China has introduced a new five-year plan to facilitate the development of the country’s raw materials industry, ordering the sector to make green and digital upgrades to balance supply and demand, and support China’s carbon neutrality goals.
The plan, issued by the Ministry of Industry and Information Technology (MIIT) and two government agencies on Wednesday, set several targets and laid out the key tasks for the raw materials sector to achieve higher quality, better profitability and distribution, with low carbon emissions during the 14th Five-Year Plan period through 2025.
By 2025, the production capacity of major bulk raw material goods such as crude steel and cement should drop or not increase further, according to the plan. The government also ordered the energy consumption per tonne of steel to be reduced by 2 per cent by 2025, while usage per unit of cement should be cut by 3.7 per cent, and electrolytic aluminium is required to use 5 per cent less energy for every unit produced by 2025.
“The demand for major bulk raw material products such as steel, electrolytic aluminium, and cement will gradually reach their peaks or plateaus, and the momentum for large-scale demand expansion will tend to weaken,” the plan said. “Facing requirements in energy and resources, as well as the goal of carbon peaking and carbon neutrality, the task of green and safe development in the raw material industry is even more urgent.
China pledged in September 2020 that the country’s total carbon emissions would peak by 2030, and reach carbon neutrality by 2060. This is also the first time Chinese authorities combined the petrochemical, steel, non-ferrous metals, building materials, as well as new materials sectors together to make such a development plan, according to Chen Kelong, head of raw material industries at MIIT at a Wednesday press conference.
The raw materials sector has long served as a foundation for China’s economy. According to MIIT, the added value of the raw material sector accounted for 27.4 per cent of all of China’s above-scale industrial sectors in 2020.
However, the energy-intensive raw materials sector also has huge environmental impacts on China, which relied heavily on coal to generate about 57 per cent of its annual electricity output last year.
As the world’s biggest crude steel consumer and producer, the sector contributed to about 15 per cent of China’s total carbon emissions. The aluminium sector in China also has a serious coal problem, using almost 500 terawatt-hours (TWh) of electricity for electrolysis in 2019, among which 430 TWh were generated from coal, according to London-based think tank Ember.
To support the country’s carbon neutral goals, the Chinese authorities have taken actions to regulate the raw material sector’s emission problems.
In November, the National Development and Reform Commission (NDRC), China’s central economic planner, introduced a new set of consumption benchmarks for the nation’s five high energy-consuming industries including steel, cement, and chemicals in the raw materials sector, ordering them to improve energy efficiency and reduce emissions.
The national emissions trading scheme (ETS), a quota system introduced in China in July to regulate emissions currently among power companies, will also expand its coverage to include companies in steel, non-ferrous metals, chemicals, petrochemicals, building materials later and regulate their carbon emissions.
“The plan proposed that by 2025, the proportion of the added value of raw materials sectors in manufacturing should remain stable, this means that the raw material sector will still maintain a certain growth,” said Zhang Ge, a researcher at Citic Futures in a report on Thursday.
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