Double Carbon Goals Force Enterprises to Accelerate Transformation

By Zhang Yan

Recently， the IDC’s report “Top Ten Predictions of China’s Energy Transformation in 2022—Achieving Highquality Growth under the Lowcarbon Transformation of Energy Structure” pointed out that in the first year of the 14th Five-Year Plan， strong economic growth supported China’s energy demand to climb to a new high. However， the price increase of fossil fuels has increased the energy cost of enterprises， and power shortages have disturbed industrial production.

At the same time， the dual control policy of energy consumption strictly grasps the energy consumption level of enterprises with high energy consumption and high pollution， forcing enterprises to accelerate the upgrade of energy structure. Under double carbon goals， energy transformation not only depends on policy support， but also requires enterprises to take practical action.

According to the IDC’s latest forecast， China’s energy supply will be more diversified in 2022， and the proportion of non-fossil energy in the primary energy consumption will increase to over 17%. From 2021 to 2025， the digital transformation expenditure of Chinese energy enterprises will increase at a rate of 15% per year， and the digitalization of production and operation will become an important carbon reduction point for enterprises.

Prediction 1： Guarantee the supply and price of coal and promote clean coal

With the implementation of supply guarantee measures and the improvement of the overall supply capacity of the market， the contradiction between supply and demand in the coal market is expected to gradually ease. IDC predicts that in 2022， the benchmark price and floating price mechanism will dynamically ease the cost， improve the profitability of coal enterprises and reduce the probability of power shortages， and coal consumption will increase to 4.2 billion tons. Coal will remain the main force of China’s energy revolution， and its future development will focus on intelligent coal mines， clean and efficient utilization， coal chemical transformation and so on.

Prediction 2： Policy-driven changes in oil and gas supply and demand， and carbon sequestration will inject new impetus into business

In the future， China’s demand for crude oil will continue to be highly dependent on imports， and natural gas will maintain a high growth rate during the 14th Five-Year Plan period. Around 2026， China’s demand for crude oil will peak， and the increase of natural gas will mainly come from unconventional gas sources such as tight gas and shale gas. Carbon reduction in oil and gas industry needs a breakthrough in every procedure—“production， transportation， storage and sales”. In order to enhance business sustainability， enterprises will explore the feasibility and economy of depleted oil and gas reservoirs as carbon storage facilities.

Prediction 3： The expansion of production capacity in chemical and refinery industry will slow down， with emphasis on high-tech materials

The chemical and refinery industry is undergoing structural transformation， and its growth will gradually shift to new chemicals. In 2023， the new production capacity of chemical and refinery industry will drop rapidly， but new materials such as EVA （photovoltaic） and DMC （lithium battery） related to new energy industry will maintain a high growth rate. In the future， chemical and refinery products will be upgraded from low-end to high-end， and enterprises will give full play to their supporting advantages in the industrial chain， strengthen the integration of chemical and refinery projects， and enhance the intelligent operation capability.

Prediction 4： Explore new applications of green hydrogen to help the decarbonization of the energy structure

Developing large-scale hydrogen energy can reduce the import of China’s oil and gas resources and promote the structural decarbonization of energy. In 2025， the output value of the hydrogen industry will exceed RMB 1 trillion， and the total demand for hydrogen energy will exceed 35 million tons， accounting for 4% of primary energy consumption. With the decrease of renewable energy cost and the improvement of resource utilization rate， China’s hydrogen production will change from “grey hydrogen” to “green hydrogen”， which will promote further decarbonization of chemical， steel， transportation and power generation industries.

Prediction 5： Renewable energy power generation will be accessible at a fair price， and comprehensive utilization will become a trend

With the localization of the supply chain and the increase of investment in R&D， the Levelized Cost of Energy（LCOE） of renewable energy will be greatly reduced after 2025， and it will be accessible at a fair price when there is no subsidy. In 2027， the average LCOE cost of renewable energy will be 25-30% lower than that of 2020. Renewable energy will increase the stability of the system， reduce the waste of wind and light， improve the comprehensive utilization rate of resources， and promote the integrated application of a microgrid and optical storage.

Prediction 6： The cost of battery materials will decrease， and the scale will improve energy storage efficiency

Electrochemical energy storage will become the focus of large-scale development of energy storage， in which lithium battery is the most important technical route. In 2025， China’s electrochemical energy storage will account for 30% of the total energy storage， and the cost of lithium batteries will be reduced by 35%. In the future， the cost reduction of lithium batteries and the breakthrough of the sodium ion battery technology will improve the scale and efficiency of electrochemical energy storage and expand its application in power grid， industry and new energy vehicles.

Prediction 7： Electric vehicle industry will maintain high growth， and high-voltage fast charging will seize the market

High voltage fast charging will become an important means to break through the charging speed of electric vehicles. In 2025， with the gradual maturity of the development architecture and the popularization of the vehicle pile network， 800V fast charging will become the mainstream high-voltage charging scheme. With the continuous improvement of the penetration rate of electric vehicles， car companies will lay out the whole industrial chain， promote high-voltage charging piles and fast charging solutions， seize market share and accelerate decarburization in the transportation sector.

Prediction 8： Green finance supports the upgrading of clean energy infrastructure and thus reduces the cost of transformation financing

Carbon emission reduction support tools and green financial evaluation system will continue to activate the supply of green loans， and carbonneutral debt aiming at carbon emission reduction will gradually increase. In 2025， the cumulative issuance scale of China’s carbon-neutral bonds is expected to exceed RMB one trillion. In the future， policy incentives will reduce the capital cost of commercial banks， guide their green loans and promote carbon emission reduction of energy enterprises， and green debts will also support the scale expansion of renewable energy enterprises.

Prediction 9： Green Power will promote decarburization of ICT industry and realize zero-carbon operation of high energy-consuming enterprises

ICT industry is facing the dual challenges of decarbonization in both energy consumption and operation. In 2023， the proportion of green electricity in the data center’s electricity consumption will increase to over 30%. In the future， high energy-consuming enterprises such as data centers will improve operational efficiency and green electricity consumption. The development of ICT will also support the digital transformation and upgrading of other industries with high energy consumption， and promote the application of cloud platform and big data analysis in energy management system and carbon emission tracking.

Prediction 10： Digital technology improves energy efficiency and reduces carbon risk exposure of enterprises

ESG requirements of enterprises are becoming increasingly strict， and those who fall behind may face high carbon taxes and environmental penalties. From 2021 to 2025， the digital transformation expenditure of Chinese energy enterprises will increase at an annual rate of 15%. In the future， the energy industry will increase the application of digital technology， improve the efficiency and automation level of production and operation， enhance the transparency of carbon emission information disclosure compliance， and promote carbon market transactions.