Liu Shijin: Transform the pressure of "dual carbon" into innovation and growth momentum
economic development
★★★★★
This article is a keynote speech delivered by Liu Shijin at the 10th Xinhua Net Sike Annual Conference (Shanxi) on January 13. First of all, I would like to congratulate Xinhuanet on the 10th Sike Annual Conference held in Linfen, and I would like to take this opportunity to talk about how to promote industrial transformation and upgrading in the context of "dual carbon". Specifically, it is to promote green innovation and industrial transformation and upgrading with full-caliber carbon accounting. As you know, in 2020, we put forward the goal of "dual carbon", which will have a great impact on all aspects of the mainland. But I think one of the most important changes is the rapid rise of a large number of low-carbon and green industries driven by innovation. China is now the world's largest producer and consumer of renewable energy, both in terms of industrial capacity and equipment manufacturing. Green innovation has led to a large amount of green investment. At this stage and for a long time to come, our economic growth needs investment, and a large part of it is green industry. China ranks first in the world in many important indicators, such as installed renewable energy generation capacity. The Green Economy Transition Should Handle the Relationship Between Increment and Stock We need to consider the question, what path should China take for the green transition of energy and economy? I think we can get some inspiration from China's experience in reform and opening up. To put it simply, it is to deal with the relationship between increment and stock. Some of the increments start smaller, but they are dynamic and expandable, and over time, they will eventually become the main force. From the perspective of energy transition, I believe that it is basically necessary to follow a path of transformation that prioritizes increments, replaces the old with the new, stimulates innovation, and is market-driven. I mentioned an increment here. From the perspective of energy transition, by 2060, 80% of China's energy should be clean energy, but the current proportion of clean energy is a little more than 20%, and 50% to 60% will be formed in the next few years. We're going to make a fuss about incrementality. Therefore, China's green and low-carbon industries are incremental, and their advantages are fast technological progress, great potential, cost reduction driven by scale effect, and good industrial supporting conditions. In particular, it is dominated by private enterprises, with strong innovation vitality and fast response speed. Therefore, the next step is that our new energy or new technologies based on new energy will accelerate the replacement of the original old technology and old industry, and promote industrial upgrading through industrial substitution. The advantages of substitution are simply put, first, it can shorten the process of "dual carbon" goals, second, it can reduce costs, and third, China will form a large number of very competitive low-carbon green industries. Innovative Carbon Reduction: Relative Reduction of Carbon Emissions by Relying on Green Technology Substitution We can see that China's carbon reduction can be divided into three types. The first is recession carbon reduction, which is to reduce carbon emissions by producing less and not producing. This generally doesn't happen. The second is efficiency-enhancing carbon reduction, which is simply energy conservation and emission reduction, but the technical framework remains unchanged. This also has potential, but the further you go, the less potential it gets. The third is innovative carbon reduction, that is, through the formation of new technologies, processes and methods to achieve low-carbon, zero-carbon, or even negative carbon emissions while achieving the same output. Here, I would like to propose a concept to you: innovative carbon substitution. It refers to the relative reduction of carbon emissions by relying on green technology substitution. It can also be called alternative carbon reduction, that is, the use of low-carbon, zero-carbon and carbon-negative technologies to reduce or offset carbon emissions compared with the original high-carbon benchmark production methods while obtaining the same output. For example, per kilowatt-hour of electricity generation, carbon emissions are 1,000 grams for coal, 30 grams for photovoltaics, and 10 grams for wind energy. If the power generation is changed from coal to wind and solar power, the carbon emission is 1% or 3% of that of coal, that is, the relative reduction is 99% or 97%. The relative reduction in carbon emissions becomes carbon substitution. What are the advantages of carbon substitution? First, we use new technologies, and the most fundamental thing in the energy transition is to replace them with new technologies, which is the fundamental policy. Second, carbon reduction drives investment. In the past, the biggest thing we were worried about when we were doing carbon reduction was that it would affect growth. Now, on the other hand, as long as new technologies are used to reduce carbon emissions, investment must be made, and investment has become one of the most important drivers of economic growth. So carbon reduction and growth used to be contradictory, but now they are synergistic with each other. Third, we need to significantly reduce carbon emissions, and more importantly, reduce the cost of carbon reduction. Accelerate the establishment of a full-caliber carbon reduction accounting system Now that the concept is proposed, it is necessary to establish a new accounting system. Because we used to talk about carbon emission reduction measurement, it was generally to reduce carbon emissions from existing high-carbon industries. So carbon accounting is also carried out within this range. Therefore, I believe that we should pay attention to the significance and value of innovative carbon substitution, carry out measurement accounting, incorporate it into the carbon accounting system, and form a new carbon accounting table, which includes both the economic output stock and the increment. The incremental part is that the use of new technologies will produce carbon substitution. The stock part will also be reduced in carbon emissions. We put them together to form a full-caliber carbon emission reduction accounting system. The energy industry has issued green certificates for green electricity generated from renewable sources and allowed to be traded. Other industries can also adopt internationally accepted methods to assess the carbon substitution generated by the use of new technologies and issue green certificates as a certificate for innovative carbon reduction, forming specific types of carbon assets of enterprises. All types of enterprises should accelerate the establishment of a full-caliber carbon reduction accounting system, including carbon substitution, and issue green certificates for innovative carbon substitution, and support enterprises to use new technologies. It is recommended to establish an innovative carbon substitution market, and some transactions should be carried out on the basis of accounting. Broadly speaking, this is a market. Therefore, we propose to establish an innovative carbon substitution market that supports green technology innovation in all aspects. The development of the mainland's carbon emission allowance market from scratch is a step forward, but it has structural shortcomings. Allowances are basically issued free of charge, leaving little room for innovative carbon reduction, so it is difficult to play a role in promoting innovation through a real carbon price discovery mechanism. Therefore, at present, the trading volume of the carbon market is small, the activity is not high, and the gap with expectations is large. With the carbon substitution market, we can establish a link between increments and stocks, and between innovative carbon substitutions and traditional carbon reductions, and open the channel for them to trade. That is, traditional production enterprises can purchase carbon substitution indicators formed by adopting new technologies to offset their own carbon emission credits. Enterprises that adopt new technologies to generate carbon reduction can obtain carbon reduction benefits and form an innovative incentive mechanism. At the macro level, this kind of trading will help to form a "double control and one reduction", that is, as long as the carbon reduction amount formed by the use of new technologies in incremental generation is greater than the carbon reduction amount of the original benchmark technology, the carbon emission intensity of the whole society will decrease, and if new technologies are also used in the existing output, the total carbon emissions of the whole society will be reduced. What's more, since new technologies are usually less expensive to reduce carbon emissions, such transactions will help reduce the cost of carbon reduction for the whole society. In this way, regions and enterprises can start from their own realities and do not implement "one-size-fits-all" carbon emission reduction targets for all industries. There is a market for high carbon, and high-yield enterprises do not have to restrict production or even stop production for a certain period of time, and can use part of the income to purchase carbon reduction credits. In this way, you will balance your account. Better achieve the "dual carbon" goal through innovation The carbon market I mentioned is an idea and method, in the initial stage, each place can start from its own reality, establish a carbon asset pool, or a low-carbon bank, and first get out the accounting of innovative carbon substitution. For example, the Linfen region has set up a table to calculate the old technology and new technology of each enterprise and the carbon reduction and carbon emission reduction account, and use it as an internal food stamp to recognize the results in the region. Externally, the local government has achieved a reduction in carbon emission intensity or total carbon emissions in accordance with the national standard. Such an accounting system can be seamlessly integrated with the existing system. If the market is doing well, it can also be open to external traders and can become a national or even international institution. In fact, what I just talked about is to let everyone change their thinking, emphasizing that innovation is very important. Because carbon reduction is a very professional thing, don't affect development. By trading more emissions reductions, we will be able to better achieve the "dual carbon" goal. The central government has made it clear that it will speed up the transition from dual control of energy consumption to dual control of carbon emissions, and all localities will speed up the implementation of the requirements of the 20th National Congress of the Communist Party of China to convert to goals. I suggest that innovative carbon substitution should be included in the accounting as soon as possible, a full-caliber carbon emission reduction accounting system should be established, green certificates for carbon substitution should be issued, and the trading channel between innovative carbon substitution and traditional carbon emission reduction should be opened. In this way, we can provide effective incentives for green innovation and appropriately raise the development goals of new energy and new technologies. In line with international standards, the development speed of our new energy will be faster. In accordance with the principle of giving priority to increments and replacing stocks in an orderly manner, all localities have formulated long-term plans and near-term implementation plans for green transformation, and effectively transformed the pressure of "dual carbon" into new drivers of innovation and growth.
[Liu Shijin: Member of the Chang'an Street Reading Club, former deputy director of the Development Research Center of the State Council]
Note: Authorized to publish, this article has been selected and included in the "Chang'an Street Reading Club" theoretical learning platform (People's Daily, People's Political Consultative Conference Daily, Beijing Daily, "China Rural Revitalization" magazine, Xinhuanet, CCTV, National Party Media Information Public Platform, Vision, Beijing Time, Surging Government Affairs, Phoenix News client "Chang'an Street Reading Club" column synchronization), reprinting must be uniformly marked "Chang'an Street Reading Club" theoretical learning platform source and author.
Editor-in-charge: Deng Qidong, preliminary review: Cheng Ziqian, Chen Jiani, re-examination: Li Yufan
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