Insights Library

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

As China seeks to advance its electricity reform, it is crucial to shift focus to the user side

Zhao Kebin, former Senior Director of Power Construction, Datang Gansu Power Generation Co., Ltd

To deepen electricity reform, the most urgent task is to increase user participation in the market. The government has set the framework, and grid operators, generators, and power companies are already involved. However, many users remain at a disadvantage when it comes to shaping policy, understanding the market, and participating in trading. It is crucial that users become more proactive and participate more effectively, otherwise competition in the new energy market will simply become a zero-sum game involving only the power generation side.

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Highly sensitive to climate change, China is facing significant shifts in its climate system

Yuan Jashuang, Deputy Director of the National Climate Center

As a region highly sensitive to and significantly affected by climate change, China is facing significant shifts in its climate system in diverse aspects.

With global warming, higher emissions are expected to drive more frequent, severe, and dangerous extreme heat events. Over the next 30 years, China’s average maximum extreme temperature is projected to rise by 1.7 to 2.8°C, with the biggest increases occurring in the eastern regions and western Xinjiang. Additionally, the average number of regional heat wave days is likely to rise by 7 to 15 days. Under high-emission scenarios, these extreme heat events could become a regular occurrence, happening once every 1 to 2 years, compared to the current rate of once every 50 years.

In the future, extreme precipitation events in China are also expected to increase faster than total precipitation, with greater variability and intensity. Over the next 30 years, five-day maximum precipitation is expected to generally increase nationwide, with more than a 10% rise in the eastern parts of Northwest China and the Huang-Huai River Basin.

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It is essential to refine the structure of green financing to solve the investment overheating in the PV and wind power sectors

Wang Yao, Director, International Institute of Green Finance, Central University of Finance and Economics

Currently, most funds raised through major financial tools such as green loans and green bonds are directed towards the clean energy industry and the green upgrade of infrastructure. In particular, the photovoltaics and wind power sectors have experienced issues with overheating and intense competition in green funds. It is essential to refine the structure of green financing to fully support projects in new energy, green transportation, green buildings, green manufacturing, and other fields. This will enhance the efficiency of fund and resource utilization.

Renewable energies such as wind and solar power are poised to become the primary sources of energy supply. There are also significant investment opportunities in the development of complementary energy storage technologies such as battery storage and hydrogen energy. Furthermore, the new energy vehicle industry offers promising investment opportunities, with infrastructure development, such as charging stations, battery swapping stations, and hydrogen refueling stations, promoting rapid industry growth. Additionally, the green finance sector itself is poised to emerge as a key investment area, encompassing various aspects that will attract investor attention. As trading expands and the market diversifies, China’s carbon market is expected to provide clearer mechanisms for pricing carbon assets and cost transmission.

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The onset date of the first high temperature period in China is advancing with extreme and compound weather events

Wang Guofu, Director, Meteorological Disaster Risk Management Division, National Climate Center

The first high temperature period in North China and the Huang-Huai region (between the Yellow River and the Huai River) has arrived earlier than usual this year. Based on the current assessment of meteorological disaster risks, by July 14 China will face compound disasters such as high temperature combined with heavy rain, drought, etc., and this summer may still be extremely hot. The onset date of regional extreme hot days nationwide is advancing at a rate of about 2.5 days per decade. This year, it occurred four days earlier than normal.

Due to climate change, atmospheric circulation has become more complex, increasing the frequency and intensity of extreme weather events. Globally, multiple disasters are overlapping to create compound events, such as high temperature with drought and low temperature with freezing, showing the characteristics of complexity, large-scale impact, and long-term consequences.

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Promote China’s energy conservation and carbon reduction efforts by cost constraint and price transmission mechanisms

Ren Daming, researcher at  Zero Carbon Research Institute, Beijing News

In the current economic environment, efforts to conserve energy and reduce carbon emissions should be made with a focus on minimizing economic costs while not disrupting regular industrial operations and economic progress. This requires the establishment of appropriate cost constraint and price transmission mechanisms.

To begin with, there is an urgent need to rapidly integrate the steel, petrochemical, non-ferrous metal and construction materials sectors into the national carbon market. Through market-based means, the imposition of carbon emission costs on energy-intensive industries would incentivize companies to accelerate their equipment upgrades or transition to more sustainable energy sources, thereby advancing the energy conservation and carbon reduction agenda. It is also necessary to change the energy consumption patterns of such enterprises through power pricing strategies, such as refining the pricing mechanism in the electricity market, eliminating price advantages for high-energy-consuming industries, and implementing time-of-use electricity pricing policies.

In addition, it is important to ensure a seamless price transmission mechanism between the production and consumption sectors so that changes in electricity and carbon prices can influence consumer behavior. For example, the carbon compliance costs paid by electricity companies covered by the national carbon market cannot currently be passed on to end users. This distorts price signals in the electricity market and disincentivizes users from actively participating in energy efficiency and carbon reduction.  

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Chinese automakers need to globalize their brands to better explore foreign markets and mitigate trade risks 

Liu Daizong, East Asia Director, Institute for Transportation & Development Policy 

In the face of global trade tensions, Chinese automakers need to transform their brands into global ones to better navigate foreign markets. They should embrace the concept of “win-win”, fostering cooperation with local partners to increase mutual prosperity. Strategies such as setting up local factories or forming joint ventures can help mitigate trade risks and unearth new growth prospects. A better understanding of Europe’s focus on (reducing) carbon emissions in the transport sector is also crucial, so that companies can offer products that meet these targets. For example, European initiatives for carbon neutrality in transport prioritize compact electric vehicles over SUVs.   

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Enhancing energy self-sufficiency in China’s central and eastern regions is both essential and achievable for optimizing the energy structure 

Du Xiangwan, Academician, Chinese Academy of Engineering

When it comes to optimizing the energy structure, for many years, we have always stressed the need to promote both energy conservation and energy efficiency through efforts on both the supply and consumption sides. In my view, it’s necessary to significantly adjust the energy supply structure to progressively increase the energy self-sufficiency level in the central and eastern regions.   

To be precise, the aim is to effectively utilize the abundant renewable energy resources in the central and eastern regions. Prioritize the use of local renewable resources to boost self-sufficiency, supplemented by long-distance power transmission where local supply falls short.  

From an economic viability standpoint, scientific analysis shows that generating electricity locally in the Central and East is more cost-effective per unit compared to importing electricity from the West.  

However, for high-load centers like Shanghai, a blanket pursuit of self-sufficiency is not advisable; imported electricity plays a crucial role, underscoring the need for tailored strategies based on specific regional conditions. 

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Policy tools like China’s Green Electricity Certificate (GEC) shouldn’t be excluded in EU carbon footprint calculations on EV batteries

Zheng Ying, Vice President of Sunwoda Electronic Co 

China’s Green Electricity Certificate (GEC) is more than just an important policy tool. Looking at the global practice, the EU also uses energy attribute certificates such as Guarantee of Origin to promote the development and integration of renewable energy. According to the adjustment in the EU’s new draft on the methodology for calculating the carbon footprint of electric vehicle batteries, some tools that support the energy transition, such as GECs, won’t be counted in the calculation. This will disregard companies’ efforts to promote the deployment and development of renewable energy, which may reduce their motivation to source renewable energy. In addition, Chinese companies would face more significant consequences than their EU counterparts if the GEC were not adopted. It is preferable to give the market the authority to use such instruments rather than bluntly rejecting companies’ efforts to drive the energy transition.   

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The release of a renewables consumption red line is favorable for balancing grid security and new energy development

Wang Weiquan, Deputy Secretary General, Renewable Energy Professional Committee, China Energy Research Society 

To some extent, the regulations on encouraging non-fossil fuel energy consumption in the 2024-2025 Action Plan for Energy Conservation and Carbon Reduction have loosened the 95% renewables consumption red line (to 90%). 

This policy shift stems from the escalating challenge that the increasing integration of wind and photovoltaic power poses to the secure operation of the power grid. Upholding the original integration red line could lead to a threat to the security of electricity supply and a decline of (new) capacity installation, both of which are unfavorable for the long-term stable development of new energy. 

Although individual projects may experience a decline in revenue due to reduced power generation hours because of the adjustment, it also means that the grid can leverage its limited integration capacity to connect more new projects. In general, this new policy strikes a balance between the secure operation of the grid and the stable development of new energy.   

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Rising tariffs on Chinese solar products could slow U.S. installations

Tan Youru, Solar Analyst, Bloomberg New Energy Finance

In fact, raising tariffs under Section 301 alone may have a limited impact on U.S. solar installations and Chinese solar manufacturers. Since 2012, the U.S. has already imposed high anti-dumping and countervailing duties (AD/CVD) on Chinese solar cells and modules, which has led Chinese companies to shift their supply chains for the U.S. market to Southeast Asia. In recent years, the volume of solar cells and modules exported directly from China to the U.S. has become negligible.

With the reimposition of anti-circumvention tariffs in June and the potential for new tariffs on Southeast Asian countries (following the second AD/CVD investigation), the cost of importing solar modules into the U.S. is expected to increase significantly.

While these policies favor domestic U.S. manufacturers, they would also raise the price of solar modules, thereby hurting solar power plant developers and increasing the cost of building solar projects. As a result, this may slow down the pace of solar installations in the country.

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