Driving force

China is playing a major role in accelerating the global development of the electric vehicle industry

The choice of words concerning fossil fuels "phaseout" or "phase-down" bore significant weight at the 28th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28).

The essence of the challenge to realize a climate consensus on the elimination of fossil fuels lies in states' varied economic experiences, politics, resources and technological capacity. It is not surprising that for most states there is a trade-off in both the short- and long-term policies for climate adaptation, mainly because policy choices on climate revolve around opportunity costs such as manufacturing, trade, household consumption, conservation and so forth.

The promises of finances made to the developing countries by the wealthy nations proved to be an utter disappointment at COP28. As rightly pointed out by Safa' Al Jayoussi, climate justice adviser at Oxfam, "developing countries are dealing with a lot of loans from the World Bank and other institutions that are causing more austerity. Adding more pressure to the countries … will impact those most vulnerable to climate change". A recent report by the UN estimates that $387 billion is required annually by developing countries in order to implement domestic climate adaptation priorities. On top of this, most suitable climate solutions should not be generalized across developing countries as they vary in geography and social, economic and political fabric.

Importantly, to address climate change, one area of agreement is the transition to electric vehicles as 60 percent of the global oil demand comes from the transportation sector. It is estimated that cars and vans account for 48.5 percent of global transport emissions.

Many participants at COP28 were enthusiastic in announcing best practices and policies for their EV industry. The United Kingdom, for example, announced a 70 million pound ($88.9 million) pilot program for ultra-rapid EV charging points. Indonesia committed to an EV ecosystem, and Nigeria announced "local assembly capacity for electric vehicles, establishing charging infrastructure, and enabling private sector participation".According to the International Energy Agency, EV's share in global vehicle sales was 14 percent in 2022 and is likely to increase threefold by the end of the decade.

The World Resources Institute stresses that the share of EVs in the global market needs to be between 75 percent to 95 percent by 2030 in order to stay in line with the global warming target of 1.5 C.

China offers valuable lessons to the developing world through its expanding EV industry. In 2022, the Chinese share of global EV sales was 60 percent. The International Energy Agency chief recently noted that "China is the champion of clean energy. They are the world's number one in solar, electric cars, nuclear, hydropower — everything".Estimates by UBS suggest that China will have a 33 percent share of the EV global market by 2030. Chinese companies such as SAIC Motor, Geely and BYD alongside startups such as Nio, Xpeng and EHang are leading the domestic market and catering to customers' demands with a growing variety of models and variants. For instance, BYD offers both luxury and affordable variants catering to the domestic market across the board.

In 2022, the EV share of the light vehicle market in China increased to 24 percent from 13.5 percent in 2021. A study published in Transport Policy found that a 2009 Chinese policy to promote EVs has resulted in "lowering urban transport emissions by an average of 16.3 percent". In addition, China is also a major EV components supplier to companies such as Tesla and Toyota.

Regionally, China is eyeing major EV investments in both raw materials and production. In the long run, China will benefit from lithium supplies from Africa and play a major role in strengthening the international EV market. For instance, Chinese EV companies have promised to invest $1.44 billion in Thailand and to convert 30 percent of the country's car production to EVs by 2030. This has brought about new opportunities for developing countries across Africa, Asia and Latin America. However, this cooperation should not only be confined to EV production. Trade in essential parts and raw materials, technology transfer, as well as training of manpower should also be explored as new pathways of opportunity.

One study estimated that sales of EVs in Ethiopia, Kenya, Nigeria, Rwanda and Uganda may reach 340,000 to 820,000 units by 2025.Ghana announced its EV policy at COP28 and highlighted "EV penetration rate will be around 35 percent". By 2027-35, the Association of Southeast Asian Nations member states such as the Philippines and Indonesia aim to incentivize their EV market through low-cost ownership and tax incentives. A study by the Center for Strategic and International Studies noted that 20 percent of vehicles in Southeast Asia will be electric by 2025.Pakistan's EV policy 2020-25 aims at making 30 percent of its vehicles electric by 2030. Morgan Stanley noted that "EVs' share of global auto sales is likely to grow … to nearly 90 percent by 2050". In short, China's profound experience in the EV industry offers promising avenues of cooperation for developing countries.

At this point in time big questions also prevail concerning sources of energy and electricity supply for EV charging. Developing countries are constrained by limited choices. The International Finance Corporation estimates that $2.8 trillion is required by emerging and developing countries by 2030 for clean energy investments to meet climate goals set under the Paris agreement. In essence, these finances are required from a combination of domestic expenditure, international and private sector finance. Reliable platforms such as the World Economic Forum, the United Nations Conference on Trade and Development, the International Atomic Energy Agency and the IEA highlight that abundant energy investment opportunities exist in the developing countries in areas of nuclear, hydro, solar, wind etc. Perhaps, advanced economies may look deeper into some of these energy projects because of their past industrial policies and pledges made at earlier COPs. EVs are not the perfect nor a stand-alone solution, but they will certainly help to reduce greenhouse gas emissions in the long run.

The author is a postdoctoral fellow at the Department of Government and Public Administration at the Chinese University of Hong Kong. The author contributed this article to China Watch, a think tank powered by China Daily.

Contact the editor at editor@chinawatch.cn