Expert Column | Exploring Dual Carbon Practice for High-quality Development of Parks

Parks are the main carrier of industrial production activities, the primary source of energy consumption and carbon emissions, and a key force in achieving China's "dual carbon" goals (DCGs). Implementing the dual carbon strategy in the course of the high-quality development of parks is an issue of vital importance.

Since the proposal of the DCGs, China has issued a series of policies and documents that impose new requirements on the low-carbon development of parks. It is proposed to build demonstration parks that are environment-friendly and carbon netural. Regarding optimizing industrial structure, it is required to close down industries with high pollution and energy consumption, develop low-carbon industries and realize industrial circular links. To improve energy efficiency, it is suggested to promote cascaded energy utilization, multi-energy complementary utilization, and integration of source, network, load, and storage. In the aspect of environment-friendly transition, it is proposed to realize the coordinated reduction of pollution and carbon, green products, and circular retrofitting. In the field of digital transition, it is put forward that we need to realize smart energy and carbon emission management as well as low-carbon manufacturing. According to the Circular of the General Office of the National Development and Reform Commission and the General Office of the Ministry of Industry and Information Technology on Further Intensifying the Work of Circular Retrofitting of Parks in the "14th Five-Year Plan" Period (FYP) issued in December 2021, which is a definite, mandatory and practical policy measure for parks, all qualified parks at the provincial level or above should have implemented circular retrofitting by the end of 2025 [1]. As the Initiative to Guide the Shift Toward Circular Development proposed, 75% of national parks and 50% of provincial parks should have implemented transformation by 2020 [2], which means that 25% of national parks and 50% of provincial parks will need to implement circular retrofitting during the 14th FYP. As the China Association of Circular Economy estimated, the total contribution rate of circular economy to China's carbon emission reduction during the 13th FYP exceeded 25% [3] and is expected to increase during the 14th FYP. Therefore, how should these parks practice the DCGs while implementing circular retrofitting and how should those parks that have completed circular retrofitting take the lead in achieving the DCGs during the 14th FYP is an issue to explore in the area of the Dual Carbon practice for high-quality development of parks.

I. How should parks of different types practice low-carbon circular development?

Parks are of a vast number and various types. As of July 2022, the total number of development zones in China had reached 2,781, including 230 national economic development zones and 172 national high-tech zones. By function, these parks can be divided into chemical parks, manufacturing parks, science and technology parks, logistics parks, resource-based parks, and city-industry integration parks. Parks of different types vary greatly, with different core points in circular retrofitting and following different main implementation paths for the DCGs. Based on the analysis of the typical domestic and foreign low-carbon circular parks, these parks are divided into three types by the mode of low-carbon circulation: industrial coupling, clean production, and resource recycling [5]. Industrial coupling parks mainly build and extend the chain of a circular economy by strengthening the chain and supplementing the chain to realize the circular link between industries. Clean production parks adopt green technology, clean energy, and raw materials to improve energy resource utilization and reduce waste generation. Resource recycling parks minimize the generation of waste and realize resource regeneration through the recycling of solid waste.

II. How does circular development achieve carbon reduction??

The park is the main site for the circular economy, a carrier for industrial concentration, as well as a concentrated area for energy and resource consumption, pollutant generation, and emission. "The main tasks of circular transformation in the 14th FYP are to optimize the spatial layout of industries, promote industrial recycling links, promote energy saving and carbon reduction, promote the efficient and comprehensive utilization of resources, and strengthen centralized pollution control [1]. Through circular retrofitting, the efficiency of land, energy, water, and other resource utilization in the park will be greatly improved, and the emissions of solid waste, wastewater, and major air pollutants will be greatly reduced, thus achieving carbon reduction, as reflected in the following aspects:

First, industrial agglomeration and circular link effect, that is, the implementation of centralized gas, heat, and water supply, as well as the intensive and efficient use of land, reduce carbon emissions in transportation. Second, the complementary chain of industries in the park makes it possible for inter-project, inter-enterprise, and inter-industry material recycling and promotes the reuse and resourceization of raw material inputs and outputs, reducing carbon emissions in production and waste disposal. Third, the energy cascade use, recycling of residual heat and pressure, and clean energy reduce fossil energy consumption and thus carbon emissions from energy consumption. Fourth, massive carbon emissions can be reduced by taking bulk solid waste into full use and avoiding the excessive manufacturing of prototypes. Fifth, through centralized management of wastes and facility renovation, we can improve the operational efficiency of various types of equipment and reduce the input of resources such as electricity, thus reducing carbon emissions during the operation of infrastructure.

III. How should digitalization contribute to the decarbonization of circular retrofitting?

Developing circular parks requires the support of low-carbon and circular projects. However, amid a government funding squeeze, fundraising challenges and poor credit indicators have become the major constraints on parks’ circular retrofitting and transformation. On the other hand, digital carbon asset management and carbon finance can boost the implementation of retrofitting projects, facilitating the decarbonization of parks.?

The digital carbon asset management system enables timely understanding, dynamic monitoring, real-time analysis, and intelligent management of parks’ energy consumption, carbon emission, and carbon assets. It is an essential cornerstone for parks to develop carbon plans, take carbon reduction measures, and deliver the “dual carbon” goals. As companies’ carbon assets change with the execution of low-carbon and circular projects, such a system can check and review these carbon asset data dynamically. In addition, it can quickly track and analyze companies’ decarbonization paths, report the implementation progress, and diagnose and provide key links of carbon reduction to propose strategies for carbon asset management. In the meantime, companies benefit from allocating and trading their carbon assets reasonably, incentivizing them to carry out carbon reduction projects.??

Efforts should be made to integrate the digital carbon asset management system and develop a carbon finance service platform to aid carbon-reducing or carbon-limiting technologies or projects, such as clean energy, waste heat utilization, and centralized heating. Through the price mechanism, carbon finance guides industrial capital to invest in effective carbon-reducing technologies more directly and efficiently. It speeds up the companies that possess key carbon-reducing technologies and need financing for transformation, as well as brings them greater economic benefits, empowering parks to decarbonize and upgrade their structures.

IV. Exploring the business models of carbon reduction circular projects

Currently, the circular retrofitting of parks mainly relies on local governments and management committees and lacks market-oriented operation mechanisms. Four significant models are adopted for operating the circular retrofitting projects of parks. Engineering, Procurement, and Construction (EPC) is mainly applied in such projects as municipal infrastructure construction, water treatment, solid waste disposal, and garbage disposal [8]; Build-Operate-Transfer (BOT) is generally used in government-invested projects such as eco-environmental projects, water treatment projects, air pollution control projects and municipal infrastructure projects [8]; Public-Private Partnership (PPP) is suitable for infrastructure and public service projects that require long-term operation in the later stage, such as power supply, water supply, gas supply, heating sewage, and garbage disposal projects, rail transit projects, medical and pension service facilities; and Energy Management Contracting (EMC) is mainly applied in clean energy development projects such as energy-saving transformation, PV, etc. These models can be used in infrastructure transformation and upgrading projects such as centralized treatment of pollutants, centralized heat and gas supply, cascaded utilization of energy, and energy-saving and clean energy projects that support the circular retrofitting of parks. However, they do not apply to carbon emission reduction projects, carbon asset development projects, and carbon finance projects with carbon emission reduction as the direct quantitative indicator. Therefore, developing an innovative dual carbon service model with less capital investment is necessary to pay the full costs of carbon reduction projects. In this mode, direct and indirect incomes from carbon reduction investment can be used to pay for the costs of implementing low-carbon projects. In addition, it is required to explore the dual carbon commercial service mode for carbon reduction enterprises, which combines carbon asset development and carbon finance services. These moves can arouse the enterprise's enthusiasm to implement carbon reduction projects, contribute to the realization of the DCGs and promote the low-carbon circular development of parks.

V. Conclusion

The DCGs guide the circular development of parks, while the circular development of parks contributes to the realization of the DCGs. In essence, the low-carbon circular development of parks is to achieve high-quality development. Developing a circular economy and implementing the dual carbon strategy is the path to promoting high-quality development. Circular parks, DCGs, and high-quality development are three interwoven actors. Circular retrofitting measures facilitate carbon reduction, while digital carbon asset management and carbon finance contribute to deep decarbonization. Innovative dual carbon service models accelerate the implementation of carbon reduction circular projects and promote green, low-carbon, circular and high-quality development of parks.

Reference

[1] National Development and Reform Commission of the People's Republic of China. General Office of the National Development and Reform Commission, General Office of the Ministry of Industry and Information Technology, Notice on Matters Relating to the Recycling of Parks in the 14th Five-Year Plan [EB/OL]. (2021-12-15) [2021-12-20]. https://www.ndrc.gov.cn/xxgk/zcfb/tz/202112/t20211220_1308649.html?code=&state=123

[2] National Development and Reform Commission of the People's Republic of China. Notice on the Issuance of "Leading Action for Circular Development" [EB/OL]. (2017-04-21) [2017-05-08]. https://www.ndrc.gov.cn/xxgk/zcfb/tz/201705/t20170508_962956.html?code=&state=123

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[5] Wu Xuelian, Wang Caiyun, Wan Yingfeng. Research on the development mode of low-carbon industrial parks at home and abroad[J]. Industrial Safety and Environmental Protection,2018,44(05):91-94.

[6] China Business Network. [Zero carbon park series article] Digitalization: a one-stop service platform for digital management, collaboration and development of carbon assets [EB/OL]. (2022-07-15) [2022-07-15]. https://www.yicai.com/news/101475598.html

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[8] Gong Changxing. Practical research on business models of environmental protection companies[J]. China Market, 2017(10):21-23+25. doi:10.13939/j.cnki.zgsc.2017.10.021.?