Ju Jiandong | The carbon intensity changes in different industries show a trend of rising first and
Speech Shorthand
Tsinghua PBC School of Finance Global Green Finance Forum
Ju Jiandong, Chair Professor of Tsinghua University PBC School of Finance and Director of the Center for Green Finance Research (CGFR):
Many thanks to Professor Zhang Xiliang for providing us with a comprehensive overview of the national carbon market. Regarding the anticipated increase in marginal costs, Professor Zhang not only outlined future price changes but also provided a detailed overview of the 70% intensity carbon market and its future plans. This information framework is invaluable; thank you again, Professor Zhang!
Next is my personal report, on the topic of "Carbon Intensity and Industrial Structure Transformation." As we all know, China has shifted from controlling both total energy consumption and energy intensity to controlling both total carbon emissions and carbon intensity. We are often asked by foreign friends that China has done very well in carbon emissions, carbon neutrality, and the development of new energy industries, so what are the differences between our system and that of the West? Our model is "effective market + proactive government," which differs somewhat from the market-led model in Europe and America.
Next, I will share my understanding. For example, Europe and the United States are now beginning to learn from our industrial policies, and I believe that in this regard, the world needs more competition. Meanwhile, China has a very effective administrative system to promote the green transformation of the entire economy. For instance, the National Development and Reform Commission can promote the transformation of the entire industry by setting national carbon emission intensity and total emission targets. I believe that China's policies in these areas are worth studying, and that we should summarize the experiences gained.
Now I'd like to talk about industrial transformation. The global carbon neutrality target poses a huge challenge to traditional trade theories and production. China has a large carbon emission base, therefore requiring significant adjustments to its industrial structure. Specifically, we need to review the industrial restructuring over the past two decades and analyze the data; this is the main task of our project.
Recently, new green trade barriers have emerged, and industrial policies have been widely adopted, especially given the global attention drawn to China's overcapacity in green industries. What exactly is overcapacity? We need to explore this question. We primarily rely on two data sources: CPCD data compiled by China's Ministry of Ecology and Environment and EXIO data from the European Union. Using these data, we define export carbon intensity, i.e., carbon emissions per unit of export value, expressed in tons per thousand RMB. We analyzed HS4-digit export data from 2002 to 2021, studying structural transformation according to carbon intensity ranking.
We found that from 2002 to 2021, China's export carbon intensity decreased from 0.32 tons per thousand yuan to 0.16 tons per thousand yuan, a drop of nearly half. The product with the highest carbon intensity decreased from 66.7 tons per thousand yuan to around 53 tons per thousand yuan, while the lowest carbon intensity increased slightly. Looking at the weighted average carbon intensity, China's export carbon intensity shows a downward trend—this is the first result. We also identified the ten products with the highest and lowest carbon intensity in 2002 and 2021.
We analyzed the relationship between export value and carbon intensity using a regression model, and found some interesting correlations between the two. First, for industries defined by carbon intensity, their export share showed a trend of first rising and then falling. Second, industries with lower carbon intensity reached their peak value later. Our main conclusion is that the trend of carbon intensity change in different industries is not a linear decline, but rather an initial rise followed by a decline. This is crucial for understanding overcapacity, as overcapacity should not occur during the expansion phase, but may appear during the decline phase.
Analysis of data from the past two decades reveals a peak and subsequent decline in the export share of industries categorized by carbon intensity. For example, the export share of the "mechanical and electrical appliance industry" has been steadily increasing due to its lower carbon intensity; while the "brick and tile and other ceramics industry" peaked around 2012 and then began to decline. These findings help us understand market-driven changes in industry structure and formulate appropriate policies.
Regarding the question of whether there is an overcapacity of green production capacity, we analyzed China's major green products, such as electric vehicles, photovoltaic power generation products, and wind power products, and found that the peak capacity of these products has not yet been reached. Therefore, these products have not yet reached the stage of reducing excess capacity.
Overall, from the perspective of China's industry, global demand for green products still exceeds supply, resulting in a significant market gap. Therefore, current efforts to reduce excess capacity for green products are inconsistent with the industrial structural changes reflected in the market.That concludes my report. Thank you all.