Interview, Fireside Chat, Conference Presentation
The Daily Check-In: China’s Path to Carbon Neutral: Addressing the Upstream
- The national Carbon Act is expected to be released within the current year, while the national Emissions Trading System (ETS) is scheduled to become operational by the end of this month.
- The initial trading cycle of the ETS is projected to involve over 2,000 power generators, reflecting the integration of decarbonization discussions into corporate and investor strategies.
- Policies and regulations are anticipated to first target emission reductions in top sectors, with upstream industries positioned at the forefront of China's 40-year net zero roadmap.
- China's carbon peak is reasonably expected to occur between 2027 and 2028, accompanied by a projected reduction in total power demand (TDP) carbon emission intensity of more than 30% from current levels.
- Two major near-term challenges are identified as reducing total emissions amidst supportive or growing demand, and addressing industrial process emissions which present a medium-to-long term hurdle.
- Coal's contribution to total energy is estimated to decrease to approximately 35% by 2030 and potentially reach zero by 2050, impacting roughly 6 million workers and 15 trillion in financial liabilities within the coal and coal-fired power sectors.
- The upstream sector is projected to deliver 20% to 30% of total emission reductions through specific measures including increased renewable energy use, a shift from blast furnace to electric arc furnace steel production, hydropower utilization in aluminum smelting, and cement kiln upgrades for electrification and efficiency.
- Post-2030 net zero strategies will increasingly rely on new technologies, specifically carbon capture, utilization, and storage (CCUS) and low-carbon production processes, which are currently not economically available.
- Early-stage technologies may currently appear loss-making, but their economic viability is expected to improve over time through policy support such as subsidies, industry scale expansion, and technological advancement.
- Transitioning successfully to these new technologies is estimated to require a decade, based on European precedents, indicating that early adoption by first movers may position them favorably for future success.