EVENT RECAP: 2023 Annual China Workshop - Opportunities for a Low-carbon Transition of Guangdong Transport Sector
Photo provided by WRI China.
To ensure the attainment of the climate targets, China is now actively developing the “1+N policy system for carbon dioxide peaking and carbon neutrality” on both the national level and subnational levels. “1” refers to the overarching guideline for emission reduction, that is, the “Working guidance for carbon dioxide peaking and carbon neutrality in full and faithful implementation of the new development philosophy”. “N” refers to the “Action plan for carbon dioxide peaking before 2030” and relevant action plans for high-emitting sectors. At present, provincial governments are developing sectoral emission reduction targets and emission-peaking action plans.
Located in southern China, Guangdong Province is the most populous and economically developed province in China. According to WRI’s estimates, transport carbon dioxide (CO2) emissions accounted for 14.3 % of energy-related emissions in Guangdong Province in 2020. This share is even larger in the Greater Bay Area and on the city level. How to decarbonize the transport sector—while promoting equitable access and economic development through investments in low-carbon transport infrastructure and zero-emission vehicle (ZEV) industries—is important for Guangdong to develop its emission-peaking action plan.
In the framework of NDC Transport Initiative for Asia (NDC-TIA), World Resources Institute (WRI) organized a workshop on April 11th, 2023, to foster knowledge sharing between Guangdong and global peers and facilitate dialogues on issues that surfaced from provincial transport decarbonization practice, such as social equity, decarbonization of heavy-duty vehicles, and carbon market mechanisms as a possible decarbonization measure. The workshop was jointly organized by Guangdong Climate Change Center and Guangdong University of Technology and supported by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, International Council on Clean Transportation (ICCT), and Agora Verkehrswende.
The event brought together experts from National Center for Climate Change Strategy and International Cooperation (NCSC), Global Sustainable Transport Innovation and Knowledge Center (GSTIKC), Guangdong Transport Planning and Design Institute, Guangzhou Institute of Energy Conversion, Sun Yat-Sen University, Guangzhou Emission Exchange Center, Guangzhou Branch of China Quality Certification Centre, Adelphi Consult GmbH, and Hiways Law Firm.
Transport decarbonization can be accelerated and equitable in Guangdong.
According to WRI’s estimates, Guangdong is the province producing the largest transport carbon emissions among all provinces in China. Nonetheless, Guangdong has the potential to accelerate transport decarbonization, while ensuring equitable transition.
Setting realistic and enhanced targets is critical. Guangdong has recently issued its carbon emissions peaking plan, which sets a target to “reduce carbon emissions intensity of operating vehicles by 10% from 2020 levels”, which is 0.5% higher than the national target by 2030. Participants from the workshop all agree that emission reduction targets, including the mid- to long-term ones, are important to form a predictable policy environment for low-carbon transport industries, investors, and the public to be better prepared for the transition.
Leverage context-specific measures to address social equity issues while decarbonizing the transport sector. One prominent equity issue that confronted Guangdong is the uneven development across cities within Guangdong. The province not only has economically advanced cities like Shenzhen and Guangzhou, but also has less developed cities in the non-Pearl River Delta Region, where GDP per capita is below the national average. The cities are also disparate in terms of ZEV adoption, motorization rates, and fiscal capacity. A WRI study shows that context-specific measures are essential (see Table 1). For example, in Shenzhen, in the near-term, the promotion of ZEVs provides the largest decarbonization potential, whereas in the non-Pearl River Delta Region, to curb the rapid transport emissions growth, it needs comprehensive measures such as accessible transit services, cycling and walking environment, in addition to the adoption of ZEVs, as explained by Xue Lulu from WRI.
On top of regional equity, other aspects of equity should also be considered. China’s transport development has been long devoted to social equity, explained by Guo Jie from Global Sustainable Transport Innovation and Knowledge Center, as evidenced by the construction and maintenance of rural roads and barrier-free facilities. Chai Qimin from National Center for Climate Change Strategy and International Cooperation emphasized that from the equity perspective, the broad transport system—rather than only ZEVs—should be considered, including public transit, cycling, and walking, which are still unevenly distributed across regions. Guangdong’s experience in incorporating the equity lens into the transport decarbonization discussions would also inspire other Chinese provinces.
Table 1. Decarbonization measures for Guangdong’s road transport sector
Source: WRI study (2023)
Promoting zero-emission (heavy-duty) trucks is next on the agenda.
Benefiting from a suite of proactive policies, Guangdong is leading China’s ZEV transition. To fuel the rapid growth of ZEVs, Guangdong provincial and municipal governments played a key role. As summarized by Liao Cuiping from Guangzhou Institute of Energy Conversion and Yao Ke from Guangdong Transport Planning and Design Institute, the provincial/municipal policy instruments include but are not limited to the development of a full-fledged local ZEV industrial chain, research & development (R&D) investments on key components of ZEVs, financial incentives (such as local ZEV purchase subsidies, tax benefits, subsidies on charging/refueling, and free parking), infrastructure investment, preferential road access policies, and the establishment of data platforms to monitor the operation of ZEVs.
Heavy-duty trucks (HDTs) are important levers to achieve Guangdong’s carbon neutrality goal in the long run. According to WRI’s estimates, HDTs will become the largest CO2 emission source of road transportation in Guangdong province in 2050. However, Guangdong currently has not yet established a concrete target and roadmap for promoting zero-emission HDTs.
In Europe, after setting 100% C02 emission reduction target for new cars and vans from 2035, the European Commission has proposed new CO2 emission targets for new heavy duty vehicles (HDVs) from 2030 onwards. This stronger standard, once put into effective, will require all new HDVs to reduce 45% CO2 emissions from 2030, compared to the 2019 levels, and to reduce 90% emissions from 2040. However, Urs Maier, the Senior Associate at Agora Verkehrswende, suggested CO2 emissions reduction targets for freight trucks could be elevated to 100% from 2035, given that battery electric vehicles can reach cost and operational performance parity with the diesel counterparts around 2030. Policies to support the target enhancement could include 1) rapid roll-out of charging and refueling infrastructure; and 2) demand-side policies such as CO2 -based truck tolls and/or CO2 pricing on transport fuels.
In the near term, Guangdong has the potential to prioritize the adoption of zero-emission dump trucks, as suggested by Niu Tianlin from ICCT. Recently, there has been a large-scale procurement of electric dump trucks in cities in Guangdong province like Shenzhen, Guangzhou, and Foshan. ICCT study shows that as zero-emissions dump trucks have not yet reached total cost of ownership (TCO) parity with their diesel counterpart, financial incentives are necessary. Liu Yonghong from Sun Yat-Sen University noted that apart from battery electric vehicles, hydrogen fuel cell HDTs (and the upstream adoption of low-carbon hydrogen) will provide a viable alternative for Guangdong to decarbonize its HDTs. This technology will be ready for large-scale adoption during 2035 and 2040. The near-term “Fuel Cell Vehicle Demonstration and Application City Clusters” in China, with Guangdong included as one of the five pilot clusters, will pave the way for wider regional adoption.
Market mechanisms like carbon pricing will play a facilitating role in transport decarbonization.
In addition to policies, Guangdong is also considering adopting market mechanisms to reduce carbon emissions to accelerate transport decarbonization.
The European Union (EU) and Germany would offer some inspiration. Theresa Wildgrube, Senior Consultant for Adelphi Consult GmbH explained that (road) transport is now incorporated in Germany’s national Emission Trading System (ETS); the sector will be covered by EU ETS 2 starting from 2027 to align the EU’s new climate target of 55% emission reduction by 2030. In German ETS, the carbon price of the (road) transport sector is imposed on “upstream” fuel distributors to ensure the full coverage of transport activities. The transport emissions allowances are now sold at fixed prices and will be transitioned to auctions with a price corridor in 2026 and market-based price determination from 2027. With the establishment of EU ETS 2, Germany’s national ETS will be merged into EU ETS 2 and the policy will exert influences on a larger geographic scale.
Figure 1. Synergies of EU ETS, German national ETS, and EU ETS 2
Source: Presentation of Theresa Wildgrube, Senior Consultant for Adelphi Consult GmbH
Similarly, China also launched a national carbon market and piloted regional carbon markets. Currently, regional carbon markets like the ones in Shanghai, Shenzhen, and Beijing have covered some transport segments, like aviation, maritime/waterway, ports, buses, subways, and freight. Guangdong’s regional market only includes the aviation segment. To incorporate more transport segments into this provincial carbon market, Xiao Sirui from Guangzhou Emission Exchange Center suggested that establishing appropriate timelines, methodology for distributing emission allowances, and Monitoring, Reporting & Verification (MRV) procedure are important.
Further, the reinstated China Certified Emission Reduction (CCER)—China’s voluntary market for carbon offsets—provides another way for transport-related companies to participate in the carbon market and benefit from their decarbonization efforts. Now, CCER covers 14 transport-related methodologies like public biking sharing systems, bus rapid transit, and high-speed railways. Xiao Sirui explained that opportunities exist to design more CCER methodologies for the transport sector. Apart from national CCERs, Guangdong has also piloted its own local voluntary emission reduction scheme called “Tan Puhui”, which aims mainly at small and medium-sized enterprises, households, and individuals. Transport-related methodologies now include bicycling and are going to include public transit, introduced by Zeng Xuelan from Guangdong University of Technology.
Workshop Takeaways
The workshop highlighted Guangdong’s success in striking a balance between implementing comprehensive policy frameworks and mobilizing market force towards zero-emission transport. To scale up this success, it’s critical to consider social equity, relatively hard-to-abate heavy-duty vehicles, and market mechanisms. The participants agreed that more and intensified dialogues among different stakeholders including policymakers, researchers, and the industry are needed to achieve this goal.
Author: Ke Chen, WRI Transport Research Analyst
