Beijing, 25th May 2022 – The European Union Chamber of Commerce in China (European Chamber), in partnership with Roland Berger, today published Carbon Neutrality: The Role of European Companies in China’s Race to 2060. Based on a member survey and extensive interviews, the report identifies areas where EU-China cooperation can be deepened so that China can front load the technologies it needs to accelerate its carbon neutrality drive.
Driven by stringent environmental regulations and consumer demand, and guided by their global corporate carbon neutrality pledges, European businesses are well placed to help China peak carbon emissions before 2030, and push towards carbon neutrality in 2060. The report finds that 67 per cent of European companies operating in China are already pursuing carbon neutrality, and 40 per cent have established China focused decarbonisation teams, many of which report directly to the board.
However, three sets of barriers currently prevent European firms from fully contributing to China’s carbon neutrality drive.
First, more policy guidance at the national-, local- and sectoral-levels is needed to enable businesses to make informed investment decisions today with 2060 in mind. Although China has started rolling out its ‘1+N’ policy framework, it needs to be quickly fleshed out. As it stands, 65 per cent of members report that a lack of industrial guidance and best practice sharing from the government or NGOs could prevent them from achieving their decarbonisation goals.
There is also the need for a more transparent, open and flexible power market. While China leads globally in installing new renewable energy generation capacity, barriers prevent businesses from fully utilising it. This is a serious challenge for 69 per cent of businesses, whose decarbonisation efforts in China could be derailed without sufficient access to renewable energy. China’s emissions trading system will also require reform, to fully incentivise companies to decarbonise their operations.
Finally, the development and roll out of leading green technologies is stifled by a lack of open markets and common standards, as well as limited corporate and consumer awareness. For example, 54 per cent of respondents from the environment sector to the Chamber’s forthcoming Business Confidence Survey 2022 report missing business opportunities because of market access restrictions or regulatory barriers, and 47 per cent of companies recognise that promoting a low carbon culture will be key to China achieving its carbon neutrality aspirations. Common standards are needed to provide assurance to those looking for truly ‘green’ investments and to eliminate green washing.
“Although China’s 30/60 Goals are extremely ambitious, our members believe they can be achieved provided China leverages all the tools at its disposal, including implementing deep market reforms and utilising proven European technologies,” said Jörg Wuttke, president of the European Union Chamber of Commerce in China. “Given that European companies have a strong track record of working towards carbon neutrality in their home markets, deepening EU-China cooperation in decarbonisation seems like a logical move.”
“Improving climate change performance is crucial for China to maintain its competitiveness as a global manufacturing powerhouse,” said Denis Depoux, global managing director of Roland Berger. “Key to this will be swift and pragmatic policy making by central and local governments, and creating medium- to long-term predictability in the business environment so that European companies can fully contribute to China’s carbon neutrality goal through their technology and the experience they have accumulated.”
Download the full report here: