China Announced Its NDCs: To Bend the Curves

Long expected, Chinese government yesterday officially announced its NDCs domestically, with clarity of time-bound decarbonization targets and plan aligned with its 30-60 carbon emissions capping and carbon neutrality targets, and an integrated national strategic planning and actions to deliver the committed targets.?

Decarbonization targets delivery is organized around 4 categories of targets: 1) Efficiency and productivity (both energy and carbon): 2025: energy intensity reduction at 13.5% over 2020 level; carbon intensity reduction at 18% over 2020 level; 2030: carbon intensity reduction at 65% over 2005 level; before 2030: capping emissions and starting to bend the curve; and 2060: achieving carbon neutral;

2). Reduction of coal/fossil fuels use: 2025: peaking coal consumption and starting to go down; 2030: peaking oil consumption; 2060: less than 20% fossil fuels in the energy system;

3) Switching to non-fossil fuels: 2025: non-fossil fuels increase to 20%; 2030: non-fossil fuels increase to 25%; total installed solar and wind energy at 1.200GW; and

4) Nature-based solutions: 2025: forest coverage increase to 24.1%; 2030: forest coverage increase to 25%.

Some “bending the curves’ moments” are highlighted - 2025 will the first when coal use achieve capping and decline starts; 2030 will see total emissions capped and decline occurs; and 2060, 80% of China’s energy sources will be non-fossil fuels, and carbon neutrality will be delivered.?

Reshape National Energy System, Fundamentally

Domestically, pivoting national energy system from fossil-fuels-based to non-fossil fuel fuels-centered has been snd will continue to be a core and top priority. Riding the wave of technology advancement, China is aggressively investing in 1) key clean energy transition technologies - renewables, 5G, AI, battery, charging station, material sciences, and super high voltage smart grids; 2) the foundational infrastructure to support and enable the transition by converging communication internet, clean energy internet and transport and mobility internet.?

Today China has build up 4 cross-country east-west grids and 6 north-south grids. They form the continental pillar grids, to enable the plug in of millions of distributed micro-grids nationwide backbones for a clean and smart national energy system.

The guiding document - Opinions on Achieving Carbon Emissions Capping and Carbon Neutrality by an Integrated and Concise National Strategy of A Grand New Development Paradigm - also clarifies a 10-front strategic priorities and 31 key projects in implementation. (See details at this link: https://mp.weixin.qq.com/s/ZMLMHGKHTD6LiaDkFyxEaQ1)

"1+N"

A total of 31 Actions are laid out in its implementation plan, fully reflecting the "1+N" national strategy to advance decarbonization and transition. The "1" represents the unifying 30-60 targets, and at national level, the 30-60 targets have to be imbedded in mid-term and longer-term national economic and social development plan. And "N" for regional, sectoral, industrial variations and priorities in implementation.

Let me make some efforts to "group" some of the priority actions for easier understanding.

1) Focused Regional Priority Opportunities - the Beijing-Tianjing-Hebei integrated development; the Yangtze River Economic Belt development; the Guangdong-Hong Kong-Macau Big Bay Area construction; the Yangtze Delta integrated regional development, the Yellow River watershed ecological protection and high-quality growth;

2) Priority Industrial carbon capping and neutrality planning - energy, iron and steel, metallurgical metals, petrochemical, building materials, transportation and buildings to lead sectoral carbon neutrality planning and actions;

3) Restrain, Control and Contain - a) high energy consumption and high emissions sectors: iron and steel, cement, panel glass, aluminum electrolysis; b) coal-fired power generation, petrochemical and coal chemical; c) refinery, ethylene, xylene and coal to olefin; coal bulk combustion; and investment in coal-fired power plants, iron and steel aluminum electrolysis, cement and petrochemicals; ban electricity price discount to high energy consumption, high emissions and resource heavy industries; and postpone and forbid approval of new projects in those regions failing to deliver targets; and strictly control size of capacity of coal-fired power plants;

4) Encouraged and Advocated - a) industrial sectors' low carbon transition and digital transition; and piloting carbon neutrality industrial parks; b) accelerate growth of strategic emerging industries, such as new generation information technology, biotechnology, new energy, new materials, high-end equipment and machinery, new energy vehicles, green and environmental protection, aviation and space, and marine/oceanic equipment; c) advance integration of new technologies with green and low carbon industries, such as internet, big data, AI and 5G; d) accelerate energy efficiency improvement and increased flexibility of existing coal-fired power plants; e) accelerate scale exploration of non-conventional oil and gas, such as shale gas, coalbed methane, tight oil and gas; f) aggressively develop non-fossil fuels, especially renewables, such as wind energy, solar energy, biomass, oceanic energy, geothermal, and hydropower based on local resources and conditions, as well as actively and safely develop nuclear power, while rationally utilizing biomass; g) scale roof-top solar, and electrify everything possible, such as building heating, household hot water and cooking;

5) Breakthrough Technology R&D - a) advance breakthrough technology R&D, such as new materials, new technologies and new equipment for low carbon, zero carbon and negative carbon goals; b) high-efficiency solar energy battery, renewable energy for hydrogen production, controllable nuclear fusion, and zero-carbon industrial processes and remanufacturing;

6) Finance Systems and Incentives - a) Carbon emissions capping and neutrality-aligned finance and investment systems; b) green and low carbon finance products and services development, such as establishing carbon emissions reduction monetary policy tools, and integrating green loans and debts into macro financial assessment framework; c) diversifying electricity pricing such as differentiated electricity pricing for different industrial sectors, time-difference electricity pricing, and tiered electricity pricing for residential users; d) improve companies' and FI's carbon emissions reporting and information disclosure mechanism;

7) Talents Development - establish Human Resources and talents for achieving the set targets and encouraging colleges and universities to add academic disciplines and specialties related to capping and neurality.

BRI: Vehicle to Investing in Overseas Renewable Energy Projects

Globally, the President’s most recent announcement of stopping investment in overseas coal power project and redirect BRI as the vehicle to invest in other developing countries’ slow carbon energy system.?

We all know the Magic of renewable energy - neither the sun nor the Earth would send us electricity bills. And even though costs of solar and wind energy have been dropping dramatically, the upfront costs for jnfrastructure still require tremendous amount of investment. When installed, we will enjoy the near zero marginal costs of our renewable energy.?And this is where China, EU and US and many other countries could work in syn and work in collaboration.

Rethinking Global Supply Chain

While contempt, hostility and confrontation have emerged around the world, partly driven by devastation, fear and concerns of climate change-incurred damages bad losses, we need to shift our attention to solutions and actions, Last year, 90% of global newly installed power generation capacity is non-fossil fuels. And in that context, China has played a significant role to support such a global clean energy transition.?

China provided 60-70% global wind and solar equipments and products last year. Half of global EVs are manufactured and deployed in China. Chinese leading companies supplied 70% global batteries. And very importantly, Chiba is a leading global developer of super high voltage grids.

COP26 already sounds like a difficult process, but a crucial one. Let's together turn fear and concerns and hostility to love, hope and collaboration.