China to set hard targets for curbing CO2 emissions

Spanish Market: Coal, Crude oil, Electricity, Metals, Oil products, Petrochemicals
02/08/24

China is planning a shift in the way it controls greenhouse gases, specifically carbon dioxide (CO2) emissions, in a move that could support progress in its national emissions trading scheme (ETS), although it is unclear what emissions levels will be targeted.

The country currently measures CO2 against economic growth, or emissions per unit of GDP in what is known as carbon intensity. This allows it to tout progress despite rising emissions so long as these do not rise faster than GDP. But it plans to change this.

Beijing aims to incorporate CO2 indicators and related requirements into national plans and establish and improve local carbon assessments in a goal to improve CO2 statistical accounting. This will affect sectors including the power, steel, building materials, non-ferrous metals, and petrochemicals sectors, according to a state council work plan issued on 2 August.

It will evaluate CO2 emissions of fixed asset investments and conduct product carbon footprint assessments while local governments will implement provincial carbon budgets that could enter trials in 2025. The latter will involve a wide range of industries including oil, petrochemicals, coal-to-gas, steel, cement, aluminium, solar panels manufacturing and electric vehicles, among others.

Beijing is hoping such measures will allow it to set hard targets for CO2 emissions from 2026-2030, although the government will still prioritise intensity control in the meantime in what it calls a ‘dual-control mechanism' — switching from controlling intensity to actual emissions of CO2. Provinces are expected to be allowed to further refine this dual control mechanism, suggesting it will may give localities some leeway to adjust.

China's ETS currently includes only the power sector due in large part to challenges collating accurate CO2 emissions data from other sectors, although it is expected to include other sectors like aluminium into the scheme soon.

China unveiled new regulations for its ETS earlier this year, aiming to crack down on falsification of data. It sees the ETS as a tool to help it meet a goal to peak carbon emissions before 2030 and reach carbon neutrality before 2060.

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

30/12/24

Viewpoint: Cu smelting capacity to outpace mining

Shanghai, 30 December (Argus) — The global copper concentrate market will likely remain tight in 2025, as an expected rise in copper smelting production capacity is set to outpace new copper mining projects and expansions. Argus expects 2.8mn t/yr of copper smelting capacity to come on stream next year, with 1.25mn t/yr of this coming from China and 1.55mn t/yr from the rest of the world. Major Chinese copper producer Tongling Nonferrous plans to launch two copper smelters in the second half of 2025, with a combined production capacity of 800,000 t/yr. The firm's 500,000 t/yr Tongling Jinxin smelter is expected to start up in the middle of 2025, pushed back from an initial launch date of the end of this year because of tight supply of copper concentrate feedstock. And the firm's 300,000 t/yr Tongling Jintong smelter is projected to start operations in October, with 200,000 t/yr of refined copper and 100,000 t/yr of copper anode production. But the company has not confirmed if it has secured enough copper concentrate to support either project. Major Chinese metals producer Guangxi Jinchuan Nonferrous is expected to begin operations at its new smelter at the end of this year, with a copper anode output capacity of 300,000 t/yr. And fellow domestic company Huading Copper finished building a new 100,000 t/yr refined copper project in November, according to market participants. Elsewhere, Indian conglomerate Adani launched a 500,000 t/yr smelter earlier this year and is expected to steadily ramp up to production capacity by 2026. Indonesian mining company PT Amman had planned to launch a 200,000 t/yr copper smelter in the fourth quarter of this year. US-based firm Freeport's Indonesian subsidiary is projected to resume production at its 300,000 t/yr Manyar smelter in the third quarter of 2025 after the facility was brought off line following a fire in October. And a 500,000 t/yr blister copper smelter at the Kamoa-Kakula mine in the Democratic Republic of Congo is expected to begin production in February. Supply growth Growth in copper concentrate supply next year is expected to mainly come from expansion projects at existing mines, with 1.2mn t/yr of additional mining capacity in the pipeline, according to Argus calculations. The first phase of Russia's Malmyzh mine is due to start operations in 2025, with a copper production capacity of 150,000 t/yr. Mongolia's Oyu Tolgoi mine will continue ramping up production next year, in a bid to lift its copper output to 500,000 t/yr by 2028 from 168,100t in 2023. And the commissioning of Kamoa-Kakula's phase 3 in August 2024 will lift copper output at the mine to 600,000 t/yr in 2025 from 450,000 t/yr previously. Two mining expansions in Chile are expected to boost global copper production next year. Australian mining group BHP is scheduled to lift copper cathode output at its Escondida mine to 410,000 t/yr over a 10-year period, having produced 198,600t in the July 2023-June 2024 fiscal year. And Chilean copper producer Codelco's El Teniente mining project is due to increase copper output to 500,000 t/yr by 2025 from 245,500 t/yr in January-September. Lower utilisation rates But mining supply growth may be insufficient to meet the additional demand from new and expanded smelting capacity, meaning global copper smelters will likely have to reduce their utilisation rates to 70pc in 2025 from 75pc this year, according to industry forecasts. "The Onsan copper smelter in South Korea is likely to cut its output by 100,000t to 550,000t for 2025, because of concentrate supply tightness," a trading company told Argus . Some Chinese smelters have already cut production capacity in response to tight copper concentrate supply or because of accidents at their facilities. "Liaoning Shenghai Copper, Guangxi Nanguo Copper, Baiyin Nonferrous, Chifeng Fubang Copper and Daye Yangxin Hongsheng have suspended operations, removing a combined 1mn t/yr of production capacity," a trader said. Extended talks over 2025 benchmarks Annual benchmark talks between Chinese smelters and representatives from Chile-based mining firm Antofagasta for copper concentrate supplies in 2025 were subject to long delays. Major Chinese smelter Jiangxi Copper and Antofagasta finally settled their treatment and refining charges for copper concentrate supplies for 2025 on 5 December, at $21.25/t and 2.125¢/Ib respectively, down from $80/t and 8.0¢/Ib in 2024, according to market participants. Chinese copper smelters and overseas concentrate suppliers usually agree charges during the Asia Copper Week conference, which was this year held in Shanghai over 13-14 November. But settlements were delayed to early December because of the two sides' significant differences in price ideas. Antofagasta quoted $10/t for treatment charges in the first round of negotiations, but smelters bid $45/t and conceded to $35/t, market participants told Argus . New copper mining capacity/expansions '000 t/yr Mine Location Capacity Start-up Oyu Tolgoi Mongolia 300 2025-28 Kamoa DRC 150 3Q24 Kansanshi S3 Zambia 55 mid-2025 El Teniente new mine level Chile 170 1Q25 Comide DRC 40 end of 2025 Malmyzh Russia 150 2025 Escondida Full Sal Chile 200 3Q24-2Q25 Tongling Non-Ferrous Mirador II Ecuador 75 Jun-25 Salvado Rajo Inca Peru 90 late 2024 Total 1,230 — Argus New copper smelter capacity '000 t/yr Smelter Location Capacity Start-up Tongling Jintong Copper Inner Mongolia, China 300 Oct-25 Yunnan Copper relocate Yunnan, China 50 late 2024 Guangxi Jinchuan Guangxi, China 300 end of 2024 Tongling Jinxin Copper Anhui, China 500 mid-2025 Huading Copper Inner Mongolia, China 100 2025 Adani India 500 2024-26 Freeport Indonesia Indonesia 300 3Q25 PT Amman Indonesia 200 4Q24 Kamoa-Kakula DRC 500 Feb-25 Kansanshi S3 Zambia 55 mid-2025 Total 2,805 — Argus Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: European diesel to stay under pressure

30/12/24

Viewpoint: European diesel to stay under pressure

London, 30 December (Argus) — The European diesel market appears to be in a period of transition defined by economic headwinds, a decline in structural demand and anticipated refinery closures in the new year. These factors are exerting downward pressure on diesel refining margins, with the IEA forecasting no return to the high margin environment experienced immediately after the Covid-19 pandemic. Margins in Europe have been trending downwards in 2024 to below $17/bl, lower by a third from $28.53/bl in 2023 and less than half the heady levels of $37.27/bl in 2022. The economic rebound experienced in the immediate aftermath of the pandemic bequeathed a high inflationary environment, and this became a significant headwind in Europe going into 2024. Central banks tightened monetary policy to counteract this, dampening economic activity and as a consequence demand for diesel, the primary fuel grade powering transport fleets, construction equipment and manufacturing. European demand has been notably lacklustre. The largest economies in the region, Germany and France, saw diesel consumption decline by 4pc and 3pc respectively in 2024, according to the most recent published data. The former's loss of cheap Russian gas has undermined its economic model, which appears to have had a structural effect on national diesel demand. Any improvement in European economic fortunes in 2025 will likely provide a tailwind for outright diesel values. Driving issues Europe is also experiencing a systemic decline in diesel vehicle usage as electric and hybrid vehicles take up an ever increasing share. Newly-registered diesel passenger vehicles made up 14.9pc of the German market and 6.1pc of the UK market in November, according to SMMT and KBA data, compared with 31.6pc and 45.8pc for pure gasoline vehicles. New hybrid vehicles claimed a 38.7pc market share in Germany. Delays to outright national bans on new diesel or gasoline vehicle sales may stem the decline in popularity for diesel vehicles, but the trend is unlikely to be reversed. European refinery closures could serve to rebalance the market next year. Petroineos' 150,000 b/d Grangemouth refinery in Scotland will become an import terminal. In Germany, Shell will cease crude processing at its 147,000 b/d Wesseling refinery and BP plans to permanently shut down a crude unit and a middle distillate desulphurisation unit at its 257,000 b/d Gelsenkirchen plant. The degree to which these capacity losses are baked into market pricing is debatable, as the refiners could decide to delay closures in the event that diesel margins recover. But the limited effect of recent unscheduled refinery outages in the Mediterranean region illustrates how Europe can bear to lose two crude units, at least in the short term. In 2025, European diesel prices may again take direction from developments outside the region, particularly the profitability of key arbitrage routes from the US Gulf coast, the Mideast Gulf and India. European diesel values and margins were affected by refinery turnarounds in supplier regions in 2024. Prices may come under further pressure in 2025 from the start of 10ppm diesel production this month at Nigeria's 650,000 b/d Dangote refinery, which could completely offset the loss in European refining capacity. Any easing in Yemen-based Houthi militant aggression in the Red Sea may encourage diesel cargoes back through the Suez Canal, cutting down delivery times and weighing on supply volatility. Price-supportive developments may come from the EU tightening sanctions on Russia's 'dark fleet', which could weigh on global supply, and an upcoming US refinery maintenance season that is is touted to be disruptive. Two US refineries will close in 2025. By George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Singapore extends electric vehicle incentive to 2027

30/12/24

Singapore extends electric vehicle incentive to 2027

Singapore, 30 December (Argus) — Singapore has extended the incentive for electric light commercial vehicles under its Commercial Vehicle Emissions Scheme (CVES) to 31 March 2027 from 1 April 2025. Incentives for more pollutive vehicles will also be scrapped or their surcharges raised, under the CVES. This is part of efforts to push for the adoption of cleaner commercial vehicles. The country's CVES categorises vehicles based on their "worst-performing pollutant". The S$15,000 ($11,060) CVES incentive for Band A, which includes mainly electric vehicles, has been kept unchanged at S$15,000, according to a joint statement by the city state's Land Transport Authority (LTA) and National Environment Agency (NEA). The S$5,000 incentive for Band B, which includes mainly petrol vehicles, will be scrapped, while the surcharge for Band C, which includes mainly diesel vehicles, will be raised from S$15,000 to S$20,000. "These changes are in line with the government's vision to have all vehicles run on cleaner energy by 2040," the LTA and NEA said in their joint statement on 30 December. Singapore will be halting new registrations for diesel cars and taxis from 2025, it said in July. Existing diesel cars will also be subject to higher road taxes. The country's Early Turnover Scheme (ETS) for heavy commercial vehicles, which promotes the replacement of older, more pollutive diesel commercial vehicles and buses by providing a discount when switching to cleaner-energy vehicles, will be extended to 31 December 2025. There were 11,941 battery electric cars in Singapore as of end-2023, which constituted just 1.8pc of its 2023 car population of around 651,300 units. The figure for petrol-electric hybrid cars, excluding plug-in vehicles, was much higher at 79,256 as of the end of 2023. By Joseph Ho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: rPET demand robust but challenges persist

30/12/24

Viewpoint: rPET demand robust but challenges persist

London, 30 December (Argus) — Europe's plastics recycling market will be supported by legislation and voluntary recycled content commitment goals in 2025. But lower costs for virgin polyethylene terephthalate (PET) resin and competitive imports will likely weigh on the sector. Recycled PET (rPET) is a plastic made from recycled bottles, containers and PET waste, and is the material most commonly used by packaging manufacturers to help meet their sustainability goals. New EU legislation should provide a stable level of demand for the recycling industry in 2025, with the Single Use Plastics Directive (SUPD) coming into effect on 1 January. The directive mandates collection and recycling targets for all member states, requiring PET beverage bottles to have a minimum recycled content of 25pc. But there are some uncertainties that undermine the security the legalisation was intended to provide. The SUPD mandates recycled goals at member state level, and so the responsibility to purchase and use rPET at a premium to virgin PET resin has not yet been passed down to individual companies. Some pushback from market participants in the value chain, which will bear the burden of the premium cost for recycled content, is anticipated. Another issue is that the penalties for member states not meeting the set targets have yet to be communicated. The impact of the SUPD will not be fully felt in Europe's rPET market until the consequences for not reaching goals are clarified and systems such as extended producer responsibility schemes are implemented to ensure equal compliance. This is unlikely to be before the second half of 2026 at the earliest. Although many large companies and fast-moving consumer goods (FMCG) brands have already set voluntarily recycled content targets for beverage bottles that go above and beyond the SUPD requirements, the recycling market is under pressure from wider economic concerns. A recovery in consumer packaging demand in 2024 has not been enough to prevent some brands from switching to lower-cost virgin PET resin, a dynamic that is expected to continue throughout 2025. Meanwhile, some brands have omitted 2025 targets from their sustainability reports and have scaled back their ambitions. . Availability of high-quality PET bale, likely to be used in food grade applications, has tightened towards the end of 2024 and could tighten further at the beginning of the new year, supporting prices in the first quarter when collection volumes are seasonally at their lowest. Demand from preform and packaging manufactures should return for the peak season of packaging consumption from March onwards, but market participants expect it to be lower than originally projected for 2025. Recyclers are well stocked and, in some cases, oversupplied with flake and food grade pellet volumes as a result of low demand throughout 2024. There is likely to be some pressure on flake and food grade prices in the first quarter and margins for recyclers may continue to be slim. Converters and packaging companies closely monitored inventory levels throughout 2024, purchasing on a hand-to-mouth basis. If end use consumer demand is stronger than expected over the peak summer season, flake and food grade prices may find support as market participants restock, allowing recyclers to regain some margin. But European recyclers continue to be concerned about competitive imports, with many calling for a level playing field . Market participants are worried that if demand picks up and the market begins to tighten, imports offered at significant discounts to European material will undercut recyclers and again weigh on European prices and recycler margins. Although the outlook for 2025 is uncertain for recyclers, there is some quiet optimism. It will be a year of transition and adjustment as the market adapts to the legislative changes and tries to mitigate the challenges endured over the past few years. By Chloe Kinner Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Consolidation looms in US methanol

27/12/24

Viewpoint: Consolidation looms in US methanol

Houston, 27 December (Argus) — The sale of Netherlands-based OCI's methanol production assets to rival producer Methanex is set to shift the market, with US methanol production most affected by the move. Methanex in the third quarter of 2024 announced the $2bn acquisition, which is expected to close in the first half of 2025. The boards of directors of both companies and OCI's shareholders approved the transaction, but it is subject to regulatory approvals. OCI operates the 1mn t/yr OCI Beaumont plant and is a 50:50 partner in Natgasoline, a 1.7mn t/yr joint-venture plant between OCI and Proman. Methanex operates three plants in the US, all in Geismar, Louisiana. These plants carry a collective 4mn t/yr capacity and represent one-third of total US methanol capacity. At front and center of the acquisition is the Natgasoline plant in Beaumont. Natgasoline, when operational, represents 14pc of domestic production. The plant opened in 2018, and throughout those six years, the plant has seen its share of operational issues. The most recent was a fire at the reformer unit in early October, resulting in a complete shutdown lasting nearly three months. When the deal was announced, Methanex made it clear that the transaction was subject to approvals by OCI shareholders, as well as a pending legal decision between OCI and Proman. "If it is not settled within a certain period, Methanex has the option to carve out the purchase of the Natgasoline joint venture and close only on the remainder of the transaction," the company said in September. Methanex and OCI declined to give further details, as the deal is still pending. Proman did not respond to a request for comment. If it goes through, the acquisition would result in the exodus of OCI from the US methanol market. But the issue of liquidity in the US spot barge market is also looming. Market participants said OCI is a frequent buyer when the Natgasoline plant goes down. In October, when Natgasoline was completely shut down, 340,000 bl of methanol moved for delivery at ITC, the terminal on the Houston Ship Channel where methanol is exchanged, according to Argus data. Market participants expect liquidity to be about the same until some time after the deal closes. When a plant goes down, a producer will emerge in the spot market for purchases. In the longer term, there are some questions around international distribution and where US methanol exports find a home. Methanex is a major exporter to Asia, whereas OCI sells into the European market. The low-carbon methanol sector will also experience some shakeup. OCI is a major participant in the bio-methanol space, selling volume into Europe. Methanex produces carbon-captured methanol, also known as blue methanol, which has not penetrated the EU market. By Steven McGinn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more