Energy Insider: Carbon Credit Program Revived, Russia Now China’s Top Oil Supplier
Green electricity trading booms, Shanxi leads coal production, NEV sales soar
A tank station of a Russian oil transportation company in Moscow. Photo: VCG
• China relaunches shelved CCER program
• Russia becomes China’s biggest oil supplier
• Shanxi retains pole position for coal output
• National new-energy vehicle sales soar to 9.5 million
• Intra-provincial green electricity trading spikes
In focus: China relaunches shelved carbon credit program
What’s new: China has relaunched its voluntary carbon credits program, also known as the China Certified Emission Reduction (CCER) scheme, after shelving it more than six years ago due to a lack of uptake and regulatory issues.
Vice Premier Ding Xuexiang announced the relaunch at a ceremony in Beijing on Jan. 22, the state-run Xinhua News Agency reported.
Four companies, including China General Nuclear Power Corp. and State Power Investment Corp. Ltd., made pledges to follow compliance rules while developing voluntary carbon-reduction projects and participating in trading, according to the report.
CNOOC Gas & Power Group Co. Ltd., a subsidiary of Chinese state-owned offshore driller CNOOC Ltd., made the first purchase of 250,000 tons of credits on the relaunched market, the company said in a social media post. These credits will be used to offset the greenhouse gas emissions during its production processes, it noted.
Why it matters: The CCER will form a complete carbon market in conjunction with the national Emissions Trading Scheme (ETS), according to state broadcaster CCTV.
The relaunch helps “lay the groundwork for the expansion of the ETS, which could be imminent,” Zheng Ying, a guest researcher at Tsinghua University’s Sichuan Energy Internet Research Institute, told Caixin. “Once new industries are incorporated into the ETS, their demand for carbon credits will surge.”
The move was also a timely response to the market’s expectation, Zheng said. “All the core elements of a relaunch were already there, so it is natural that this happened now,” she added.
Market: Russia replaces Saudi Arabia as China’s top oil supplier
What’s new: Russia dethroned Saudi Arabia as China’s largest oil supplier in 2023, according to data released by China’s General Administration of Customs on Jan. 20.
Beijing imported 107 million tons of Russian crude last year, up 24% year on year, the data showed. In comparison, Saudi Arabia, which ranked second, shipped 86 million tons of crude oil to China, a 1.7% drop on the year. Saudi Arabia was China’s leading oil supplier from 2019 through 2022.
Russia, which faced Western sanctions against its oil exports due to its invasion of Ukraine, sold the large quantity to China at an average price of $566.45 per ton, 16.6% cheaper than in 2022.
Why it matters: Beijing and Moscow strengthened their energy cooperation last year, with Russia “prepared to scale up uninterrupted oil supplies for the Chinese economy,” Russian President Vladimir Putin said in March in Moscow, following talks with President Xi Jinping.
The news also reflected China’s surge in demand for oil last year. The spike was largely driven by a fast expansion of its petrochemical sector, according to a December analysis by the International Energy Agency. The agency predicted China would continue leading global oil demand growth in 2024.
Shanxi remains China’s top coal producer
What’s new: Shanxi retained its position as the largest coal-producing region in China after mining 1.36 billion tons of the dirty fuel in 2023, according to data released by the China National Coal Association on Jan. 23.
The northern province is followed by neighboring Inner Mongolia and Shaanxi, which ranked second and third. They produced 1.2 billion tons and 761 million tons of coal last year, respectively.
Seven provinces mined over 100 million tons of coal last year, one more than 2022. Their combined output reached 4.1 billion tons, accounting for 88.6% of national coal output.
Why it matters: The latest data also indicated the shifting role of coal to different provinces. The output of Shanxi and Shaanxi, whose economies still rely on mining and heavy industry, rose by 3.3% and 2.3% year on year, in order.
In comparison, Inner Mongolia, which has been rapidly expanding its renewable industry, only booked a 0.2% year-on-year increase, the lowest rate among the top five coal producing regions.
Xinjiang and Guizhou, which both identify coal as a new economic driver, booked double-digit growth. The latter saw a 12.3% jump in output, while Xinjiang increased production by 10.7%.
Transport: National sales of NEVs sky-rocket
What’s new: Sales of new-energy vehicles (NEVs) in China soared by a whopping 38% in 2023 to 9.5 million units, according to Xin Guobin, the deputy head of the Ministry of Industry and Information Technology.
The penetration rate of NEVs in the country rose to 31.6% last year, Xin said at a press conference on Jan. 19, meaning that nearly one in every three vehicles sold is from the NEV category, which includes plug-in hybrids, battery-powered electric vehicles and those powered by fuel cells.
Why it matters: China’s NEV industry experienced robust growth last year as the sector helped form a new economic driver for the country.
NEV production jumped 35.8% from 2022 to 9.6 million vehicles in 2023, Xin said.
According to data published by Cui Shudong, the secretary-general of the China Passenger Car Association, China’s NEV exports surged 55% in 2023 to 1.73 million.
But there are also concerns about the state of the industry. Xin warned of “disorderly” competition, such as NEV projects being “blindly launched.”
Market: Intra-provincial green electricity trading booms
What’s new: The total volume of green electricity traded within provincial borders in China more than doubled last year, according to data released by the China Electricity Council (CEC) on Jan. 23.
A total of 53.77 terawatt-hours changed hands between buyers and green electricity generators in intra-provincial trading, up 112% from the 22.78 terawatt-hours in 2022, according to data from the trade body.
The trading of all types of electricity via China’s provincial power trading centers increased by 7.9% year on year, reaching 5,668 terawatt-hours in 2023, the data showed. The figure accounts for 61.4% of all electricity used in China last year, meaning that less than half of the country’s electricity consumption is now distributed by state planning.
Why it matters: The figures indicate China’s surging demand for green electricity.
Although the CEC did not release the volume of green electricity traded across provinces last year, intra-provincial green electricity trading forms the vast majority of all green electricity transactions in China, according to Rocky Mountain Institute, a U.S.-based non-profit specializing in energy analysis. Inter-provincial trading involves more stakeholders and is, therefore, more complicated, it noted.
Zheng of the Sichuan Energy Internet Research Institute expected fast growth to continue: “The society’s demand for green electricity is huge now and green electricity trading will be a focus of electricity trading this year.”