In the next of his national decarbonisation policy overviews, Mark William finds that China is addressing the issue – but shipping is not top of the list
Powerhouse with an Opportunity
China is the world’s economic powerhouse, its development driven by the twin processes of urbanisation and industrialisation. China produces half the world’s steel, more than half the world’s cement and concrete, and has been building cityscapes the size of Birmingham in the UK or San Jose in California twenty times a year since 2008.
China is also the world’s shipping powerhouse. It is the biggest importer of crude oil and iron ore and one of the biggest importers of coal alongside India, Japan and South Korea. In the next two years it will overtake Japan as the biggest importer of LNG. China is the biggest exporter of steel products and the fastest growing exporter of refined petroleum products.
If one includes Hong Kong owners and overseas joint ventures and listings, then Chinese companies control around 16 per cent of the world’s oil tankers and bulk carriers, while via COSCO and OOCL the Chinese state controls one of the top four container liner businesses world-wide.
If the world and the shipping industry are to decarbonise, then China and China’s shipping industry must decarbonise. The seemingly insuperable challenge may in fact be an opportunity to advance certain Chinese economic policy goals such as the Made in China 2025 policy and the long-term goal to overtake the US as the world’s biggest economy, currently on course to occur in the mid-2030s basis unadjusted GDP projections.
A report by the thinktank Energy Transitions Commission published in November 2019 suggests that, ‘Far from constraining China’s ability to meet its objective of being ‘a fully developed rich economy’ by 2050, committing to achieve zero emissions by 2050 will spur investment and innovation that could accelerate progress.’
Climate Policy Evolution
China has four principle climate goals: to stop the growth of CO2 emissions around the year 2030; to lower CO2 emissions per unit of GDP by 60-65% by 2030 compared to 2005; to increase the share of non-fossil fuels in primary energy to around 20% by 2030; and to increase forested areas between 2005 and 2030.
China’s leaders make regular public statements supporting the development of renewable energy and reducing pollution. The National Development and Reform Commission, a powerful ministry with responsibility for overseeing China’s economic development, publishes annual reports on China’s Policies and Actions for Addressing Climate Change.
It is likely that policies to address climate change will be central to the 14th Five Year Plan for the years 2021-25. Work on these plans goes on constantly, but the process of writing this one down will begin at the fifth plenary session of the 19th CPC Central Committee to be held in Beijing in October 2020. The centrepiece of that plan will be the development of Chinese-owned high-tech industries to avoid growth being stifled by foreign powers withholding their own technologies. Will this industrial nationalism leave room for research and engineering to decarbonise China’s huge shipping requirement?
A Primary Focus on Electricity Generation
China’s hydroelectric engineers have held senior political positions at provincial and national level for decades. Hu Jintao, immediate past President, was a hydro-engineer by training. Hydroelectric plants generate 20% of China’s electricity, second only to coal.
China is still the biggest burner of coal to generate electricity, consuming 2.9 billion onnes of thermal coal a year – over half of global consumption – while also investing in coal fired power generation in developing countries around the world.
China is nonetheless working on installing new renewable power plants. It had installed one third of total global solar energy capacity by 2019 and is growing its solar capacity faster than any other nation.
Renewables are becoming commercially more attractive in China. At this week’s Climate Week NYC meeting, several Chinese companies signed up to the RE100 initiative to promote 100% renewable energy consumption in China. The new members include LONGi, the world’s most valuable solar panel manufacturer, which joins Sungrow, a large Chinese solar photovoltaic inverter manufacturer, as a RE100 member.
Road is the Transport Policy Priority
Decarbonising China’s transport sector will involve electrifying passenger road transport, with a lesser contribution from hydrogen fuel cells. Currently around 50% of the world’s electric cars and 99% of the world’s electric buses are in China, the world’s biggest auto market with over 20 million new registrations recorded annually.
Despite being the world’s biggest hydrogen producer, China has not fully embraced hydrogen fuel cells for road transport. China’s first hydrogen filling station opened in Guangdong Province in 2017. Around 60 were in operation by the end of 2019 out of a global total of 432 operational stations. But the government removed generous subsidies of up to US 22,000 for fuel cell cars in October 2019, seemingly preferring lithium-ion type batteries to hydrogen fuel cells for passenger cars.
Nonetheless, in June 2020, five Chinese auto manufacturers: China FAW Corporation Limited, Dongfeng Motor Corporation, Guangzhou Automobile Group Co., Ltd., Beijing Automotive Group Co., Ltd. And Beijing SinoHytec Co., Ltd. plus Toyota Motor Corporation of Japan established United Fuel Cell System R&D (Beijing) Co., Ltd., a joint venture to develop fuel cells for commercial vehicles. They aim at one million fuel cell vehicles to be on the roads by 2030, selling 50,000 a year. For comparison, South Korea is aiming for 80,000 fuel cell car sales by 2025 and Japan for 200,000 by 2030.
Waterborne Transport Policy Focused on Rivers
China has big plans for weaning its overland transport off petroleum products. Its plans for waterborne transport appear to be smaller in scale and focused on removing older, pollutive, diesel powered boats from domestic river shipping.
In December 2017, China launched its first electric cargo ship. The 2,200 DWT vessel could travel 90 km with a top speed of 12 km/h. The 1,000 lithium iron batteries used to power it could be recharged in two hours, well within the time taken up by port operations, according to its designers, Hangzhou Modern Ship Design & Research Co. The ship has been trading on the Pearl River, mostly transporting thermal coal.
In May 2020, State Grid Jiangsu Branch, an office of electricity infrastructure management, announced that it had co-designed and tested an electric cargo ship at Changzhou, about 180 km upriver from Shanghai on the Yangtze. The vessel, with 1,000 DWT capacity, is powered by a lithium battery with power of 1,458 kW. The ship, called ‘Zhongtiandianyun 001’ can travel 50 km after a 2.5-hour recharge. It is expected to be one of hundreds of similar ‘clean-up’ electric cargo vessels to sail on the Yangtze, the Jiangsu section of which is one of the world’s busiest waterways. The Jiangsu provincial government is installing nearly 5,000 charging stations along the river in anticipation of an battery-powered river cargo fleet.
In September 2020, China Classification Society engineer Aohan Qin told the Gastech Virtual Summit that CCS and CSSC are jointly developing a 2,100 DWT hydrogen-powered cargo ship. The vessel is being built at Guangzhou Shipyard International Co. Ltd. It will be launched for trials in Guangdong around the end of 2021, and is destined to transport coal to a power plant on the Pearl River. Four 130 kW fuel cells will supply power while the vessel will be able to store 280 kilos of hydrogen in 36 gas cylinders, giving it a range of 140 km. The ship will also be fitted with 1,260 kW of lithium batteries to power equipment.
Maritime Policy Indifference?
Given this focus on domestic river transport, it is perhaps not surprising that China’s shipbuilding behemoths CSSC and CSIC are not at the forefront of fuel cell research and development for ocean-going ships. Despite the Made in China 2025 policy, China’s hydrogen storage and filling infrastructure remains reliant on overseas and established technology. As global shipyard orderbooks have fallen to their lowest levels since the 1980s, shipbuilders have little spare cash for research and development.
To date, China’s shipping companies have followed the pack. For instance, Sinotrans Shipping Ltd signed a joint letter with over 100 other shipping companies in May 2019 calling for mandatory speed limits to cut CO2 emissions from existing ships. But as most of China’s shipping companies are at least partly state-owned, it is the state, via the NDRC, the Ministry of Transport and the Ministry of Industry and Information Technology, which will determine whether and how China’s shipping industry decarbonises. Yet China policy watchers report a lack of debate in China on the use of hydrogen or other potential zero-carbon marine fuels for China’s ocean shipping industry.
On 11 July 2020, China celebrated its 16th Maritime Day. A number of announcements were made about seafarer welfare during the Covid-19 pandemic and the Belt and Road Initiative. A Ministry of Transport document released to celebrate Maritime Day praised China’s maritime transport for its ‘significant role in promoting world economic and trade development and building a community with a shared future for humanity….Cooperation in Economy, Technology and Culture between China and the Countries and Regions along the Belt & Road is getting closer through the Ocean under the BRI.’ There was no mention of any efforts to develop China’s post-hydrocarbon maritime future.
The Chinese State Council publishes regular policy updates in the English language for overseas readers. A press release dated 15 July 2020 reports that China’s Maritime Safety Administration and CSSC had agreed ‘to develop smart ships, a smart transport management system and smart inspection and monitoring systems and forge a development plan for the smart shipping industry.’ One sentence covered maritime decarbonisation plans, which are clearly at an early stage: ‘The two sides will cooperate to research and develop new energy-powered ships and energy saving and environmental protection devices. The duo plans to design strategies to promote the reduction of greenhouse gas emissions from ships.’
The Ministry of Industry and Information Technology issued a press release on 20 July 2020 promoting China’s shipbuilding industry. It reported that, ‘The completion volume of shipbuilding in China, dropping by 10.6% year-on-year to 17.58 million deadweight tons (dwt) in H1, accounted for 37.2% of the global market share. New shipbuilding orders, up by 3.4% from last year to reach 12.47 million DWT in H1, took up 67.5% of the market share worldwide. The volume of holding orders, down by 6.3% year-on-year to 76.54 million dwt in H1, accounted for 48.2 percent of the global market share.’ No mention was made of whether China’s world-leading shipbuilding industry is developing a new generation of non-fuel oil vessels.
We await the 14th Five Year Plan to see if non-hydrocarbon marine fuels and ship designs feature at all.