Insights Library

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

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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Tariffs on Chinese-made EVs will increase pressure on both foreign and domestic automakers in China

Sun Lei, Senior Partner, Beijing Dacheng Law Offices

The imposition of tariffs on Chinese electric vehicles will have a significant near-term impact on automakers like Tesla that have invested in building factories in China. For example, if these tariffs are imposed, Tesla’s Chinese-made cars could only be sold in China or other markets outside the U.S., increasing the fixed costs associated with the company’s operations.

For Chinese companies, the policy increases the pressure to shift investments and the need for faster decision-making. This will affect not only the electric vehicle industry, but the entire automotive supply chain. The shift of auto assembly and production to other countries could affect related sectors, including steel and aluminum, engine technology, and lithium batteries.

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China’s latest Energy Law draft addresses some persistent issues in energy development, but needs to be more practical 

Chen Xinghua, Associate Professor, Department of Law, North China University of Technology 

Since its inception (with the first draft in 2006), China’s Energy Law has been criticized for being more policy-heavy than practice-oriented. The 2020 draft version specifically aimed to address this issue by making the law more functional and user-friendly. Unfortunately, the current 2024 draft has removed many of the regulatory and institutional provisions and instead added more policy statements. Some issues of widespread concern, such as energy management, oversight, and regulation, were given less emphasis in the 2024 version than in the previous one. 

Nevertheless, the latest draft introduces some noteworthy improvements. For example, it consolidates the sections on energy development, processing, conversion, supply and use into a single chapter, streamlining the legal text. It also includes new provisions on energy production, supply, storage, and sales, addressing some of the long-standing issues in the development of China’s energy sector. 

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To prevent overcapacity from becoming a reality, companies need to proactively prepare for external uncertainties 

Huang Yiping, Dean of the National School of Development, Peking University

On average, capacity utilization rates do not appear to indicate that overcapacity is a widespread issue in China, but this depends on how overcapacity is defined. For instance, in 2023, China’s exports of the “new trio” (electric vehicles, lithium batteries, and photovoltaic products) grew by nearly 30% year-on-year. If the “new trio” faces a decline in international market demand, the domestic overcapacity problem could become more severe. 

To address the current overcapacity issue, the priority is to tackle macroeconomic imbalances. Additionally, industrial policies should shift their focus to the forefront of the innovation chain instead of duplicating capacity. Moreover, local governments and financial institutions should be restrained from rushing to support so-called emerging industries. Finally, market discipline needs to be strengthened. Since most overcapacity issues involve private enterprises, the market will naturally help them clear a significant portion of the excess capacity. 

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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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To reduce energy intensity, China will implement stricter measures targeting high-energy-consuming industries    

Yang Fan, Chief Policy Analyst, CITIC Securities 

The goal of reducing energy consumption per unit of GDP by 13.5% during the period of China’s 14th Five-Year Plan(2021-2025) now seems challenging to achieve, and it may not stay a rigid goal. It is anticipated that there won’t be a resurgence of “rushing to carbon peak”, but stricter measures will be implemented, especially targeting sectors with high energy consumption and pollution.

In the short term, reducing the proportion of the mining and construction industries, increasing the utilization of clean energy, and enhancing energy efficiency in traditional and high-energy-consuming industries are the three main focal points for reducing energy consumption this year.

Regarding long-term mechanisms, the expansion of the carbon market and the construction of a new energy system are expected to accelerate within the year. It is projected that the steel, electrolytic aluminum, and cement industries will be brought into carbon trading this year, and reforms in the electricity market are also expected to progress rapidly.

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New policy to boost the development of new energy vehicles in China’s state-owned automotive companies     

Zhang Yuzhuo, chairman of the State-owned Assets Supervision and Administration Commission of the State Council

From the perspective of state-owned asset management, a key focus is to encourage bold innovation in enterprises and remove institutional barriers that hinder high-quality development. For example, in the realm of new energy vehicles, state-owned automotive companies are not progressing swiftly enough. Therefore, we’re adjusting policies to separately evaluate the new energy vehicle business for three major central state-owned automotive enterprises (FAW Group, Dongfeng Motor Corporation, and Changan Automobile). We’ve noticed that despite the ongoing advantages of traditional fuel vehicles, there’s a global trend among automotive companies to implement new energy vehicles businesses, which requires heavy investment in the initial stage. If we only consider the immediate profits, this might slow down companies’ progress. Therefore, our policy aims to address this challenge by evaluating their technology, market share, and prospects in the future. 

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