Insights Library

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

Carbon emission trading urgently needs legislative regulation to promote a healthier market   

Wang Peng, Researcher at Guangzhou Institute of Energy Conversion, Chinese Academy of Sciences   

Clarifying the rights and responsibilities in the form of laws will make the carbon market more binding and carbon trading more formalized. In the past, I have learned that some moribund companies with high carbon emissions delayed their market exit because they could sell carbon allowances to make profits, which affected the fairness of trading. This calls for more meticulous supervision of carbon emission trading and the establishment of regulations to provide a reasonable management system to maintain scientific, standardized and orderly carbon emission trading.  

Currently in China’s carbon market, a significant number of participants, including large emitters, lack a deep understanding of the rules. Many participating companies are motivated by financial gain, much like retail investors in the stock market. However, carbon allowances are more of a responsibility. Providing education and training for companies involved in the carbon market is helpful for robust and effective trading. 

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The recent approvals for new coal-fired power projects are phased steps in energy substitution and transition   

Su Wei, China’s Chief Climate Negotiator   

Regarding the pace of coal phase-out, it is essential to acknowledge that the role of coal itself is also undergoing a gradual transition from a primary power source to a flexible and peak-shaving power source (in China). The direction of this transition is clear, though it necessitates a gradual process. As for approvals for new coal-fired power projects in the recent period, there are two primary reasons. Firstly, there is a practical need for ensuring energy supply. Secondly, these new approvals contribute to providing flexible power support for the large-scale development of renewable energy. Approving new coal-fired projects is a temporary move in the long-term development. With the widespread development of renewable and non-fossil energy, not only will the incremental growth of coal power gradually decrease, but its overall proportion will also decline. This aligns with the prevailing trend of energy substitution and transition.   

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The current bottleneck in solar photovoltaic industry development lies in the overall power system    

Shi Zhenrong, Chinese solar industry pioneer, Founder of Sunman Energy    

Examining the entire power system through the lens of photovoltaic (PV) products, the PV industry has experienced remarkable development in the past two decades. As a product, PV has achieved perfection in aspects like conversion efficiency, cost, capacity, and the supply chain. At 1 yuan per watt, costs in the PV industry have already reached a satisfactory low point. Further cost reduction would not only be unprofitable for the PV sector but might also fail to generate additional returns for the overall power system. 

The PV industry can easily and swiftly achieve the goal of tripling installed capacity, or even more. The current bottleneck in industry development lies not in the production but in the overall power system. Today’s power system is not fully equipped to handle the intermittent and large-scale integration of PV and wind energy into the grid. Overcoming this challenge requires both top-level design and a rapid push toward the development of smart grid interconnection.    

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China’s carbon market can integrate with international markets through CCER   

Ma Jun, President of the Institute of Finance and Sustainability   

It is necessary to enhance the role of the carbon pricing mechanism, as once established, it can serve as a cost-effective and efficient tool for directing more resources toward green and low-carbon allocations. However, constructing the carbon market presents several challenges, one of which is how to maintain connectivity with the international market while aligning with global standards. 

Regarding this issue, I believe that, in the short to medium term, China’s carbon market has the potential to integrate with international markets through Chinese Certified Emission Reductions (CCER). The international community has recognized the significant potential of CCER, as it may evolve into the largest voluntary carbon market worldwide. Consequently, there is considerable global interest in participating in it.  

Nevertheless, two critical issues must be addressed: firstly, aligning China’s CCER standards with international ones. The most straightforward approach is to seek recognition from the Integrity Council for the Voluntary Carbon Market for China’s CCER market standards and methodologies, thereby making the CCER market acceptable to global investors. Secondly, mere acknowledgment of CCER’s quality is insufficient; there must be a trading channel for foreign individuals to easily acquire CCER products. Mechanisms like Stock Connect and Bond Connect could potentially serve as viable solutions.    

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Ceasing the construction of new coal-fired power plants and transitioning to emerging energy sources may be a solution to balancing development with climate change mitigation   

Yao Yang, Dean of the National School of Development, Peking University   

Currently, China’s approach does not involve the complete shutdown of all coal-fired power plants. Instead, the focus lies in advancing the implementation of green technologies, especially in photovoltaic and wind power. Several years ago, there was a discussion in China about the possibility of closing a portion of coal-fired power plants. However, it was eventually recognized that this was not a viable solution. Therefore, two years ago, we shifted our strategy to prioritize the development of photovoltaic and wind power generation, a decision that has proven to be judicious.” 

Climate change is indeed an urgent concern, but from today’s perspective, it is not yet a daily risk, but it poses a risk that may extend for decades. Thus, we still have time to address this issue. The demand for energy in developing countries is expected to rise, so looking from today into the future, ceasing the construction of new coal-fired power plants and transitioning to emerging energy sources could sufficiently address such risks.   

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Significantly impacted by climate change, China experienced extreme cold waves in December   

National Climate Centre    

In December, the country experienced a roller-coaster ride of temperatures, with a persistent early warmth followed by a sharp decline in the later period. From December 1st to 13th, the national average temperature was higher than usual, reaching the highest level in history for the same period. Yunnan and Ningxia both registered their highest historical temperatures for this timeframe. However, starting from the 14th, under a widespread cold wave, temperatures sharply declined across most regions of the country. Some national meteorological stations have recorded maximum daily temperature drops that surpassed historical extremes. 

China is a region sensitive to and significantly impacted by climate change. Despite the warming trend surpassing the global average, the intensity of extreme cold waves has not diminished, and the impact range of strong cold air or cold waves has expanded.   

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Trade protection measures increase pressure on energy transition and supply chain stability   

Wang Yichen, Journalist and Columnist in Energy, Economic Daily    

The target to increase installed renewable energy generation (agreed to in the Global Renewables and Efficiency Pledge) provides a fresh investment opportunity for the global new energy industry and injects new vitality to economic recovery. It also poses a significant challenge to supply chain security. Currently, there is a rise in trade protection measures against new energy equipment. Such actions will only increase the global cost of energy transition and intensify supply chain risks. It is essential for countries to jointly uphold supply chain stability with a more open and inclusive mindset, thereby facilitating the energy transition. At the same time, to ensure a smooth transition in the energy structure, the development of grid facilities and power supply regulation should not lag behind.   

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Climate-trade nexus is becoming an increasingly prominent climate issue   

Dr. Kevin Mo, iGDP Principal   

While trade and climate have always been linked, it has been climate that has gotten the lion’s share of attention. But that is changing. The climate-trade nexus is becoming an increasingly prominent climate issue, as demonstrated by a growing number of related associations and initiatives like the Climate Club, negotiations at the US-EU Global Arrangement on Sustainable Steel and Aluminum, and the US-EU Trade and Technology Council, which aims to leverage trade cooperation to support global climate action.  

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China will stick to its current climate goal to reach carbon peak before 2030  

Xie Zhenhua, China’s Special Representative for Climate Change Affairs  

China’s target is to achieve carbon peak before 2030, and we are currently in the process of refining the exact year through calculations. However, it can be confidently stated that there is no need to modify this goal. We will present the absolute emissions for achieving the peak. Why is this important? Because in the context of China’s strategic transition from dual control over the amount and intensity of energy consumption to dual control over the amount and intensity of carbon emissions., the absolute quantity is crucial in determining the exact year of peaking. Nevertheless, it is certain that China will peak before 2030, not in 2030. 

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The replacement of fossil fuel energy needs to take place in the process of developing the renewables   

Zou Ji, CEO & President of Energy Foundation China  

The restriction on fossil fuel usage comes with a precondition: the actual energy demand in practical development cannot decrease and may even need to increase. Therefore, the replacement of coal, oil, and gas for power generation needs to occur within the framework of renewable energy development. For countries heavily reliant on coal, the process of “phasing out” may increase pressure by augmenting demands for the intensity and speed of the transition. In intergovernmental negotiations, while keeping the current direction unchanged, a buffer zone is necessary. Achieving a 50%-70% reduction in coal-fired power generation is a feasible goal. However, an immediate reduction to zero would lead to a sharp increase in costs. This aligns with the economic principle of increasing marginal cost, where further reduction becomes progressively more challenging. Hence, there needs to be flexibility in government commitments. 

From a technological standpoint, we have not yet observed a fully fossil fuel-free energy system. In the current context, scholars and researchers can certainly design scenarios and goals for “phasing out.” However, personally, I believe that for governments, committing to the outcomes of such “phasing out” may present challenges.  

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