Insights Library

Browse TTP’s updates on the latest insights and analysis in chronological order below. 

The trends in methane emissions in China’s energy sector align with the emissions dynamics and spatial distribution of coal and oil and gas sectors

Teng Fei, Professor and Deputy Director of the Institute of Energy, Environment and Economy, Tsinghua University 

Our team’s research shows that China’s energy methane emissions experienced rapid growth from 2011 to 2013, followed by a decline from 2014 to 2016, and then stabilized from 2016 to 2020. Methane emissions and intensity peaked in 2014, and emissions intensity decreased by 20% from 2014 to 2020. These trends are consistent with the emission dynamics and spatial distribution in the coal and oil and gas sectors. 

The temporal shifts in methane emissions from the energy sector are primarily driven by coal methane. Over the past decade, many coal mines have been closed in China. Due to the significantly higher emission factors of closed mines compared to those of active mines, methane emissions from abandoned mines (AMM) far exceed existing research estimates. This increase contributed to the peak in energy-related methane emissions in 2014. Meanwhile, coal production has shifted to regions with lower gas content, such as Inner Mongolia and Xinjiang, resulting in a nationwide reduction in the average emission factor for coal and a subsequent decline in methane emissions and intensity after 2014.  

Methane emissions from the oil and gas sector, however, have continued to increase. Between 2011 and 2020, shale gas production increased significantly, and the number of cross-border oil and gas pipelines expanded under the Belt and Road Initiative, resulting in a notable increase in the number of oil and gas facilities in operation. The methane emission intensity of shale gas production is more than twice that of conventional natural gas and is gradually accounting for about 35% of China’s total methane emissions from natural gas. As a result, the average methane emission intensity of natural gas exploration and production increased by 26%. In addition, imported pipeline gas has become the second largest source of methane emissions in the oil and gas sector, with long-distance international transport exacerbating the average emission intensity of pipeline transport. 

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To establish a diverse New Collective Quantified Goal (NCQG) in climate finance, countries should engage in more in-depth discussions and consultations

Wang Yi, Vice-Chair of China’s National Expert Panel on Climate Change

Negotiations on the New Collective Quantified Goal (NCQG) at the 29th Conference of the Parties on Climate Change (COP29) are confronted with diverse financing needs and a lack of a sustainable financial order and governance framework for the various sources of finance. Countries should work together to establish a multi-layered collective climate finance framework and global financing model based on existing international climate rules, with developed countries taking primary responsibility for emission reductions. This can be achieved through various approaches, including reforms of multilateral development banks (MDBs), debt-for-climate swaps, and sustainable financial governance, to facilitate the mobilization and integration of climate finance. In addition, ongoing discussions are essential to address various issues related to the management of funds. 

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Despite the EU’s restrictive measures, there is still potential for cooperation between China and the EU in the electric vehicle sector

Wu Zelin, Associate Researcher, Institute of International Relations, Shanghai Academy of Social Sciences

Despite the EU’s incentives for its domestic electric vehicle industry and restrictions on imports from abroad, there are still opportunities for cooperation. First, China can improve communication and consultation with the EU. On the one hand, cooperate on training in areas such as battery carbon footprint accounting standards and battery recycling, which would help the entire industry chain meet carbon emission requirements. On the other hand, continue discussions to address unfair trade barriers against China.   

Second, Chinese car companies can set up production factories in the EU or elsewhere. Even if the EU decides to impose tariffs on Chinese electric vehicles, China can avoid these tariffs by manufacturing components domestically and assembling them abroad. Some EU member states are also actively attracting Chinese carmakers to develop local supply chains and create jobs. In this context, Chinese companies may still retain a cost advantage.  

Third, promoting plug-in hybrids as flagship products for the EU market could serve as a breakthrough for China. 

Fourth, cooperation between Chinese battery manufacturers and EU car brands is crucial. As Chinese battery companies tend to have both scale and cost advantages, using Chinese batteries can reduce the cost and improve the competitiveness of EU electric vehicles, leading to a mutually beneficial outcome in the market.   

Finally, China should strengthen partnerships with EU carmakers for mid-to-high-end models, expanding its market presence with higher-quality products. 

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CCER may gain international recognition through carbon reduction cooperation mechanisms

Shi Weiwei, General Manager, Datang Carbon Assets Co.

International recognition of Chinese Certified Emissions Reduction scheme (CCER) is achievable. The International Civil Aviation Organization (ICAO) previously included the CCER mechanism in its list of qualified emission reduction mechanisms under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). It could potentially be re-included in the future, allowing international airlines to purchase emission reductions generated by the CCER mechanism for compliance, thereby expanding its international reach.  

Additionally, the CCER mechanism might gain international recognition through other avenues. For instance, two countries could establish an international emission reduction cooperation mechanism under Article 6.2 of the Paris Agreement, mutually recognizing the emission reductions from the CCER mechanism (as internationally transferred mitigation outcomes). This scenario is also a plausible path to international acknowledgment. 

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The expansion of For developing countries, adapting to climate change becomes more urgent

Xie Zhenhua, Former Special Envoy for Climate Change Affairs of China

The global average near-surface temperature in 2023 was 1.45°C above the pre-industrial baseline, making it unlikely to limit warming to within 1.5°C by 2030. As the challenge to achieve the 1.5°C goal in time grows more complex, the issue of adaptation has become crucial, as it directly impacts lives. 

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China is willing to share its technologies and practices in industrial decarbonization, electrification, smart technologies, and low-carbon smart city demonstration projects with other nations, working together toward a greener future. 

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To embrace carbon-neutral economy, China’s new energy companies need to strategically approach their internationalization through the lens of the global industrial landscape. 

Wang Shi, Chairman of Vanke Foundation 

China has made significant progress in photovoltaics, wind power, and new energy vehicles. While some critics may attribute these achievements solely to “government subsidies”, the reality is that technological innovation and widespread adoption and use of clean products, in addition to supportive policies, are critical to the industry’s success.  

As companies seek to internationalize, it is necessary to have a full understanding of the global industrial landscape. For example, cooperation between companies from China, the United States and Japan has great potential to promote carbon neutrality. Each country has different strengths in the global green transition, and cooperation between companies can promote mutual benefits in technology, markets, and policies. As a highly industrialized nation, Japan has made significant progress in innovation and implementation of carbon trading. The United States has the largest global market, abundant financial resources, and strong capabilities in technological innovation. China excels in the application and promotion of new energy technologies, especially in large-scale deployment. By joining forces, companies from these three countries can not only drive the green transition in their domestic markets, but also jointly tap global markets. Rather than looking at a country’s market in isolation, it is necessary to work together to promote a carbon-neutral economy. 

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The expansion of China’s national carbon market will increase market activity and promote industry transition

Shi Yichen, Assistant Dean of International Institute of Green Finance, Central University of Finance and Economics 

Compared to other high-emission sectors, the cement, steel, and aluminum electrolysis industries are particularly well-positioned to participate in the national carbon market. They have demonstrated a sense of urgency in cutting emissions, the potential to coordinate pollution control and carbon reduction, robustness in data quality, and cost-effectiveness in marginal emission reductions. 

The first round of expansion will bring in approximately 1,500 new key emitters, which is expected to result in an increase in carbon prices and the vitality of the carbon market. The growing heterogeneity within the industry will also help to diversify the market’s risk appetite, leading to a more rational carbon pricing structure. This will enhance the market’s ability for carbon price discovery and better reflect the varying costs of emission reductions across different entities. Moreover, the expansion will reduce the export burden posed by carbon tariffs in the industry. 

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New energy storage faces cost, technology, marketization, and coordination challenges

Wu Yin, Former Deputy Director of the National Energy Administration 

Currently, China’s new energy storage sector faces several challenges. The first is high cost, with many companies struggling to break even. The second is technological; the safety and reliability of energy storage systems need to be improved. The third is the underdeveloped market mechanisms, which do not fully capture the potential value of energy storage. Finally, there’s a coordination problem, particularly in integrating energy storage with new energy sources such as photovoltaics. 

In response, there are several recommendations. First, take a holistic approach to planning. Second, increase investment in research and application of new technologies. Third, improve the reliability of equipment and the stability of energy storage systems. Finally, give full play to the decisive role of the market in establishing a clear value for energy storage in new energy development. 

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China urgently needs to develop its own authentic and reliable carbon footprint background database for products

Xu Ming, Professor, School of Environment, Tsinghua University; He Kebin, Academician, Chinese Academy of Engineering 

For most companies, supply chain traceability is a significant challenge, resulting in a heavy reliance on background databases for product carbon footprint accounting. The quality, reliability and representativeness of these databases are critical to the accuracy of the results. It is urgent for China to develop a background database of product carbon footprint that reflects its technological capabilities and regional differences among provinces, supported by effective data aggregation and updating mechanisms. This will enable Chinese enterprises to calculate their carbon footprints, address green trade barriers, and promote comprehensive emissions reductions across supply chains through advances in technology, product design, and supply chain management. 

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Trading of green electricity and Green Electricity Certificate(GEC) needs further stimulation

Wang Xu, Member of Institute of Energy Conservation and Environmental Protection, China Center for Information Industry Development 

Although the scale of green electricity and GEC transactions has increased annually, the overall market dynamics remain subdued. Green electricity transactions account for a small share of total market volume, only 0.95% in 2023 and 0.4% in 2022. Currently, the supply of GEC exceeds the demand, and several key issues are hindering the growth of the market: the mismatch between green power supply and demand complicating inter-provincial trading; low acceptance of GEC internationally; and a lack of integration of GEC with the carbon market. These issues impede the market’s ability to satisfy businesses’ needs for green power and slow the progress of decarbonizing the supply chain. To address these challenges, it is imperative to reduce barriers to interprovincial trade in green power, promote international recognition of green certificates, and develop a synergistic mechanism linking power, certificates, and carbon markets. 

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