China's impending carbon neutral plan will have significant flow on effects to Australian resources, which currently buoy the economy.
China recently announced a goal to reach net zero emissions by 2060, with hopes levels peak by 2030.
Tsinghua University's Institute of Energy, Environment and the Economy developed plans laying out the road map to reach net zero by 2070 and 2060.
The institute's executive director Zhang Xiliang concedes he was surprised the Chinese government chose the earlier option.
National carbon markets are currently being developed to cover eight sectors including steel.
They will regulate about 72 per cent of China's total emissions.
"We import a lot of iron ore from Australia, so the iron steel sector is also a very big sector that will be covered by the national carbon market," Mr Zhang told a Carbon Market Institute online summit on Thursday.
He doesn't expect it to affect trade between China and Australia in the short term, but there will be an impact in the future as carbon neutrality is aimed for in steel and iron.
Hydrogen was being looked at as an option to radically change the manufacturing process to achieve that, Mr Zhang said.
"So no longer using coal."
The federal government is eyeing hydrogen as a key energy export when the goals shift through the change to more renewable sources.
Mr Zhang told the industry event a lot of China's growth had come from energy intensive sectors, but that was becoming less so.
"In my opinion China's demand of steel and iron is peaking, so there will be a decline."
It comes as Resources Minister Keith Pitt released trade data showing the strength of energy exports in helping Australia's economy recover from coronavirus.
October data released by the Australian Bureau of Statistics iron ore exports grew 4.1 per cent in a month, netting the nation $11 billion in that period.
The trade data found coal exports were worth $3.4 billion in October, while LNG exports earned $2.2 billion.
Australian Associated Press
