15 Departments Release "Implementation Plan": A Roadmap for Carbon Footprint Management in the Automotive Industry Chain

On June 5th, 15 departments including the Ministry of Ecology and Environment, the National Development and Reform Commission, and the Ministry of Industry and Information Technology released the "Implementation Plan for Establishing a Carbon Footprint Management System" (hereinafter referred to as the "Implementation Plan"), officially putting the work of the carbon footprint management system on the agenda.

The "Implementation Plan" proposes that by 2027, a preliminary carbon footprint management system will be established; national product carbon footprint accounting general rules that are in line with international standards will be formulated and published, and about 100 key product carbon footprint accounting rules and standards will be introduced; by 2030, the carbon footprint management system will be more improved, with about 200 key product carbon footprint accounting rules and standards formulated and introduced.

For the automotive and parts industry, the construction of the carbon footprint management system is of special significance and is urgent. China's automotive and parts exports are strong, and seizing the "second curve" has become a growth opportunity that enterprises up and down the industrial chain do not want to miss. On the long road of "going global," in addition to the product itself, establishing a sound carbon footprint management system is a brand-new and major test that enterprises must face.

In fact, the "Implementation Plan" also focuses on new energy vehicles as a key area, and will develop key product carbon footprint accounting rules and standards in accordance with the principle of trying out group standards first and then gradually transforming them into industry standards or national standards.

At the same time, the "Implementation Plan" also proposes to establish and improve the product carbon footprint factor database, relying on the national greenhouse gas emission factor database, focusing on key areas such as basic energy, bulk commodities and raw materials, semi-finished products, and transportation to release product carbon footprint factors first, and establish a national product carbon footprint factor database; establish a product carbon label certification system, study and formulate product carbon label certification management methods, clarify the scope of application, label style, certification process, and management requirements; establish a product carbon footprint grading management system, encourage enterprises to carry out their own and supply chain carbon footprint evaluation according to relevant standards and requirements, promote enterprises to tap into carbon reduction potential, optimize supply chain management, and enhance the low-carbon competitiveness of products; explore and establish a carbon footprint information disclosure system, and encourage enterprises to disclose product carbon footprint accounting results and reports in stages and steps through environmental climate information disclosure, sustainable information disclosure, or voluntary evaluation and certification methods.

This is an unprecedented challenge. In the process of establishing a carbon footprint management system, upstream and downstream enterprises in China's automotive industry chain must recognize its arduousness, complexity, and long-term nature, such as factor mutual recognition, standard unification, talent gap, international relations... The road is long and winding, but I will seek up and down.

Beware of the "Carbon Barriers" in the Cleaning Industry

After the Chinese government proposed the "dual carbon" goals of carbon peak by 2030 and carbon neutrality by 2060, the automotive industry has reached a new level of understanding on the basis of its original energy-saving and environmental protection efforts, and its actions have become more detailed and powerful. However, professionals point out that at the same time, the formulation of carbon barrier policies in some countries and regions has also significantly accelerated, aiming to seize the leadership in global climate change response and the formulation of international trade rules, in order to maintain their own global industrial structure and division of labor.

On June 12th local time, the European Commission announced that it would impose provisional punitive tariffs on BYD, Geely, and SAIC Motor, which will be implemented from July 4th, and electric vehicles registered within the previous 90 days can also be retroactively taxed. In addition, the anti-subsidy investigation against China's electric vehicles will continue until the end of October this year, when the European Commission will decide whether to impose "permanent tariffs", which usually last for 5 years, unless the EU countries overwhelmingly oppose, otherwise punitive tariffs will be implemented.

Not long ago, the EU's new battery law supporting rules - the draft rules and annexes for the calculation of electric vehicle battery carbon footprint (hereinafter referred to as the "Draft") ended a one-month comment period.

The new EU battery law stipulates that from 2027, power batteries exported to Europe must have a "battery passport" that meets the requirements. This digital ID includes information such as battery manufacturers, material composition, carbon footprint, supply chain, etc. The first to become a "tiger" in the way is the product carbon footprint information. Power battery companies need to announce the carbon footprint value of the entire life cycle of the product from July 2025.

The "Draft" has attracted widespread attention from China's power battery industry because it only retains the "national average electricity consumption combination" and "direct connection electricity" calculation models in the old draft released in June 2023, and directly eliminates the calculation models of "supplier electricity products" and "remaining electricity consumption combinations". In other words, the "Draft" has put forward higher requirements for the carbon footprint of the entire life cycle of the product.

According to the "Draft", for the power battery production link, the largest proportion of carbon emissions, the electricity carbon emissions part, companies are likely to calculate the electricity carbon emission value according to the "national average electricity consumption combination", and China's value is higher than many EU countries, as well as Japan, South Korea and other major power battery producing countries. This will require companies to not only carry out the carbon footprint inventory and inspection of the supply chain link, but also to calculate the final carbon footprint data, which is likely to be unfavorable to the products of Chinese manufacturers.

Challenges and Opportunities in Carbon Footprint Work

It is understood that the power battery industry has basically completed the construction of the carbon footprint system framework. However, industry experts point out that this is only the first step, and the key to the follow-up is how to strengthen the mutual recognition of standards, because the "Draft" stipulates that the only tool for tracing electricity production is direct connection, which is the strictest definition for green electricity traceability. At present, the domestic green electricity that meets the direct connection requirements of the rules is only the distributed photovoltaic or wind power that is self-generated and self-used, and this part of the electricity is small and cannot meet the actual production electricity demand of enterprises. China's coal power accounts for nearly 60% of the total power generation, far higher than the EU. If the grid average carbon footprint factor is used to calculate the indirect emissions of electricity, then the carbon footprint of the power batteries produced in China will be much higher than those produced in the EU under the same conditions. This will put China's exported EU power batteries at a disadvantage in terms of carbon footprint compared to their locally produced products, which is very unfavorable to Chinese companies.

From Nothing to Something: The Dilemma and Challenges

With the acceleration of the global carbon-neutral process, in addition to power batteries, the requirements for product carbon footprints are spreading from the whole vehicle to other parts, and even to the more upstream raw materials and energy end. For the domestic automotive industry chain, the difficulty of establishing a sound carbon footprint management system is self-evident. Zhang Ting believes that the challenges are mainly reflected in four aspects.

Firstly, in terms of cognition, at present, companies have "carbon focus" at the organizational level, but there is no complete "carbon index" at the product level. The industry still lacks a scientific, systematic, and complete top-level planning guide, and the industry has not reached a consensus on what kind of management system to establish and how to establish it.

Secondly, the composition of organizational carbon mainly includes two parts: direct emissions and indirect emissions. The means to reduce direct emissions include companies using lower-emission processes, replacing fossil fuels with clean energy, improving energy efficiency, and purchasing lower-emission raw materials; the means to reduce indirect emissions include improving energy efficiency and using green electricity. From a calculation perspective, the data and indicators involved are complex and numerous, and many data cannot be obtained. "No data, no standard." Zhang Ting said that the bottom layer