Analysis: China’s green car credit system to be replaced as country pursues carbon neutrality

Cars are seen in a traffic jam during the evening rush hour in Beijing, as the country is hit by an outbreak of the novel coronavirus disease (COVID-19), China, April 8, 2020. REUTERS / Tingshu Wang / File Photo

SHANGHAI, Sept. 27 (Reuters) – China may replace its credit system for green cars with a new policy focused more broadly on reducing carbon emissions, industry officials say.

One option being considered is a carbon emissions trading system (ETS), three industry executives said. This would address industry concerns that the current system incentivizes the production of electric vehicles (EVs) without addressing carbon emissions in general, executives say.

“(The replacement) is being discussed within the ministries,” Xu Haidong, an official with the China Association of Automobile Manufacturers (CAAM), said at a briefing last month.

Political discussions are ongoing and are not final, people familiar with the matter said. The current system, which will be in effect until 2023, was introduced in 2017. Under it, automakers get credits for the sale of electric or fuel-efficient vehicles that can offset penalties on their models. more carbon intensive.

Any changes to the system could significantly affect product planning and technological development for automakers in China, where more than 25 million vehicles were sold last year, making it the world’s largest auto market.

The auto industry is not among the eight industries required to trade carbon emissions, but Chinese industry bodies have arranged for automakers, including electric vehicle maker Tesla Inc (TSLA.O) to study the exchange system, said two sources familiar with the matter.

Industry executives have declined to be named because the talks are not public. China’s Ministry of Industry did not immediately respond to a request for comment.

Sanae Nuimura, vice president of Honda (7267.T) China, told an industry conference this month that the new system will be very important.


Last year, Chinese President Xi Jinping announced his intention to increase the Paris Climate Agreement target, claiming that China would reach a peak in carbon dioxide emissions before 2030 and carbon neutrality. before 2060.

The China Society of Automotive Engineers (China-SAE) predicts that carbon dioxide emissions from the Chinese auto industry will peak around 2028 and fall to 20% from that level by 2035, a projection widely shared by companies. and government officials.

The new policy is likely to calculate carbon emissions from the use of electric vehicles based on a standard called GB-27999, which was released in 2019.

State-owned automaker GAC has said it will work with the Guangzhou Carbon Trading Exchange to design carbon accounts to promote trade.

Chinese automakers including Volkswagen (VOWG_p.DE) are already demanding that suppliers use renewable energy and plant trees to meet government demand.

On commercial vehicles, policymakers are expected to implement a separate credit scheme this year for truck and van manufacturers, Reuters reported in April.

Yin Hang, an official at the Vehicle Emissions Monitoring Center of China’s Ministry of Ecology and Environment, said that in the future, regulators will likely test for carbon dioxide emissions from trucks and vans. , an element which is not part of the current requirements.

Reporting by Yilei Sun and Brenda Goh. Editing by Gerry Doyle

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