China has been the world’s largest and most important car market now for a number of years, with an estimated 302 million passenger cars on the road. More cars are produced and sold in China than in the USA or in the EU despite some decline in sales in more recent years. The China Association of Automobile Manufacturers (CAAM) states production numbers of roughly 20 million passenger cars for 2020, and 21 million units for 2021, up 7.07% year-on-year. CAAM publishes car production data on a monthly basis. Passenger car sales in China came to around 20.2 million units in 2020, down 5.9% year-on-year, and 21.5 million units in 2021, up 6.46% year-on-year. Estimates by other sources foresee sales of passenger vehicles of 29 million for 2022 with some 38 million vehicles being registered annually in China by 2030.
So-called New Energy Vehicles (NEVs) were more than 3 million vehicles in 2021, and the China Passenger Car Association estimates sales of 6.5 million units in 2022. In addition, China has been investing in and promoting a charging infrastructure, that is unparalleled. It has the world’s largest charging network and by end of June 2022, there were 3.9 million public and private charging pillars across China, a year-on-year increase of 101.2 percent. In addition, concomitant technologies to make NEVs attractive and convenient, such as battery-swapping technology, are being promoted and it is estimated that by 2025 more than 28,000 battery-swapping stations will exist, up from 1,582 such stations in June 2022.
It has long been China’s ambition to build a globally viable auto industry. And NEV production and sales have been playing an ever-special role in that strategy. The original motivation to promote the NEV industry laid in the government’s fight against air pollution in 2009. The establishment of a robust and internationally competitive NEV industry has since become a central part of China’s low-carbon transition. In 2010, the government designated NEVs as one of its seven “strategic emerging industries” and in 2015, Chinese Premier Li Keqiang further elevated the industry plus a concomitant battery technology production and charging network to become a key pillar in the strategic “Made in China 2025” plan.
Current strategy plans to delineate the path to carbon neutrality in 2060 foresee a NEVs share of 40% of all new vehicle sales by 2030. In November 2020, the State Council published the “NEV Development Plan 2021–2035”, giving a target of 20 % for NEV market share by 2025. Among others, it outlines a proposal to connect the Dual Credits Measures and China’s emissions trading scheme. The strategy paper furthermore outlines the role of NEVs and intelligent connected vehicles (ICVs) for future economic development and provides guidelines for industrial production ecosystems, battery ecosystems, recycling, life cycle/circularity, modular but integrated supply chains, renewable energy systems, quality control, user-friendliness, charging infrastructure, data use, and protection, vehicle-to-grid communication, etc. Other policies promoting the electrification of passenger transport also include measures to incentivize NEV consumption through NEV purchasing subsidies and the exemption of purchase tax of NEVs (PTE). This September the government announced that it will extend its tax exemption scheme for the purchase of new energy vehicles until the end of 2023 – the third extension of its kind.
Concomitant with the development of the NEV and ICV industry, China’s government has consistently planned and executed the establishment of a comprehensive (EV)-charging infrastructure. The Guidance for Developing Electric Vehicle Charging Infrastructure (Guidance) was issued jointly in October 2015 by the NDRC, the National Energy Administration (NEA), the MIIT, and the Ministry of Housing and Urban Development (MOHURD).
Whether the Chinese government’s plans to use electrification of transport to lower carbon emissions will pay off remains to be seen. Individual CO2 emissions data pertaining specifically to passenger car volumes on Chinese streets does not seem to be publicly accessible in a consolidated and easy mode. Several sources provide insights that emissions from transportation make up a large, but by far not the biggest part of emissions in China. Some sources report that CO2 emissions for the transportation infrastructure in China increased at an average annual rate of 15% during the period 1997–2006. While the World Resources Institute figures that China’s cars, buses, trucks, shipping, and other transport generated 828 million tonnes of greenhouse gases in 2014. And in 2018, China’s transport emissions are said to have accounted for 11% of the world’s transportation emissions. More recent studies put the share of emissions from transport in China at about 10% of China’s total carbon emissions.
While some improvement in air quality can be seen in cities with large fleets of NEVs, the overall assessment of the sector’s environmental impact is critical, saying that there is little evidence of reduced greenhouse gas emissions. Much of China’s electricity grid is powered primarily by coal-fired power plants making electric cars not much cleaner in terms of carbon emissions than combustible engines. In addition, the indirect emissions caused by the high energy consumption needed to produce lithium-ion batteries can be up to twice those used to manufacture a standard combustible vehicle. In this sense, how much China’s drive to electrify its transport system, including individual passenger cars, will contribute to carbon neutrality by 2060 will depend also on the decarbonisation of the energy industry and newer battery production technology.
This Post was submitted by Climate Scorecard Country Manager Annette Wiedenbach
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