China signals shift from gas-powered cars by 2035

Source: By Benjamin Storrow, E&E News reporter • Posted: Sunday, November 8, 2020

Half of Chinese auto sales will need to come from electric vehicles, plug-in hybrids or fuel cells by 2035, according to a new report from the country’s organization of automobile experts. The remaining fossil fuel vehicles will need to be hybrids.

The plan outlined last month by the Society of Automotive Engineers of China, an influential trade group, underlines the commitment of the world’s largest carbon emitter to green its economy, analysts said. In September, President Xi Jinping announced the country would work to eliminate its carbon emissions by 2060.

The impact could also be felt further afield. China is the world’s largest auto market. Major car companies will likely need to adjust their product lines to meet the requirements to sell there, observers said.

“If China does to EVs what it did to solar power and batteries and pushes the cost down, there is a lot of developed and emerging markets in Asia that are oil importers and are very keen to kick the oil habit,” said Lauri Myllyvirta, who tracks Chinese climate policy at the Centre for Research on Energy and Clean Air. “Once the economics catch up, it will be very attractive for many of the emerging countries.”

The plan does not represent official government policy. But the timing of its release does reflect the goals of Xi’s recent climate announcement.

State agencies and bureaucrats are gearing up for the release of China’s next five-year plan, which will govern the country’s industrial policy. The Society of Automotive Engineers of China works closely with Beijing on meeting the government’s goals.

Reuters reported that 95% of the new energy vehicles called for under the plan are expected to be electric.

The climate impacts of the move will likely be muted by China’s reliance on coal, which accounts for 70% of the country’s power generation. The country continues to build coal plants at a rapid clip, sanctioning 48 gigawatts of new planned capacity this year alone.

Coal’s share of Chinese electricity generation is expected to fall to 50% over the next decade, said Kate Larsen, an analyst with the Rhodium Group.

“The pace of China’s near-term commitments to phase down coal and ramp up zero-emission electricity will determine whether the new EV goals contribute to emission reductions,” she said.

In 2019, roughly 70% of Chinese emissions were associated with coal consumption in the power and industrial sector, according to the Global Carbon Project. Oil, by contrast, was responsible for more than 15% of China’s emissions.

But oil emissions have grown at a faster clip in recent years as more people in China have bought cars. Oil emissions, which include consumption from other parts of the economy outside of transportation, grew by 4.2% annually between 2013 and 2018, while coal emissions decreased by 0.8%.

Kelly Sims Gallagher, a professor of energy and environmental policy at Tufts University who studies China, said the plan shows the government is beginning to plan for how to meet its emissions targets.

“This policy could have major implications for future carbon emissions in China, depending on the composition of sources fueling the grid,” she said. “If China’s grid continues to get progressively cleaner, specifically continuing to shift away from coal, an all-EV fleet presents a viable pathway for net-zero emissions by 2060.”