China Briefing, 24 June 2021: Hydrogen-fuelled vehicles; ETS launch date; Xinjiang solar ban

§ Snapshot

Shanghai has announced plans to promote hydrogen as an alternative to fossil fuels, focusing on hydrogen-fuelled vehicles. As one website reported, the municipality has planned multiple “hydrogen new towns” and pledged to become a regional hydrogen hub. The news came amid China’s national push to develop the hydrogen industry under its climate goals. 

Meanwhile, the launch date of the national emission trading scheme (ETS) has sparked confusion. State newswire Xinhua reported late last week that trading would begin on 25 June. Days later, two local outlets called the information “inauthentic”, but failed to give a specific date. Today, Carbon Brief published an in-depth Q&A explaining how China’s national ETS – the world’s largest – can help the nation tackle climate change. 

Elsewhere, the US has ordered a ban on imports of solar products from a Xinjiang-based company over its concerns about reports of “forced labour”, Reuters said. China has firmly denied all accusations of human-rights abuses in Xinjiang. This week, the Chinese foreign ministry called them “a pack of barefaced lies”, according to Beijing’s state media.   

§ Key developments

Shanghai ‘goes all out’ to drive hydrogen industry

WHAT: Shanghai is “going all out” to establish itself as a “world-leading hydrogen port” with a focus on hydrogen fuel-cell vehicles, 21st Century Business Herald reported last Thursday. The outlet said that the city aims to become the “core” of the hydrogen development in the Yangtze River Delta region – a highly urbanised area on China’s east coast that is roughly 1.5 times the size of the UK. In addition, Shanghai’s local 14th five-year plan has incorporated hydrogen into the roadmaps of five new towns, including Jiading New Town – which is known as Shanghai’s “automobile town” – the article added. 

WHEN: By 2023, Shanghai aims to have nearly 10,000 hydrogen fuel-cell vehicles on the road and 30 hydrogen refuelling stations in operation, 21st Century Business Herald said. More refuelling stations are due to be planned in residential districts, around airports and near the Shanghai Disneyland, reported state-run Jiefang Daily. According to a government plan, the value of Shanghai’s hydrogen transport industry is expected to grow to nearly 100bn yuan (£11bn) within two years. 

WHERE: Shanghai has also launched a joint programme with six other cities to “popularise” 5,000 fuel cell cars by 2025 – under a wider scheme from the central government – Xinhua said. These cities include Suzhou, Nantong, Zibo and Ordos. Apart from Shanghai, 15 other Chinese regions have introduced their plans to develop hydrogen or fuel-cell technology, reported Caixin. Shandong province, for example, intends to have 1m fuel-cell vehicles up and running by 2035 and introduce hydrogen as a fuel to 10m customers, noted China Urban Energy Weekly. 

HOW: Under China’s 2060 “carbon neutrality” goal, some 8% of the nation’s energy consumption would need to rely on “green hydrogen” – which is generated solely by using renewable resources – reported Caixin. However, the financial publication described the manufacturing of “green energy” as a crucial obstacle, or a “pain point”, in China’s renewable endeavour. About 30m tonnes of hydrogen is currently produced in China each year using “non-clean resources”, such as coal and natural gas, it said. Carbon Brief has examined how hydrogen might help the world solve climate issues – and the challenges it must overcome – in this in-depth Q&A.

WHY IT MATTERS: China’s 14th five-year plan has included hydrogen – along with energy storage – under what it calls the “frontier technology and transformational sectors”. Among all existing regional blueprints for hydrogen and fuel-cell vehicles, Shanghai’s deployment target is “one of the most aggressive”, BloombergNEF’s analyst Mi Siyi tells Carbon Brief. However, she adds that the target is still “dwarfed” by Shanghai’s objectives for “new energy” vehicles – which aims to turn at least half of its private cars and more than 80% of buses and delivery vans into electric by 2025. Mi expects more local governments in China to pilot hydrogen use for trucks and buses. She also predicts hydrogen fuel-cell vehicles to play “a bigger role” in decarbonising “hard-to-abate segments”, such as heavy-duty trucking, as hydrogen becomes more affordable.

National emissions trading scheme causes confusion

WHAT: As the launch deadline for the national ETS draws closer, there have been conflicting reports about exactly when the programme will go online. Xinhua’s report of the scheme’s starting date of 25 June was later described as “inauthentic” by two local media outlets. Both sides said they had received the information from trustworthy sources. As of writing, it remains unclear what date the ETS will start trading, though it is expected to be launched “by the end of June”. 

WHO: The financial division of Xinhua first reported that “the national carbon market will open on 25 June”. The state news agency – one of the most official media outlets in China – said that the Ministry of Ecology and Environment and other government organs would announce the news. Yicai, part of the state-owned Shanghai Media Group, and 21st Century Business Herald, which is affiliated with state-owned Southern Newspaper Media Group, then called the message “inauthentic”. But neither named Xinhua as the source and referred to the information as coming from “previous media reports”. 

WHEN: On Saturday, Xinhua Finance broke the story in an “exclusive”, citing “authoritative sources”. The original report cannot be found on Xinhua’s website anymore, but various outlets, such as Caixin and Securities Times, have syndicated it. On Tuesday, Yicai, which had also reposted Xinhua’s article, countered the report – also in an “exclusive”. It quoted “authoritative figures” and stated that the scheme’s trading date was “yet to be decided”. Simultaneously, 21st Century Business Herald published a similar story – a third “exclusive”. It said that “relevant sources” had verified that the launch date of the ETS “is confirmed to be delayed”. The article stated that the scheme would be launched later than 25 June.

WHERE: The ETS’s trading platform has been developed in Shanghai by the Shanghai Environment and Energy Exchange and will be operated by it before a dedicated national ETS institute is established, according to state newswire China News Service. On Tuesday, the exchange released some details of the national ETS in a bulletin, explaining the trading methods, venue and time. The move meant that the launch of the ETS was “imminent”, wrote Xinhua on Thursday – without mentioning an exact date.

WHY IT MATTERS: Although the national ETS’s launch date remains unclear, the scheme – which has taken China 10 years to develop – has grabbed much attention as to how it will help the country reduce emissions. In an article published today, Hongqiao Liu, Carbon Brief’s China specialist, has provided detailed analysis of the highly anticipated programme by studying government documents and interviewing a dozen experts. Her report explains how the ETS will work, what it will cover and what it means for China’s climate targets. One of the experts says that if China “gets the balance right”, the carbon market has the potential to be “a really powerful policy instrument”.

§ Other news

SOLAR PANELS: The Biden administration in the US issued an order on Wednesday to ban imports from Xinjiang-based Hoshine Silicon Industry Co – which produces key materials for solar panels – over “forced labour” allegations. The news was reported by Reuters, citing “two sources briefed on the matter”. Politico first reported on Monday that the US was weighing such a ban. Reuters said that the US had separately restricted its firms from exporting goods to five Chinese companies, including Hoshine. On Thursday, China’s Ministry of Foreign Affairs said that China “strongly condemns” the US sanctions, which are “based on lies and false information”, reported Jiemian News. Bloomberg, the Financial Times and the Wall Street Journal also have the story.  

IRON AND STEEL: According to a new paper from Nature Sustainability, emission standards imposed by China on its iron and steel industry in 2015 have led to “steady declines” in emission concentrations. The study finds that particulate matter (PM) and sulfur dioxide (SO2) emissions from ironmaking and steelmaking plants fell by 47% and 42%, respectively, between 2014 and 2018 – even though production increased by 14%. The researchers also see a consistent decrease in nitrogen oxide (NOx) concentrations. Furthermore, the study estimates that if all facilities achieve the “ultra-low” emission standards “promoted” by China in 2019, their PM, SO2 and NOx emissions will drop further.

RENEWABLES: Chinese premier Li Keqiang has instructed the nation to “play the advantage” of its wind, light, hydropower and mineral resources in its vast western region, reported China’s Securities Times. At a meeting on Monday, Li directed his government to build “large-scale clean energy bases” there to boost the nation’s abilities to ensure the steady supply of energy and vital resources, the report said. Vice premier Han Zheng, the leader of China’s new climate “leaders group“, attended the meeting, reported state broadcaster CCTV. 

COTTON: A study has found that half of the world’s cotton-growing regions, including China, are expected to face “escalating climate risks” by 2040, unless global greenhouse gas (GHG) emissions are rapidly curbed, reported Business Green. The article said that the analysis had assessed the world’s six biggest cotton-producing countries: India, the US, China, Brazil, Pakistan and Turkey. The researchers found that all of them will face “drastic” exposure to high temperatures, changes to water availability and extreme weather events – with impacts set to worsen – under a high-emissions scenario, the website added. 

COAL: Some of China’s regional regulators and companies have suspended the operation of their coal mines amid rising concern over industrial accidents, Bloomberg reported on Monday. Hubei province has halted all coal-mining operations from 15 June to 5 July following a gas pipeline explosion that killed 25 people, the news outlet said. A coal industry group called Anyuan also ordered five coal mines in Jiangxi province to stop running from 21 June to 4 July. The move came as China’s coal prices continued to rise, the report added. 

CLIMATE DIPLOMACY: China formally accepted the Kigali Amendment to the Montreal Protocol last Thursday, reported Xinhua, adding that the ratification will be effective on 15 September. The international agreement aims to reduce the use of hydrofluorocarbons (HFCs) – potent pollutants used mainly in fridges and air conditioning – by more than 80% by 2047. President Xi pledged to accept the amendment and tighten regulations over non-carbon dioxide emissions during the Leaders Summit on Climate in April.

ENERGY INTENSITY: Zhao Penggao, deputy director of the environmental resources department of the National Development and Reform Commission, has instructed all regions to meet their target of cutting energy intensity by “around 3%” this year, according to Securities Times. During a meeting with “some” regional officials in Beijing, Zhao said the main task was to curb the “blind development” of projects with high energy use and high emissions, or “dual-high” projects, the report said.

§ Extra reading

• China’s initial carbon prices to balance growth needs with long-term climate goals – Ivy Yin and Eric Yip, S&P Global Platts
• Bitcoin miners exit China, beat a path to the U.S. as crypto climate shifts – Gerry Shih, The Washington Post
• Can America’s solar power industry compete with China’s? One firm tries – Bob Davis, The Wall Street Journal
• China’s role in the race for climate leadership – Sverre Alvik, Forbes

§ New science

Projection of the future changes in tropical cyclone activity affecting East Asia over the western North Pacific based on multi-RegCM4 simulations
Advances in Atmospheric Sciences

According to new research from the Chinese Academy of Sciences, regional climate models are a “very useful” and – to some extent – “essential” tool to study changes in tropical cyclones affecting East Asia. Through multiple model simulations, the scientists project that tropical cyclones will form and occur more frequently in the western North Pacific by the end of the 21st century. They also find that the projected cyclones “tend to be stronger” and that more will likely make landfall in most coastal Chinese provinces. Prof Gao Xuejie, the paper’s lead author, tells Carbon Brief that, despite “large uncertainty”, the study highlights the importance of employing regional climate models to project future changes in tropical cyclones and the assessment of impacts and risk management studies.

Sensitivity of PM2.5 and O3 pollution episodes to meteorological factors over the North China Plain
Science of the Total Environment

A new study has found that meteorological conditions significantly influence the concentrations of fine particulate matter (PM2.5) and ozone (O3) in the North China Plain. PM2.5 and O3 are the main pollutants driving air pollution in the region, which is situated in north-central China and covers cities including Beijing and steel hub Tangshan. Dr Shao Min, the paper’s corresponding author, tells Carbon Brief that the researchers hoped to “illuminate the possible factors determining air quality under light to extreme polluting conditions”. He says they also hoped to “let the government know the importance of considering meteorological conditions while developing an emission control strategy”.

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