Decarbonization to push transition of construction sector

Aerial photo taken on Dec. 30, 2020 shows a view of a section of Wuzhishan-Haitangwan Expressway in south China's Hainan Province. [Photo/Xinhua]

China's efforts to cut carbon emissions will drive the upgrade of its construction sector, benefiting leading companies in the building-material and construction industries, a report showed.

Decarbonization may lead to a temporary increase in investment and costs, but corporate champions could benefit in the long term from the improvement in operational efficiency, mitigation of regulatory risk, and lower capital costs, Fitch Ratings said in a report.

In contrast, the credit profiles of smaller companies that perform poorly on the environmental front may deteriorate due to potential regulatory intervention and higher operational and financing costs, the report said.

China's building-material and construction sectors generate over half of the country's carbon emissions, the report noted, adding that measures including the launch of the national carbon-trading market this year will provide economic incentives for companies to proactively reduce emissions.

China has vowed to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060 and set new targets in its development plan for the next five years to improve the industrial structure and maximize the use of clean energy.

Amid the efforts, more cement, steel and construction firms will tap China's green bond market to finance their low-carbon transition, the rating agency said in the report.