China's HBIS readies group members for trading in national carbon market

Chinese steel manufacturing conglomerate Hebei Iron and Steel Group (HBIS) has unveiled an official work plan to simulate trading in the country's national carbon market, taking the lead for such trading within China's steel industry, according to the steel group's latest release via its official WeChat account on Sunday afternoon.

The initiative to get member companies ready for participating in carbon trading is HBIS's response to China's dual carbon goals, namely to reach peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060, as Mysteel Global has reported. The steelmaker's initiative marks the beginning of a new chapter in "green development" of the country's steel industry, HBIS said.

China's national carbon emissions trading market or emission trading scheme (ETS) began operations in July 2021, but so far, the market has focussed only on the coal-fired electricity generation sector, which produces 5.1 gigatonnes of carbon dioxide emissions annually and accounts for over 40% of the country's total. The market covers 2,257 power-generating enterprises, Mysteel Global notes.

The steel giant's work plan specifies the use of real data on carbon emissions collected from HBIS units to simulate the trading process in the national carbon market "while strictly adhering to the procedures of carbon emission reporting and verification," it said. Headquartered in Shijiazhuang in North China's Hebei province, HBIS has some 30 key group members under its umbrella though how many of these will be joining the scheme preparing for carbon trading is unknown.

HBIS says it will simulate the "entire trading process" and cover all elements in the national carbon market. The group will allocate emission allowances for free to participating units with which they may trade in the market, while also adopting the "voluntary certificate emission reduction scheme" that allows any unit to purchase carbon credits so as to enhance the authenticity of the trading activities, according to the plan.

A carbon credit is a certificate that permits a company to emit one tonne of CO2 or other greenhouse gases, Mysteel Global notes.

The simulation will be implemented in stages, with the first compliance period mainly covering carbon that is generated during sintering and ironmaking in the blast furnace-basic oxygen furnace (BF-BOF) steelmaking route. Subsequently, HBIS will gradually expand to the whole process of the BF-BOF route and incorporate the electric-arc-furnace route and hydrogen metallurgy processes as well, the release said.

Last December, HBIS signed an agreement with Australian miner BHP to trial direct reduced iron (DRI) production and utilisation of BHP iron ores in blends aimed at lowering blast furnace carbon emissions. The DRI plant uses hydrogen-rich gas byproducts in the steelworks to convert ore into a metallic iron product that is further refined for steel, according to BHP.

"We are working with HBIS Group to demonstrate the use of BHP iron ores in DRI production trials," BHP's chief commercial officer, Vandita Pant, said at the time. "Together with other collaborations we have underway, including electric smelting development, the outcomes are expected to provide pathways to reduce carbon emissions from steel production using BHP's products," she said.

Note: This article has been written in accordance with an article exchange agreement between MySteel Global and BigMint.