Boston Consultingresearch report

China’s carbon neutral target and climate path Report From Boston Consulting

The following is the China’s carbon neutral target and climate path Report From Boston Consulting recommended by And this article belongs to the classification: Boston Consulting, research report.

Boston Consulting Company (BCG) released the report on China’s climate path, which broke down the carbon reduction targets promised by China at the 75th UN General Assembly and turned them into practical emission reduction paths. The report aims to arouse the awareness and attention of the society on carbon reduction, drive the green transformation of enterprises, and contribute to China’s efforts to alleviate climate pressure and achieve sustainable economic development. In the process of writing the report, BCG, through dozens of interviews with academia and industry and bottom-up modeling and simulation, transformed China’s grand goal of carbon reduction into specific implementation measures, and calculated the carbon reduction impact and required investment of each measure. At the same time, it provides practical transformation scheme and priority planning for key industries such as energy, manufacturing and transportation. It is true that achieving fundamental low-carbon emission reduction requires essential breakthroughs in many fields. The report fully takes into account China’s current capacity in nuclear energy, photovoltaic, wind power, new energy vehicles and other fields, as well as the potential for future technological progress and scale improvement, and provides a highly feasible action plan for China’s carbon reduction.

In September 22, 2020, President Xi Jinping promised at the seventy-fifth UN General Assembly that China will adopt more effective policies and measures to strive for carbon and [1] before 2060. This commitment reflects China’s long-term vision of joining hands with the world to curb climate warming and control the extent of global warming, and also represents China’s unrepentant determination to actively invest in this vision.

Lars faeste, managing director, global senior partner and China executive partner of BCG, said: “if we want to achieve the carbon neutral target by 2060, China must immediately take action and make unremitting efforts along the 1.5 ℃ path [2] to achieve 75% – 85% greenhouse gas emission reduction by 2050. Under this path, China needs to substantially increase investment on the basis of the current carbon reduction plan, and strive to break through the current technology and social cognitive boundary. ” On the other hand, the report also describes the 2 ℃ path [2], which fully considers the uncertainty of technology and economy, and provides a reliable alternative for China’s emission reduction path.

Under the benchmark scenario [3], it is estimated that China’s carbon emissions in 2050 will be reduced by 10% – 20% compared with the current situation, and there is still a big gap compared with the carbon neutral target. China should strengthen its confidence, start from the root, and actively implement more carbon reduction measures, such as stopping the further expansion of thermal power plants at home and abroad, and promoting energy efficiency improvement in industrial fields (such as steel, cement and Construction Engineering) to meet the world’s leading standards. If China does not take more active measures, the possibility of the world to achieve the 1.5 ℃ temperature control target is very small.

Thomas Palme, managing director of BCG, global partner and core leader of social impact project in China, said: “for China, now is the best time to lead the world in accelerating global emission reduction. Starting a more positive goal on climate change is conducive to the sustainable development of the country and the fundamental interests of the people. “Green economy” will also play a positive role in promoting GDP, which is expected to contribute more than 2% of GDP in 2050. At the same time, the country’s energy security will also be protected. Fossil fuel consumption is expected to reduce by about 80%, greatly reducing the dependence on non renewable and imported energy. With the blessing of clean energy, China’s export competitiveness will also be greatly enhanced. “

From the perspective of emission sources, the industrial sector has the largest emission reduction under the benchmark scenario, and will achieve about 50% emission reduction in 2050 compared with the current situation. In order to make up for the gap with the 1.5 ℃ or even carbon neutral target, the energy sector must contribute a greater proportion of carbon reduction and increase the emission reduction by more than 60 percentage points compared with the benchmark scenario. Among them, nuclear power and renewable energy power generation will be an indispensable key solution.

From the perspective of realization path, promoting key technologies independent of fossil fuels and driving the transformation of energy structure are the key to energy conservation and emission reduction, which will contribute about 70% of greenhouse gas emission reduction. At the same time, relevant policies to promote the development of key technologies are crucial (such as renewable and nuclear power generation, new energy vehicle policies), and carbon pricing means may become a key driving force to accelerate energy conservation and emission reduction measures.

In order to truly realize the carbon neutral commitment, China even needs to exceed the target under the 1.5 ℃ path in some of the most challenging measures, and needs to further tap the potential of negative emissions (such as carbon capture and storage, carbon sink [4]).

From the perspective of capital investment, in order to achieve the goal of carbon neutrality, China needs 90-100 trillion yuan of investment from 2020 to 2050, accounting for about 2% of the total accumulated GDP in the past 30 years.

Carrying forward the past and opening up the future, the positive climate target will create multiple opportunities for China

The past 20 years have witnessed not only the rapid development of China, but also the process of China becoming a big carbon emitter. After 2013, with the slowing down of economic growth and the increase of energy conservation and emission reduction measures, carbon emissions entered the platform period. Globally, although the growth rate is slowing down, China’s carbon emissions account for more than 20% of the world’s total, making it the world’s largest carbon emission country. The combined effect of economic and industrial structure, energy cleanliness, energy efficiency and energy demand intensity leads to the huge amount of carbon emissions in China today.

Chen Baiping, managing director of BCG, global partner and head of social influence project in China, said: “in the past decade, China has taken effective actions in all dimensions. In terms of energy, China is the leader in the world’s photovoltaic industry, accounting for about 45% of the global photovoltaic installed capacity, and continues to contribute to the reduction of photovoltaic prices. In terms of industry, during the 13th Five Year Plan period, China was committed to supply side reform and eliminated a large number of inefficient production capacity. In terms of transportation, the government guides the popularization of new energy vehicles through the double points policy. In terms of architecture, China has issued green building evaluation standards and logo certification. In terms of agriculture and land use, China has the largest net increase in forest area in the past decade. “

Despite considerable achievements in carbon reduction, due to China’s rapid development and huge carbon emission base, the existing measures are far from enough to achieve the 2 ℃ / 1.5 ℃ and even the committed carbon neutral target of Paris Agreement. Setting a higher carbon reduction target will bring new opportunities for China’s development from three aspects of sustainable development, direct economic promotion and national energy security.

Suggestions on China’s climate path towards carbon neutral goal

BCG estimates the trend of greenhouse gas emission reduction in China under different scenarios (see the figure below). Under the benchmark scenario, by 2050, greenhouse gas emissions will be reduced by 10% – 20% compared with the current situation. There is still a big gap between achieving the temperature control of the Paris Agreement and China’s carbon neutral target. BCG analysis shows that implementing the 1.5 ℃ path immediately is the only way for China to achieve the goal of carbon neutrality before 2060. China should strive to reduce greenhouse gas emissions by 75% – 85% by 2050. In this process, China needs to implement more active carbon reduction measures on the basis of the current plan, and strive to break through the existing technology and social cognitive boundaries.

In order to fundamentally understand the key to China’s carbon reduction, BCG divides China’s carbon reduction measures into four categories: energy structure transformation, mode upgrading, energy efficiency improvement and carbon capture and storage technology (CCS). Among them, the carbon reduction impact of energy structure transformation is the most significant, which will contribute about 70% of greenhouse gas emission reduction, mainly driven by clean energy power generation in energy sector and electric transformation in transportation sector. Mode upgrading takes the second place, accounting for about 20% of greenhouse gas emission reduction, in which technological process innovation and sustainable agriculture related initiatives contribute the main share. The contribution of carbon capture and storage technology to emission reduction can not be underestimated. In the case that fossil fuels cannot be completely removed, CCS technology will be implemented.

Under the guidance of the carbon neutral goal, the five major sectors of energy, transportation, industry, construction, agriculture and land use need to work together to start a low-carbon transformation (see the figure below). In order to achieve the goal of greenhouse gas emission reduction under the 1.5 ℃ path, the five sectors need to achieve emission reduction ranging from 60% to 105%, and for some sectors, it is close to zero emission level. This means to promote the fundamental change of the industry, the green transformation of enterprises and the concept of carbon reduction of the public with decisive policy driven and mechanism reform as the foundation and positive and powerful emission reduction measures as the starting point. For example, in the energy sector, actively promote energy system reform, promote fair competition and technological innovation. To tap the carbon reduction potential of technological process innovation in the industrial sector, and guide enterprises to establish a sound regulatory capacity of energy conservation and emission reduction. In the transportation and construction sectors, enhance the social acceptance of the electrification of transportation, cooking and hot water.

In order to achieve the emission reduction target under the 1.5 ℃ path, the cumulative investment required for various measures by 2050 is RMB 90-100 trillion, accounting for about 2% of the cumulative GDP in 2020-2050 (see the figure below). Among them, the transportation sector needs the largest investment, mainly including the electrification of vehicles and the clean transformation of aviation fuel. The energy sector takes the second place, mainly driven by the R & D and application expansion of renewable energy, nuclear power generation and CCS technology. In addition, the technological process innovation in the industrial sector, the heat pump technology in the construction sector, and the waste treatment technology in the agriculture and land use sector will also occupy a larger investment share.

The “last mile” to achieve carbon neutrality

As mentioned above, in order to achieve the carbon neutral commitment, China needs to make unremitting efforts along the 1.5 ℃ emission reduction path and strive to achieve the ultimate in various measures. In order to achieve carbon neutrality by 2060, China even needs to exceed the target of 1.5 ℃ in some of the most challenging measures. It mainly includes actively promoting the cost reduction, safety improvement and social recognition of nuclear power in the energy sector, promoting the full penetration of CCS in the industrial sector, banning large-scale fuel vehicles and accelerating the commercialization of hydrogen fueled aircraft in transportation, vigorously promoting waste incineration in land use, and continuously tapping the potential of carbon sequestration growth.

[1] Carbon neutralization means that man-made emissions are offset by man-made removal of carbon dioxide within a specified period of time. Anthropogenic emission refers to carbon dioxide emissions caused by human activities, including fossil fuel combustion, industrial processes, agricultural and land use activities; anthropogenic removal refers to the removal of carbon dioxide from the atmosphere, including afforestation to increase carbon absorption, carbon capture and storage, etc.

[2] The long-term goal of the Paris Agreement is to control the increase of global average temperature within 2 ℃ compared with that of the pre industrial period, and strive to limit the increase of temperature within 1.5 ℃. The 2 ℃ and 1.5 ℃ paths are simulated based on the temperature rise target of Paris Agreement.

[3] The baseline scenario is defined as a scenario in which the existing planned emission reduction measures, policy framework and predictable technology path are continued to develop without additional efforts to reduce carbon emissions.

[4] Carbon sink refers to the process, activity or mechanism of reducing the concentration of greenhouse gases in the atmosphere by taking advantage of plant photosynthesis to absorb greenhouse gases in the atmosphere and fix them in vegetation and soil through afforestation, forest management, vegetation restoration and other measures.

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