The status of China's automobile industry's "carbon rivers and lakes"

In the “river and lake” of the Chinese auto market, the days of car companies are getting worse and mixed. Following the forthcoming measures for the simultaneous management of average fuel consumption (CAFE) and new energy vehicle credits (NEV) for passenger car companies, the state once again made a heavy punch for the emission of automobile products.

On August 2, the General Office of the National Development and Reform Commission issued the “Measures for the Management of Carbon Equity for New Energy Vehicles”, and invited relevant ministries, enterprises, industry associations and other research to submit comments and feedback on written comments before August 25. According to this "draft for comment", domestic auto manufacturers and import auto dealers can generate carbon credits for new energy vehicles by producing and importing new energy vehicles. These carbon allowances can be traded in the carbon emissions market. If some auto companies produce and sell a small number of new energy vehicles, they can purchase carbon credits from companies with excess carbon allowances through the carbon emissions trading market.

The status of China's automobile industry's "carbon rivers and lakes"

The CAFE Act, NEV Points, and the carbon emissions trading market, which is expected to be launched nationwide in 2017, constitute a different “carbon river” in China's auto industry. How to continue to "mix" has become a realistic test that every car company must face.

Trinity

There are almost no signs. On August 2nd, a draft for the “New Energy Vehicle Carbon Quota Management Measures” appeared quietly on the official website of the National Development and Reform Commission. In response to this new policy, the NDRC’s feedback on the opinions left by various parties is not sufficient. According to the timetable, the consultation will end on August 25th. Based on the carbon emissions trading market in which seven pilot projects have been launched in China since 2013, comprehensive carbon emission quota trading is expected to be launched nationwide in 2017.

Time is so urgent, what is the NDRC's intention?

This time, the National Development and Reform Commission formulated a carbon credit trading policy for new energy vehicles based on two reasons. On the one hand, with the continuous growth of new energy vehicle production and sales, large-scale fiscal and tax subsidies are difficult to sustain; on the other hand, the structural overcapacity of fuel vehicle production has begun to appear, not only need to reduce the average fuel consumption, but also need to control the total amount of fuel vehicles. And increments.

“Subsidy retreat is already an established policy formulated by the national ministries and commissions. In 2016, the subsidy for new energy passenger vehicles will be 25,000-200,000 yuan, and the subsidy standard for 2017-2018 will be 20% lower from 2016, 2019-2020. The subsidy standard has dropped by 40% on the basis of 2016.” Cui Dongshu, secretary-general of the National Federation of the United States, interpret the draft for comment. “Compared to financial subsidies, the carbon credit system uses the power of the market to motivate and force enterprises. Multiple resources are invested in product development and technological innovation."

Prior to this, the Chinese government encouraged automobile companies to produce new energy vehicles through financial subsidies, while continuously increasing the fuel consumption limit for passenger vehicles. The fourth phase of passenger fuel consumption, which began to be implemented on January 1, 2016, requires that the average fuel consumption of domestic passenger vehicles will drop to 5.0 liters per 100 kilometers by 2020. From 2016 to 2020, the annual limit is 6.7 liters, 6.4 liters, 6 liters, 5.5 liters and 5 liters per 100 kilometers. If the car companies do not produce new energy vehicles, it is almost impossible to achieve this goal. The carbon credit management of new energy vehicles will be combined with the management of passenger fuel consumption limits to force car companies to expand the production of new energy vehicles.

At the same time, the implementation of the carbon allowance management method is also expected to provide a legal basis for the NEV points that have been brewed in the past. “The NDRC uses the carbon trading regulations to resolve the legal basis for economic penalties and changes the points of new energy vehicles to the “carbon quotas” in carbon trading terms.” Liu Bin, director of the New Energy Vehicle and Fiscal and Tax Policy Research Office of China Automotive Technology and Research Center According to the analysis, this idea is essentially similar to that of California.

Traceable

Liu Bin’s “similar to California” refers to the fact that since 2014, the National Development and Reform Commission and other ministries have begun to study the California ZEV (Zero Emission Vehicle Incentive System) Act, hoping to draw on this policy to accelerate the popularization of zero-emission vehicles in California. China's NEV points management promotes the development of new energy vehicles.

California implemented the ZEV Act as early as 1990. Through this mandatory policy mechanism, it stipulates that the proportion of zero-emission vehicles sold by car companies and the combination of allowable points transactions will force enterprises to vigorously develop zero-emission vehicles.

The latest ZEV Act was finalized in 2009 by the California Air Resources Board (CARB). Companies that sell more than a certain number of cars in the state under the latest regulations must meet the requirements for eco-cars. That is to say, in 2010, the sales volume of ZEV, which has a sales volume of 100,000 units, needs to reach 2.5% (2,500 vehicles = 2,500 points, and the car companies must receive at least 2,500 points, so they will not be punished). The types of environmentally friendly vehicles can be pure electric vehicle EV, fuel cell vehicle FCV, plug-in hybrid vehicle PHEV, hybrid vehicle HEV, and the like.

For companies that do not meet the standards set by the ZEV Act, they must pay CARB a fine of $5,000 per vehicle or buy points from other companies. Tesla is applying the bill to the ultimate car company.

Since the establishment of Tesla, its car sales have fully contributed to the super battery factory and global retail stores. Although it has not been able to make profits by selling cars, it relies on the policy of ZEV and Total Control and Trading (C&T). Many traditional auto companies have purchased a lot of expensive points from Tesla. In the first half of 2013 alone, Tesla earned about $140 million in profits by relying on "sales" of ZEV points.

Compared with ZEV, carbon allowances have been around for a long time. As early as 1992, the United Nations Framework Convention on Climate Change adopted by the United Nations and the Kyoto Protocol, the first additional agreement to be adopted subsequently, all mentioned the use of market mechanisms as a greenhouse gas reduction representative of carbon dioxide. The new path of the problem, that is, the carbon dioxide emission right as a commodity, thus forming a carbon dioxide emission right transaction, namely carbon trading.

The problem is still

According to the Exposure Draft, the carbon quota method is managed to produce and import fuel vehicles to a certain number of enterprises (fuel-vehicle-scale enterprises), and fuel vehicles do not meet the above requirements, but new energy vehicles have reached a certain number of production and sales, and will voluntarily incorporate new Energy vehicle carbon quota management enterprises (new energy vehicle scale enterprises).

Although the proposed draft of the management method has not yet defined the definition criteria of these two types of enterprises (that is, “certain quantity”), in Cui Dongshu’s view, the traditional car companies that are unwilling to produce new energy vehicles can be made through the carbon allowance policy. Accepting more penalties or paying higher purchase quota costs, thereby ensuring the upgrading and transformation of the traditional car companies' product series and stabilizing the production and sales ratio of new energy vehicles, so that government subsidies can be smoothly withdrawn, and new energy sources can be motivated through market regulation. The development of the car.

When talking about the relationship between carbon allowances and NEV points and the CAFE bill, Cui Dongshu said that the new energy vehicle carbon quota restraint policy will further reduce the average fuel consumption level of the company. "It is a good thing."

However, in the eyes of many insiders, although the NDRC's carbon quota management measures introduced this time have helped to promote the sustainable and healthy development of the domestic new energy automobile industry through sound policies and legal systems, there are still some systems design. The details that need to be perfected.

“How do the points and ready-made carbon trading and CAFE combine?” These three are actually very relevant, and they are also a very difficult technical problem involving the interests of multiple institutions; on the other hand, the calculation methods are different, and the management system is also Not the same, "If there are a lot of integration mechanisms at the same time, there are a lot of uncertainties for the company, and it also provides a lot of space for the game to use the rules of the game, which may not meet our needs. Energy, safety, and air improvement goals.” As a third-party think tank, the founder and executive director of the Energy and Transportation Innovation Center (ICET), An Feng, expressed his concerns.

Similar to An Feng, there is also Li Wanli, former deputy inspector of the Industrial Policy Department of the former Ministry of Industry and Information Technology. In his view, at this stage, the fuel consumption management method led by the Ministry of Industry and Information Technology, the NEV points led by the Ministry of Finance, and the carbon trading led by the National Development and Reform Commission have not yet formed a unified system. "If everyone starts, it will be inconsistent, and all aspects are inconsistent. Without the possibility of integration, I believe that the actual effect of total carbon emission control may be worse than the effect of controlling vehicle pollutant emissions."

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