Made in China to go global, we must gnaw this hard bone

· This is the 5461st original first article Word Count 3k+ ·

The "carbon tariff" is coming

The implementation of the world's first carbon tariff mechanism - the "wolf" is really coming!

On August 17 this year, the European Commission adopted and published the implementation rules for the transition period of the EU's Carbon Border Adjustment Mechanism (CBAM). The detailed rules will officially start trial operation from October 1, and the transition period will be until the end of 2025. In other words, from 2026 onwards, if the carbon price of the production site is lower than that of the EU carbon market, it will be necessary to buy a CBAM certificate to make up the difference.

According to the CBAM, the EU will impose additional carbon border adjustment fees on certain products such as cement, aluminum, fertilizer, and steel imported from abroad, known as "carbon tariffs".

This also means that the EU will become the first economy in the world to start imposing "carbon tariffs".

The implementation of carbon tariffs in Europe has aroused great concern around the world, and developing countries may face huge challenges in carbon reduction and trade, especially as the EU's largest trading partner, Chinese companies will have to face the EU's carbon barriers.

"According to preliminary estimates, at least two trillion yuan of Chinese exports will directly face the challenge of carbon tariff barriers or hidden carbon costs in the future." At the 2023 Ordos Zero Carbon Industry Conference held on October 26, Zhang Lei, CEO of Envision Technology Group, said.

Carbon tariffs have become a new tool for the EU to create trade barriers, Chai Qimin, director of the strategic planning department of the National Center for Climate Strategy, believes that in essence, carbon tariffs are a kind of green trade barriers, and the fundamental reason for its occurrence lies in global industrial competition, and the energy and industrial revolution brought about by climate change has led to the redistribution of interests.

Wu Bixuan, a senior partner at Hiways Law Firm (Beijing) and a special researcher at the China Carbon Neutrality 50 Forum, who has long tracked changes in trade rules, also believes that although the CBAM is an internal measure of the EU carbon market, it has a strong spillover effect, which is reflected in the fact that it forces other countries to achieve carbon reduction through carbon pricing, and also makes the carbon price as close to the EU level as possible. However, in reality, few countries can (or need to) do so, so the CBAM objectively sets up barriers to trade.

"In the age of climate change, a new factor will affect trade and national competitiveness, and that is carbon." Wu Bixuan said.

In fact, on a global scale, there are higher requirements for carbon emissions. As early as 2020, South Korean regulators proposed new carbon footprint requirements to verify the carbon emissions of Chinese products.

In addition to the introduction of the CBAM, the EU also introduced the "New Battery Law" in August this year, starting from July 2024, power batteries and industrial batteries sold in the EU market must declare the carbon footprint of the product, and by July 2027, the relevant carbon footprint limit requirements must be met.

The carbon footprint of the New Battery Law requires the whole life cycle to be accounted for, that is, from the cradle to the grave, which puts forward higher requirements for the management of carbon data within enterprises and upstream and downstream of the supply chain.

How to solve the problem of carbon tariffs and carbon barriers in global trade has become an important challenge for Chinese enterprises to go global.

A "long-term pathway" to break down the carbon barrier

To solve the carbon tariff problem and carbon barriers, we must first understand what the core of carbon tariff is.

Wu Bixuan believes that the essence of CBAM is to levy the difference between the EU carbon price and the carbon price of exporting countries on the carbon content of imported products, so increasing the domestic carbon price will inevitably lead to the reduction of the burden of CBAM on export products. But how high is the carbon price useful?

In recent years, carbon pricing in the EU has been rising. Recently, the closing price of carbon prices in the EU has exceeded the 100 euro mark twice, while the carbon price in China's national carbon market is still at a single-digit level when converted into euros. To effectively avoid CBAM, China's carbon price must be raised to a level close to that of the European Union. However, if 3.2% of exports to Europe are exempted from CBAM, the burden of ultra-high carbon prices on China's entire economy will basically be a fatal blow to Chinese companies, which is inappropriate and unfair.

A study published by the Africa Climate Foundation and the London School of Economics shows that the economic impact of the CBAM is far-reaching, costing African countries $25 billion a year. The World Bank reports that if the "carbon tariff" is fully implemented, in the international market, Chinese manufacturing may face an average of 26% tariffs, and the cost of export-oriented enterprises will increase, and the export volume may fall by 21% as a result.

And if the EU's carbon tariffs cannot be avoided by raising carbon prices, a more effective way is to reduce carbon emissions, so as to achieve carbon neutrality in the manufacturing process. Therefore, achieving carbon neutrality or even negative carbon in the production process is the way out for a manufacturing country like China.

This is also the core of Envision Technology Group's creative proposal of a zero-carbon industrial park.

70% to 80% of China's manufacturing industry takes place in industrial parks, and from a national perspective, industrial parks contribute 30% of GDP, and the national industrial energy consumption accounts for 66% of the national energy consumption.

At the "Ordos Zero Carbon Industry Summit" held in October 2021, the concept of a zero carbon industrial park was unveiled for the first time.

Taking advantage of Ordos' abundant natural resources and the trend of integrated development of "new energy" and "new industry", Envision Technology Group and the Ordos government reached a cooperation in early 2021 to build the world's first zero-carbon industrial park. In April 2022, the first phase of Envision Ordos Zero Carbon Industrial Park was announced to be completed and put into operation, establishing a city of the future with green industry in the desert.

In the practice of the Ordos Zero-Carbon Industrial Park, Envision has established three major innovation systems for the Zero-Carbon Industrial Park:

One is the renewable energy system. Envision efficiently couples wind power, photovoltaic, energy storage and hydrogen energy together through zero-carbon industrial parks and intelligent means, and works together like a symphony to meet the continuous supply of green energy and low-cost power supply in the industrial park.

The second is a zero-carbon digital operating system. Envision can combine the carbon management of the whole life cycle of products with the international carbon verification and certification system, so that the zero-carbon industrial park can truly break the increasing barriers to international carbon tariff trade and let Chinese manufacturing go global freely.

The third is green industrial clusters based on renewable energy. At present, LONGi Green Energy, the "leader of China's photovoltaic industry", Meijin Guohong, the "leader of China's hydrogen energy industry", SAIC Hongyan, the "leader of China's trucks", and Huayou Cobalt, the "leader of China's lithium battery materials", have settled in or will soon settle in, forming a green industrial ecosystem and building a new energy industrial cluster.

Over the past year of operation, 80% of the electricity generated by the Ordos Zero Carbon Industrial Park has been directly supplied by renewable energy in the region, and 20% has been traded with the power grid, and the enterprises in the park have achieved 100% green and zero-carbon energy supply in terms of energy - green power emission reduction is also one of the important ways to deal with the EU CBAM.

The zero-carbon digital certification system based on the intelligent IoT operating system EnOS and the Ark Energy carbon management platform laid out in the zero-carbon industrial park gives each product a "zero-carbon green code" that can be traced and traced, meets various international standards, and has been certified by authoritative institutions, without fear of carbon tariffs, and can travel unhindered in the world.

Today, 80% of the battery products produced by Envision Ordos Zero Carbon Industrial Park are exported to all over the world, and these battery products have been certified as carbon neutral. "When the carbon tariff barriers of batteries in the future and the competition of batteries intensify, the products of Ordos and Inner Mongolia will gain unprecedented competitiveness." At the summit on October 26, Zhang Lei said proudly.

The three major innovation systems and practices established by Envision in the Ordos Zero-carbon Industrial Park show us that the zero-carbon industrial park is becoming a catalyst, cultivator and leader of green industry. It also shows us a feasible "long-term path" for Chinese companies to deal with carbon barriers in global trade.

From Ordos to the world

Facts have proved that the "long-term path" of zero-carbon industrial parks is feasible.

In June this year, Envision released the "2023 Zero Carbon Action Report", which showed that Envision Technology Group successfully achieved the goal of carbon neutrality in its operations in 2022 and became one of the first green technology companies in the world to achieve carbon neutrality.

Based on the successful practice of the Ordos Zero-Carbon Industrial Park, Envision is standardizing the zero-carbon industrial park to promote it to the world.

In October 2021, Envision joined hands with the China National Institute of Standardization (CHINA) and Bureau Veritas, an internationally renowned certification body, to release the world's first "International Zero Carbon Industrial Park Standard", which is in line with international standards and the requirements of SBTi's science-based carbon targets.

Since then, Envision has also joined hands with the Inner Mongolia Autonomous Region Market Supervision and Administration Bureau to release the country's first "Green Power Application Evaluation Method" in August 2022. The local standard of the "Specification for the Construction of Zero-carbon Industrial Parks" drafted by the China National Institute of Standardization, the Inner Mongolia Autonomous Region Institute of Quality and Standardization and other industry-university-research institutions was officially implemented on April 28, 2023; Issued the Inner Mongolia local standard of "Measurement and Evaluation Specification for Zero-carbon Industrial Park"; Together with the China Chamber of Commerce for Import and Export of Machinery and Electronic Products and the China Automotive Power Battery Industry Innovation Alliance, we have jointly created a carbon footprint service platform based on the zero-carbon industrial park.

At the 2023 Ordos Zero Carbon Industry Conference, Envision joined hands with the Resources and Environment Research Branch of the China Institute of Standardization, the EU Standardization Expert Project in China, Deloitte China, TÜV SÜD, DNV Det Norske Veritas and other domestic and foreign authoritative institutions and enterprises to jointly launch the zero-carbon international standard construction and green trade Ordos Action, aiming to create zero-carbon standards in line with international and domestic standards, promote international certification and mutual trust and international green trade, and effectively promote the zero-carbon industrial park from physical form to future standard output.

While making standards, Envision has never hidden its ambition to promote zero-carbon industrial parks to the world. Zhang Lei said that in the future, Envision's mission is to make the zero-carbon industrial park, China's original product and original standard, go global, and become an important promoter of the green industrial revolution with more partners. By 2030, Envision will work with partners to build 100 zero-carbon industrial parks and achieve an annual carbon emission reduction of 1 billion tons globally.

Up to now, Envision has also landed zero-carbon industrial parks with green energy equipment, zero-carbon industrial gases, batteries, and green metallurgy as the core in Sheyang, Cangnan, Chifeng, Shiyan, Cangzhou, Baotou and other places. It has been quickly replicated in Spain, Saudi Arabia, Indonesia and other countries to create a "green new industry" system on a global scale.

At the 2nd Ordos Zero Carbon Industry Summit in 2022, Zhang Lei said passionately, "Manchester has started the industrial revolution through the advantages of fossil energy, Ordos, which has abundant renewable energy, will lead the new industrial revolution, and the zero carbon industrial park will become the cradle of the new industrial revolution." ”

Now, in three years, Envision's zero-carbon industrial park has moved from concept to reality, from enterprise-driven innovation to local and global standards. The answer to China's green products and global green trade may lie in the vast Ordos Plateau.

References: [1] "Chai Qimin: Taking Precautions to Deal with "Carbon Barriers" and Optimizing the Allocation of Resources in the Global Industrial Chain", Yicai; [2] "Clarifying the Bottom and Talking about the Impact and Response of the EU's "Carbon Tariff", Wu Bixuan, Finance and Economics; [3] "From Ideal to Reality, "Coal Capital" Has Made Such a Zero-Carbon Experiment", Yicai.

「 Picture | Visual China »