.2 mn) clean energy fund in China to expand its renewable energy capacity in the country. The fund is part of Apple’s broader push to transition its entire supply chain to 100% renewable energy by 2030. (Reuters)
  • Vattenfall to build Germany’s largest offshore wind project: Swedish power utility Vattenfall has made a final investment decision on the 1.6 GW Nordlicht 1 and 2 wind projects in the German North Sea. Construction is set to begin next year to reach full operational capacity in 2028 at 6 TWh per year. (Press release)
  • Total invests in battery storage in Germany: TotalEnergies will invest EUR 160 mn in six battery storage projects in Germany, which are set to go live in 2026. The 221 MW projects will be developed by Kyon Energy, and will be equipped with batteries from Safr — both German subsidiaries of the French giant. (Press release)
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