Suggestion on Promoting Sustainable and Sound Development of Renewable Energy and Pushing Implementation of Carbon Peaking and Carbon Neutrality Goals

Deputy: Liu Hanyuan

At present, carbon neutrality has become a global consensus. Countries across the world are now expediting their movement toward this goal. After announcing that the emission reduction rate has been increased by triple, Germany raised on February 28 that it was planning to accelerate expansion of its wind and solar power infrastructure, realizing the target of 100% renewable energy power supply 15 years ahead of schedule to 2035. The "3060" carbon peaking and carbon neutrality goals of China and their progress have also become a focus of concern of all sectors of society. In the process of moving towards the carbon peaking and carbon neutrality goals, renewable energy represented by PV and wind energy undoubtedly serves as the main driving force.

At the Two Sessions, Mr. Liu Hanyuan, Deputy to the NPC and chairman of the Board of Directors of Tongwei Group, put forward suggestions on fostering sustainable and sound development of renewable energy and contributing to the effective implementation of carbon peaking and carbon neutrality goals.

Liu Hanyuan pointed out that the Central Committee of the Communist Party of China and the State Council officially printed and issued the Opinions on Complete, Accurate and Comprehensive Implementation of New Development Ideas and Carrying out Carbon Peaking and Carbon Neutrality Work on October 24, 2021. According to the Opinions, to realize the carbon peaking and carbon neutrality goals is a major strategic decision made by the Central Committee of the Communist Party of China with Comrade Xi Jinping as the core, taking into full account both the domestic and international situations, an inevitable choice if we want to solve the prominent problems of resource and environmental constraints and realize sustainable development of the Chinese nation, and a solemn commitment to building a community with a shared future for mankind. Release of the document signifies that China has completed the top-level design of its carbon peaking and carbon neutrality work, which has become part of the major national strategy to lead the economy of China to high-quality development and realize the great rejuvenation of the Chinese nation.

In the process of moving towards the carbon peaking and carbon neutrality goals, renewable energy represented by PV and wind energy undoubtedly serves as the main driving force. In the past more than 10 years, the cost of PV power generation dropped by more than 90%, and PV power generation has become the most economical mode of power generation in the world. The cost of PV power generation in China is now already below RMB 0.3/kWh. The grid purchase price is expected to drop to a point below RMB 0.25/kWh during the "14th Five-year Plan" period. By that time, the PV power generation cost will be lower than most of coal power plants. Taking into account of ecological environment cost, the advantages of PV power generation are even more prominent.

According to Liu Hanyuan, on the consumption side, oil consumption by transportation accounts for approx. 70% of annual crude oil consumption in the country and fuel cost of an oil-fueled automobile per 100km is approx. 4~5 times the electricity cost of an electric automobile per 100km; the electricity cost is 1/4~1/5 of fuel cost at the consumption side when calculated based on the equivalent energy output. At present, the world crude oil price is close to USD 100 per barrel. Calculated based on the average crude oil price in 2021, which was USD 70 per barrel, the electricity cost of equivalent energy is some USD 15. The PV power generation has achieved the grid parity. Therefore, the PV power generation cost is already reduced to the price of a barrel of crude oil worth 15 USD. The entire power generation process has zero pollution and zero emission.

In terms of carbon emission reduction, the PV system capacity in China has reached some 200GW. The power generated by PV products every year amounts to the equivalent energy generated by 100 million tons of crude oil. Consumption of 100 million tons of crude oil would generate carbon emission of 350 million tons, while production of PV systems of 200GW generates carbon emission of about 10.5 million tons. To put it another way, for every 1 ton of carbon emission generated by manufacturing of PV systems, there will be a reduction of 33 tons of carbon emission every year resulting from power generation by PV products.

Based on the input-output ratio of energy, power consumption for manufacturing of PV power system of 1kw is about 300kwh, while PV power system of 1kw generates power of about 1,500kwh on a yearly basis. This means that the power consumption throughout the entire manufacturing process of PV system can be recovered within half a year upon completion of the power plant. A PV system is expected to operate free of trouble for more than 25 years and will generate electric power more than 50 times the input throughout its entire service life. This is a typical industry in which "small energy" is traded for "big energy".

In terms of the national strategic security of energy, in recent years, the imports of crude oil of China topped USD 200 billion every year, with a degree of dependence upon foreign trade above 70%. In 2021, the import volume reached 513 million tons and the foreign exchange payment reached USD 257.3 billion, hitting a record high. Totally 80% of the crude oil is imported to China through Malacca. In view of the energy and foreign exchange security, China is fully capable of substituting 70% of its energy increase and 30% to 50% of its energy reserve with renewable clean energy in 10 to 20 years, and solve the possible "bottleneck" problems of crude oil import for good. If required by the national strategy, the development speed can be further boosted and the above goal can be achieved in about 10 years.

According to Liu Hanyuan, renewable energy represented by PV has become the main driving force of the carbon peaking and carbon neutrality goals given the above facts. However, development of the sector is still facing challenges, which is delaying the realization of carbon peaking and carbon neutrality goals to a certain extent. Last year, due to short supply and price rise of coal, growth of power demand and other factors, many places in China experienced power shortage. On August 17, 2021, the National Development and Reform Commission printed and issued the Barometer of Completion of Control Goals of Total Amount and Intensity of Energy Consumption in Different Parts of China in the First Half of 2021, and made public the performance of different parts of China. Many provinces (regions) were given the first-class red alert. After that, many provinces (regions) in China, in particular those given the first-class red alert, initiated power rationing and production restriction out of expectation, in a bid to achieve the control goals of total amount and intensity of energy consumption of the year. This resulted in even more serious power shortage, and posed significant impact on regular operation and production of enterprises.

Liu Hanyuan also pointed that in view of the campaign-like, unexpected carbon emission reduction initiatives taken by various provinces and regions, the Central Committee of the Communist Party of China resolutely ordered them to stop and make corrections, and stressed at the Central Economic Working Conference: "We should understand and grasp carbon peaking and carbon neutrality properly, and move toward the goals resolutely. However, we should never attempt to accomplish the whole task at one stroke." "We should carry out assessment in a scientific manner. The energy consumption of newly added renewable energy and raw materials should not be included in the control of total consumption of energy. We should provide conditions for shift from 'control of total amount and density' of energy consumption to the 'control' of total amount and intensity of carbon emission." This move of the Central Committee of the Communist Party of China effectively stopped the aggressive, unexpected carbon emission initiatives. However, the provinces and regions had different understanding of the intent of the Central Committee of the Communist Party of China, and problems such as absence of supporting measures and failure to implement related policies persisted.

In order to promote effective realization of the carbon peaking and carbon neutrality goals of China, Liu Hanyuan put forward the following suggestions with regard to the above problems:

In the first place, support should be granted to development of renewable energy industry such as PV, and the energy consumption generated by production of the raw materials and different links of the industrial chain should not be included in the assessment of total energy consumption. Many parts of China experienced extensive power shortage in 2021 basically as a result of the gradual fadeout of fossil energy and slow development of renewable energy. Therefore, it is suggested that the PV industry not be included in the assessment of total energy consumption, and efforts be made to expedite its development to meet the energy transformation need.

Furthermore, related specifications and standards, and supporting policies and mechanisms should be established to grant more support to the industry and guide electric vehicles to become energy storage terminals of power grid. At present, the average one-charge distance range of electric vehicles is some 300km, which means about 300,000km for 1,000 charges. This basically covers the distance range of family cars in their service life. A battery can be charged 2,000 to 3,000 times throughout its service life, and this number is expected to reach 5,000 in a couple of years. There will be massive redundancy. Besides, the average service time of a family car is no more than 3 hours and this means a plenty of idle time. As the number of electric vehicles keeps growing rapidly, there should be a way to effectively utilize the idle resources. For example, they can be connected to the system as distributed energy storage units and serve as a part of the power grid energy storage, micro-grid energy storage, residential community energy storage and household energy storage during the idle time. During peak hours of power grid load, they may sell electric power to the grid; when the load is low, they may store the surplus electric power of the grid. While making contributions to the grid, the vehicle owners would benefit from the price difference between charge and discharge as regulated by the marketization mechanism. This way, the purchase cost of the complete vehicle or the battery pack is reduced and benign interaction between the electric vehicles and power grid is established. By doing so we can greatly improve the power grid efficiency, reduce power supply loss and increase utilization rate of idle resources. Besides, the application scenarios of renewable energy can be further enhanced, and utilization rate of renewable energy increased, contributing to the carbon peaking and carbon neutrality goals. Apart from that, the intelligent reconstruction of power grid will stimulate related investment.

Moreover, it is suggested to improve the self-sufficiency rate of zero carbon and low-carbon energy in photovoltaic and other renewable energy manufacturing industries. Also, it is suggested that private enterprises be allowed to build PV and wind power plants, supporting systems and mechanisms and policy measures be established, and wheeling charges be reduced or remitted, so as to allow for self-sufficiency, meet the growing needs of energy without increasing carbon emission, and realize all-green production on the manufacturing side.

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