(Yicai Global) March 11 -- Chinese cement makers, including sector leaders Ningbo Fuda and Sichuan Golden Summit Group, advanced strongly today after reports broke that China might include more sectors that generate large quantities of greenhouse gases, such as cement producers, into its new emissions trading scheme.

Ningbo Fudan soared 10 percent to CNY3.64 (USD0.56) and Golden Summit also hit the exchange-imposed limit up to reach CNY6.07.

China will gradually include the petrochemical, chemical, building materials, iron and steel, non-ferrous metals, papermaking and aviation industries into its carbon market, the Securities Times reported earlier, citing the Cailian Press. For now it encompasses the power sector and about 2,000 electricity generation plants. Newly-added industries will first be traded in pilot markets, it added.

China’s emissions trading scheme, which launched last month, is open to designated industries that emit over 26,000 tons of greenhouse gases a year, equivalent to the consumption of 10,000 tons of coal, according to the Ministry of Ecology and Environment. The aim is that it will get companies to pay firms with a lower carbon footprint for the right to pollute. Eligible companies must also report their carbon emission data, meet carbon emission quotas, disclose trading information and be open to supervision, it added.

Including the cement sector into the emissions market will help spur businesses to reduce emissions by upgrading their technology and also encourage them to find ways to recycle power, such as from waste heat, household refuse and carbon capture technology. Anhui Conch Cement, for example, has spent CNY580 million (USD89.3 million) on harnessing heat seepage from its clinker production lines to generate power.

The cement industry accounts for 13.5 percent of the country’s total emissions. Controlling production capacity is the most direct and effective way to cut emissions, according to Industrial Securities. But a large reduction in output will likely cause drastic price fluctuations, so a gradual reduction may be a more reasonable measure.

China tested carbon emission trading in seven provinces between 2011 and August last year. Out of 9,800 entities in northern Hubei province, 81 percent were in the electricity, steel, cement and chemicals industries.

Editor: Kim Taylor