China's Early Carbon Peak Movement Gains Momentum

More state-owned Chinese firms, as well as city and provincial governments are responding to a call for decarbonizing sooner than the nationally committed carbon peaking deadline of 2030 -- whether voluntarily, under pressure from Beijing or motivated by a combination of both (NE Jan.21'21). Some companies, like State Power Investment Corp. (SPIC) and the giant Baowu Steel Group, are pledging to peak carbon emissions as early as 2023, or seven years ahead of the national goal. The more common “early carbon peak” deadline set by others like the Shanghai municipal government, national oil company (NOC) PetroChina, and power utility Datang is 2025, or five years before the national schedule. Most of those committed to decarbonizing early are also aiming to achieve carbon neutrality around 2050, or a decade sooner than President Xi Jinping’s official pledge of 2060. This reflects China's desire to deepen its climate goals despite being reluctant to officially ratchet up its Paris commitment and be seen as caving in to international pressure (related). Steel Target China’s mammoth steel industry accounts for over 56% of global crude steel production capacity but lags behind its international rivals in technology and energy efficiency (NE Mar.25'21). Emissions from the Chinese iron/steel sector contribute to around 15% of the national total, prompting Beijing to single out the industry for early decarbonization actions. Under an action plan now in the works, the iron and steel sector is to flatten its emissions curve before 2025 and cut 30% off the peak level by 2030, equivalent to some 420 million tons in annual carbon emissions. China’s Baowu -- also the world’s top steelmaker -- said it wants to exceed the Beijing-imposed goals by committing to an even earlier peak in 2023 -- two years ahead of the sectorwide deadline and seven years sooner than the national schedule. To do so, Baowu said it would increase the ratio of natural gas, solar, wind and biomass used in its operations, as well as “greatly reduce energy intensity and strictly control total energy usage.” It will also start mapping out a hydrogen strategy. Baowu’s compatriot Hebei Iron and Steel Group (HBIS) has already taken the first step in hydrogen. HBIS is partnering with Italy’s metallurgical technology provider Tenova to erect what would be the world’s first hydrogen-based “direct reduced iron” (DRI) steelmaking facility in China with a capacity of 600,000 tons per year and slated for completion by end-2021 (NE Apr.1'21). The DRI technology substitutes the use of coal for a synthetic gas with a 70% hydrogen concentration in a process that Tenova said would emit only 250 kilograms of carbon dioxide per ton of production. By comparison, each ton of steel produced in 2018 emitted on average 1,850 kg of CO2, according to a Mckinsey report. Gencos Embrace Early Peak China’s power generation sector has so far not been named explicitly by Beijing for early emissions peaking, but it is indirectly under pressure to decarbonize quicker than others: Generation companies (Gencos) are the pioneer batch of emitters being drafted into the national carbon market, which means they must purchase carbon permits for emitting above their allotted baselines. Several large, state-owned gencos have voluntarily embraced early peaking timetables. Like Baowu Steel, SPIC has committed to a carbon peak in 2023. SPIC is in a good position to make good on its ambitious promise. Some 46% of its generation capacity does not consume fossil fuels, the highest ratio among its peers. SPIC has also forayed into hydrogen fuel-cell manufacturing. State-owned Datang too has announced a 2025 carbon peaking target, together with a pledge to boost the ratio of non-fossil generation capacity to over 50% by then, from around 36% currently. Another state-owned genco Huadian also said it “has hopes of attaining a carbon peak in 2025.” NOCs More Cautious By comparison, Chinese NOCs appear, for now, to be more cautious than their steel and power counterparts in setting decarbonization targets. Only PetroChina has committed to “strive to peak carbon by 2025.” Sinopec Corp., the Hong Kong-listed subsidiary of Sinopec Group, said it would do so “before” the national schedule of 2030, but stopped short of naming a date (IOD Mar.29'21). CNOOC, for its part, has not disclosed any carbon peaking targets. Both PetroChina and Sinopec have stated their longer-term intentions for carbon neutrality by 2050, or 10 years ahead of the national target. The two companies have also committed to cutting methane emission intensity by 50% by 2025. Sinopec is leaning on hydrogen as the main pillar of its decarbonization efforts, pledging to become “China’s largest hydrogen energy company.” As a first step, it will be setting up 1,000 hybrid oil-hydrogen refueling stations in the next five years. Sinopec’s other 2025 targets include building “megaton-level carbon capture, utilization and storage demonstration projects.” Kimfeng Wong, Singapore Carbon Peaking Targets Iron/Steel Sectorwide target to peak before 2025,