Current Opinion

Carefully selected insights and analysis from China’s thought leaders on climate change and the low-carbon transition

Encourage the development of new energy storage with market effort and scientific scheduling mechanism 

Cao Hu, Vice President, BYD Electric Power Research Institute 

To promote the efficient scheduling and utilization of new energy storage, I believe that companies can make efforts from two aspects.   

In terms of the electricity market, first, there is a need to expedite the development of the electricity market by encouraging the collective use of distributed energy storage facilities on the user side, such as uninterruptible power supplies, electric vehicles, and charging stations to achieve “one storage for multiple use”. It is also crucial to diversify the types of trading products in the ancillary services market, hasten the establishment of the capacity market, and properly increase the ratio of ancillary service costs to end-use energy costs.  

Second, it is vital to propel the diverse, market-driven, and large-scale growth development of new energy storage projects. This entails establishing a robust and sustainable profit model and accelerating the implementation of pricing mechanisms that reflect the value of new energy storage.  

Regarding operational deployment, first, it is imperative to refine and optimize the mechanisms for energy storage scheduling. This involves setting phased goals for energy storage power scheduling and enhancing the intelligence level of grid management. By considering various scenarios for different types of new energy storage, it is important to ensure scientific scheduling systems and operational methodologies. 

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Focus of green finance in China shifts to high-quality development

Peng Wensheng, Chief Economist, CICC

In a new phase of the green transition, China is refining its focus on green finance, moving from quantity to quality. The recent issuance of the “Guidelines to Further Strengthen Financial Support for Green and Low-Carbon Development” by seven authorities, including the People’s Bank of China on April 10, clarify the direction of this evolving mission. The guidelines articulate several key points:

Firstly, they outline mid to long-term goals for green finance, providing market participants with a framework to develop stable expectations and comprehensive action plans.

Secondly, there is an emphasis on implementing an environmental disclosure framework across various financial institutions, underscoring the pivotal role of carbon accounting in enhancing green finance standards.

Thirdly, a dual strategy is proposed, focusing on transitioning high-carbon capacity while simultaneously nurturing green capacity. This entails supporting the greening and decarbonization of high-emission industries and projects, along with expediting the establishment of standard systems for transition finance.

Additionally, the guidelines advocate for research into financial products linked to carbon credits, aiming to broaden the involvement of financial institutions in carbon market transactions gradually.

Lastly, they underscore the importance of international cooperation.This involves aligning Chinese standards with global norms to facilitate the international flow of domestic green capital and attract international investment into China’s green and low-carbon assets.  

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Development of new energy vehicles stands as a crucial national strategy in China     

Ouyang Minggao, Academician of the Chinese Academy of Sciences 

The development of new energy vehicles stands as a crucial national strategy in China, based on considerations of oil security, air pollution, and industrial advancement. China is also a front-runner in automotive intelligence. Electric vehicles, with their inherent advantage in intelligence, outmatch traditional fuel-powered vehicles in terms of autonomous driving capabilities. 

New energy vehicles represent a technological ecosystem rather than a mere shift to electrification. This comprehensive system encompasses the essence of the Fourth Industrial Revolution and propels three fundamental transformations: electrification, intelligence evolution, and decarbonization.  

The realization of the three transformations aims to make China an automotive powerhouse. Beyond that, it involves not only domestic strategies but also global market integration, fostering thus upscale development.   

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 Hydrogen energy project investment speeds up while green hydrogen policy needs to be strengthened    

Liu Xueye, Project Lead for Green Economics & Yang Li, Senior Program Director for Energy Transition, Institute of Global Decarbonization Progress (iGDP) 

After analyzing hydrogen energy policies and major projects listed by 28 provinces from 2020 to 2023, iGDP had the following findings: first, during the past four years, investment in hydrogen energy listed in major projects of each provincial region has accelerated, with an overall increase of three times. 

Second, hydrogen production projects make up a small percentage of the total, in which green hydrogen manufacturing projects are predominant. However, there is a lack of sufficient policies and guidance for related segments. 

By categorizing these policies and projects, it was noted that China lacks unified national standards for defining green hydrogen, its technical pathways, and thresholds. The “Standards and Evaluation of Low-Carbon Hydrogen, Clean Hydrogen, and Renewable Hydrogen” group standard released by China Hydrogen Alliance in 2020 sets thresholds at 14.51 kg CO2e/kg H2 for low-carbon hydrogen, and 4.9 kg CO2e/kg H2 for clean hydrogen while renewable hydrogen requires renewable energy as the hydrogen source. These thresholds exceed the 3.4 CO2e/kg H2 set by the EU and Japan for green hydrogen.  

In provincial major project lists, we can find emerging hydrogen projects that utilize waste resources for production. These projects not only effectively utilize existing waste materials but also reduce land usage and the demand for renewable energy in hydrogen production processes. Therefore, incentivizing relevant technological innovations and effectively reducing greenhouse gas emissions, particularly carbon dioxide emissions, generated during hydrogen production processes, may be a key focus area for future hydrogen energy policies in China.   

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Spring 2024 Winter 2023 Autumn 2023 Summer 2023 

Spring 2024

high tech factory

Unleashing New Quality Productive Forces for Economic Growth and Green Transformation

The recent Boao Forum for Asia, which came to a close on March 29th, reignited discussions around the concept of “new quality productive forces.”  This notion, prominently featured in the 2024 government work report, is emerging as a significant driver of China’s economic growth. As for the energy sector, terms closely linked to “new quality productive forces,” including the national carbon market, hydrogen power, modern energy storage, and distributed new energy, received considerable attention during this year’s Two Sessions.

But the pursuit of these new growth paths has also intensified the pressure to meet the energy and climate targets outlined in China’s 14th Five-Year Plan, underscoring the urgency of achieving the “Energy Consumption Dual Control” goals by 2025 and raising concerns about their feasibility.

In this spring issue, TTP has curated several perspectives and discussions to provide readers with a clearer understanding of the role of new quality productive forces, particularly within the energy sector.

Click here for the the full newsletter.

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