Carmakers rev up efforts to reach carbon goals

Dual credit system

This has been achieved thanks to China's dual credit system, which was put in place in April 2018 and prompts carmakers to use smaller engines or to improve engine efficiency while introducing electric cars, plug-in hybrids or hydrogen fuel vehicles that use little or no gasoline at all.

According to the system, carmakers generate negative credits if they fail to meet the country's fuel consumption standards, but they can earn positive credits by producing electric cars, plug-in hybrids or hydrogen fuel vehicles.

If their positive credits are not enough to offset negative ones, the carmakers have to buy from others who have a surplus, or they will face government fines.

The policy and the government's subsidies on new energy vehicles starting in 2009 have spurred the development of the NEV sector and helped cut carbon emissions from the very beginning.

"After several years of implementation, China's dual credit policy is starting to prove its significance in pushing carmakers toward electrification," said Julia An, an industry analyst at consulting firm Strategy Analytics. "They are proactively shaping their future electrification strategies, as compliance is now essentially a precondition of carmakers' ability to expand in the China market."

China has been the world's largest NEV market for seven years in a row, with production increasing from 507,000 units in 2016 to 3.52 million last year, said Xin Guobin, vice-minister of industry and information technology.

This has boosted the automotive sector's confidence in achieving the carbon peak goal in 2028, two years ahead of the nation's target, said Li Jun, head of the China Society of Automotive Engineers.

Li, also an automotive professor at Tsinghua University, said the society of engineers expects that by 2035－when new energy vehicles are to account for 50 percent of total vehicle sales, of which 90 percent will be electric cars－the sector's carbon emissions will be 20 percent less than the peak.

Some carmakers are exploring the potential in other areas as well. Besides electric cars and plug-in hybrids, Great Wall Motors, China's largest SUV and pickup truck maker, is investing heavily in hydrogen vehicles as well.

The company, based in Baoding, Hebei province, aims to become carbon-neutral by 2045.

Wei Jianjun, chairman of Great Wall Motors, said the company has the world's largest and most complete hydrogen technology development center.

Its hydrogen vehicle solutions cover fuel cell batteries, onboard hydrogen storage systems and other core components.

Wei said the reason the company attaches such importance to hydrogen vehicles is the nature of the fuel.

"Hydrogen is regarded as the ultimate source of energy, which is green and renewable," Wei said. "So we are less concerned about specific vehicle models than technology development."