The carbon game behind carbon emission reduction
Reducing carbon emissions and mitigating global warming is the common vision of almost all countries. It seems that we should work together and act in concert, because this is the well-being of mankind.
However, when carbon reduction actions are implemented, the picture is not as warm as imagined. Not only is it not warm, it can even be said to be a tough game - a game between the country, the industry, and the company.
You can get an intuitive feeling by looking at the ongoing 2024 Shanghai International Carbon Neutral Technology, Products and Achievements Expo. Automobile manufacturers are important participants in this year's Carbon Expo. In the exhibition hall, Volkswagen of Europe is using high-power loudspeakers to promote the ID.3, a "pure electric cannon", while Tesla of the United States has brought its large pure electric pickup truck Cybertruck to a Chinese exhibition for the first time. , and around them are a large number of domestic new energy brands: BYD, Geely, Avita, Zhiji, Weilai, Xiaopeng, Chery... From oil to electricity, the automobile industry is turning to a low-carbon future, leading to the future On the way, there may be mutual support, but it is more competition and game. Some people say this is a green technology competition, while others say this is a climate trade war.
When talking about the carbon game, we have to start with the source of carbon. The largest source of greenhouse gases such as carbon dioxide is the combustion of fossil fuels, which are used to generate electricity and heat. According to statistics from the World Resources Institute, energy and electricity account for about 40% of greenhouse gas emissions. Therefore, the first industry included in China’s carbon emissions trading is the power generation industry.
Carbon reduction will have the earliest and most direct impact on the energy and power industry. The energy sources relied on for power generation must transition from coal, oil, and natural gas to wind energy, solar energy, etc. If the energy game of the 20th century revolves around oil, new energy will play a decisive role in the future.
The carbon game is first and foremost an energy game. At this year’s Carbon Expo, the first exhibition hall gathered all power and energy companies such as State Grid and Huaneng. At the State Grid booth, a bar chart of new energy trading power was displayed. Starting from 2019, the bar every year has been much higher than the previous year. In 2023, new energy trading power will account for 45.3% of total power generation. The trend of energy transformation can also be confirmed in China Huaneng next door. Huaneng's low-carbon clean energy installed capacity accounts for 48.2% of the installed electricity capacity. A Huaneng employee at the scene told reporters that in the past two or three years, the company's wind power and photovoltaic installed capacity have grown extremely fast. On the contrary, some coal power plants have been transferred and some have stopped operating.
In recent years, China, Europe, and the United States have all increased the development and utilization of green energy such as wind, light, and hydrogen. In particular, the conflict between Russia and Ukraine has accelerated changes in the global energy landscape, and countries have begun to examine the potential risks brought about by over-reliance on traditional energy. Europe, once mired in an energy crisis, was forced to reconsider energy security, increase investment in clean energy, and accelerate energy transformation. In 2021, the United States announced its return to the Paris Agreement, set a clear goal of carbon neutrality, and attempted to regain leadership in international climate governance. Even Saudi Arabia, the world's largest oil exporter, and Australia, a major coal producer, have proposed carbon neutrality goals and increased investment in clean energy. In the process of promoting carbon neutrality, the competition between countries in the energy field has intensified.
The carbon game is also a game for future industries. Accompanying the transformation of energy and power is the sudden rise of the new energy industry. New industries represented by electric vehicles, photovoltaic power generation, lithium battery energy storage, etc. are becoming the main areas of competition for various countries. Li Liang, general manager of the Municipal Energy Conservation and Emission Reduction Center of Shangzi Group, said: "These three are indispensable technologies for all countries in the world to move towards carbon neutrality. So no one wants to let these technologies be completely in the hands of others."
On May 14, the U.S. government announced that it would raise import tariffs on Chinese electric vehicles to 100%, unilaterally quadrupling the current tariffs. Not only electric vehicles, the United States has also increased tariffs on Chinese lithium batteries, solar cells and other products. The New York Times commented that imposing tariffs on products that would help achieve global climate goals would have been unthinkable a decade ago. This newspaper believes that "the climate trade war is escalating significantly."
Nobel economist Paul Krugman asked in an article, why doesn’t the United States buy cheap Chinese batteries? He answered himself: "This is a political and economic issue." The Biden administration has staked a lot of political capital on green industrial policies, and has arranged $2 trillion in expenditures for this purpose such as the Inflation Reduction Act, which focuses on climate issues. . The United States wants to build a moat for the emerging green industry, and the "river water" means imposing heavy taxes on Chinese green products.
At the Carbon Expo, a staff member introduced Tesla's electric drive system exhibits to visitors. photo
The carbon game is a game of standard rules. This year's Carbon Expo has a distinctive feature. There are many carbon neutral certification agencies, and most of them are from Europe. The reason is not difficult to understand: Europe was the first region to establish carbon emission reduction standards, and it is also the region with the most aggressive goals and the most complete regulations.
In May last year, the European Parliament passed three climate bills including the reform of the carbon emissions trading system, aiming to significantly reduce the EU's greenhouse gas emissions. It was called "the largest carbon market reform in European history" by the outside world. Foreign products entering the European market will be subject to complex carbon-related regulations. Various carbon-related verification and certification services have emerged. On these standards, Europe takes the lead in having the right to speak.
Carbon standards will be a new threshold. A person in charge of Intertek Group, an international certification and testing organization, said that Intertek was the first to conduct safety standard testing, and later came performance standards, then ecological standards, and the latest is carbon standards.
Carbon standards will have a profound impact on all walks of life. French automotive technology company Faurecia has proposed to achieve carbon neutrality in its internal emissions by 2025. At the Carbon Expo, Li Li, Vice President of Faurecia China Operations, said: “We require suppliers to reduce internal emissions by 80% in 2027. Starting from the second half of this year, we also require suppliers to include carbon emissions in their quotations. Explanation. "In order to achieve carbon reduction goals, Faurecia has also added carbon neutral positions to be responsible for carbon footprint calculation and carbon emission reduction implementation.
This will be a restructuring of supply chains in all industries, and those suppliers that do not meet carbon emission reduction targets may be forced out. The diverse exhibitors at the Carbon Expo illustrate this trend. There are energy, automobiles, finance, manufacturing, and even consumer electronics like Sony, skin care products like L'Oreal, and hotels like Marriott. Almost all industries will have a link to carbon, and they will change as a result of carbon rules.
“The right to speak about carbon will become the core of the right to speak about big countries.” One researcher concluded.
