Frost & Sullivan releases the White Paper on Manufacturing under 'Carbon Neutrality'

"Carbon neutrality" refers to net-zero carbon emissions, aiming to reduce carbon dioxide emissions through various methods to achieve offsetting between carbon emission and carbon absorption."Carbon neutrality" is not only a process of overall system balance but also a dynamic one, ensuring that the total emissions and absorption over a period of time are always kept in equilibrium.

Specifically, on the premise of maintaining economic growth, the realization of 'carbon neutrality' requires reducing carbon emissions in economic production activities through measures such as changing energy use structures and lowering energy consumption per unit of output value. As one of the main sources of carbon emissions, the development of manufacturing plays an important role in the process of achieving 'carbon neutrality'.

To promote the reduction of greenhouse gas emissions, mainly carbon dioxide, and to address climate change, China first proposed its "carbon peak" target for 2030 in a document submitted to the United Nations in 2015. In September 2020, President Xi Jinping put forward clear goals at the General Debate of the United Nations General Assembly: a "carbon peak" by 2030 and "carbon neutrality" by 2060. With the support of the "3060 Agenda," China has successively issued relevant documents, constructing a "1+N" dual-carbon policy system, and proposed "31 key tasks in 10 major areas" to clarify the roadmap and construction plan for "carbon peak" and "carbon neutrality." Under the guidance of multiple policy documents, the development of China's manufacturing industry will no longer come at the cost of sacrificing the ecological environment and emitting large amounts of greenhouse gases, and a green economy is expected to be truly realized.

Several industrial revolutions since the 18th century have significantly increased production efficiency and gradually broken the carbon balance between human activities and natural regulation. As a major source of global greenhouse gas emissions, manufacturing has become an important area for global transformation towards 'carbon neutrality'.

Similarly, as the world's largest manufacturing country, China has made manufacturing one of the most important engines of economic development.According to statistics, in China's carbon emission structure, the power generation and heating industries, manufacturing, construction, and transportation sectors consume a large amount of energy, accounting for more than 70% of China's total carbon emissions; among them, the energy consumption of manufacturing and construction has exceeded 20%. Industrial production and manufacturing have become the main source of carbon emissions.Therefore, for manufacturing to achieve 'carbon neutrality' and energy conservation and emission reduction, the low-carbon transformation of the manufacturing industry has become an inevitable trend. By improving the level of low-carbon technology research and development and developing clean energy, the realization of 'carbon neutrality' in manufacturing is not only an important driving force for the transformation of traditional industries but also provides an important opportunity for China's supply-side reform.

The product lifecycle refers to the entire process from raw material acquisition to design, manufacturing, assembly, final assembly, packaging, transportation, recycling, and ultimate disposal of a product. It quantitatively calculates the resources and energy consumed by the product as well as carbon emissions throughout this process. Typically, the carbon emissions throughout the full product lifecycle are also known as 'carbon footprint'.

By quantitatively evaluating the environmental impacts caused by energy, material consumption, and waste emissions throughout the product lifecycle, it is conducive to timely identification and discovery of opportunities for improving the environment in manufacturing.Three major ports: energy, equipment, and technologyEffectively reduce the generation of 'carbon footprint' within each link.

China is the world's largest consumer of energy and also the largest manufacturing country. Driven by the 'carbon neutrality' goal, there will be significant changes in the energy structure of the manufacturing industry. Currently, the proportion of clean energy in China's energy consumption structure has been showing an upward trend year by year.

In recent years, China's energy utilization efficiency has continued to improve, the structure of energy consumption has been continuously optimized, and the level of electrification is accelerating. In 2021, coal consumption accounted for 56.0% of total energy consumption, a decrease of 0.9% from the previous year; oil consumption accounted for 18.5% of total energy consumption, a decrease of 0.3% from the previous year; while in 2021, clean energy consumption such as natural gas, hydropower, wind power, nuclear power, and solar power accounted for 25.5% of total energy consumption, an increase of 1.2% from the previous year.Looking ahead, clean energy will continue to be the main source of energy for China's manufacturing industry. As a new economic growth point, the growth rate of various clean energy sources will continue to lead.

Manufacturing has characteristics such as high capital intensity and significant environmental impacts during the production process. Maintaining a basically stable proportion of manufacturing is a fundamental guarantee for the stable operation of the economy and society. Therefore, solving the energy consumption and utilization issues in the manufacturing industry holds a pivotal position in achieving 'carbon peak' and 'carbon neutrality'.

With the implementation and advancement of the dual carbon goals, manufacturing has incubated green factories to fully support the practical implementation of zero-carbon policies. A green factory refers to a facility that has achieved intensive land use, clean production, resource utilization of waste, and low-carbon energy. The ways to achieve green development in manufacturing factories include intelligent transformation, digital upgrading, and optimization of energy equipment structure. The key approach to achieving zero-carbon emissions in manufacturing factories is through the use of clean energy, which can save energy, reduce emissions, and lower energy consumption by utilizing clean energy equipment as a 'energy-saving' tool within the energy industry's equipment. Clean energy equipment, as an 'energy-reducing' weapon in the energy industry's equipment, is of great significance for optimizing the energy structure and achieving the dual carbon goals.

In the future, with the in-depth implementation of China's 'dual circulation' development strategy, the penetration rate of clean energy will gradually accelerate. The technical level of clean energy will further improve, ultimately reducing energy consumption and carbon dioxide emissions, and guiding the manufacturing industry towards a healthy and green direction.

• Sustainable development of renewable energy

The energy supply side of the manufacturing industry will achieve low-carbon transformation by reducing coal consumption, controlling oil use, increasing gas production, and leapfrogging development of renewable energy. In the future, China will continue the good trend of renewable energy development during the 13th Five-Year Plan period, continue to prioritize the development and utilization of renewable energy, combine centralized and decentralized development, and accelerate the deployment of new energy sources such as wind power and photovoltaics. It will further improve the level of clean coal utilization, strictly limit the supply capacity of new coal-fired power, significantly enhance the safety guarantee capacity, and diversify the supply structure of flexible resources.

• The demand for sustainable energy is on the rise

The sustainable energy transition of the global manufacturing industry is a pathway for the global energy sector to shift from fossil-based systems to zero-carbon ones. In December 2015, 196 countries signed the Paris Agreement and reached consensus on net-zero emission strategic plans through policy documents or regulatory laws. China's goal is to achieve 'carbon neutrality' by 2060, while the EU and the United States commit to achieving the same goal by 2050. Enterprises in various industries are also actively supporting the sustainable energy transition—As of May 2022, approximately 315 companies have publicly committed to achieving net-zero emissions by 2040. The share of sustainable energy in global energy consumption is expected to increase from 6.5% in 2021 to 11.0% in 2026. During the period from 2021 to 2050, total investment in sustainable energy (excluding hydropower) is expected to exceed $10 trillion, with more than 40% of it projected to be invested in solar photovoltaics.

To improve energy efficiency and effectively achieve emission reduction targets, enterprises within the manufacturing industry are also promoting energy conservation and emission reduction by changing the operation modes of existing equipment and processes. With the advancement of energy-saving work in the manufacturing sector, the replacement of advanced low-energy-consuming equipment with traditional high-energy-consuming ones and the optimization of traditional high-energy-consuming equipment will jointly drive a significant improvement in corporate energy efficiency levels.

Lithium battery equipment - Lithium battery equipment refers to the production machinery used in the manufacturing process of lithium-ion batteries. It encompasses all aspects of the lithium battery manufacturing process and is an essential part of lithium battery production. As an important tool for manufacturing, lithium battery equipment is widely applied in fields such as new energy vehicles, engineering power, communications, electric ships, household energy storage, and power energy storage, continuously promoting the development of the lithium battery energy storage industry and contributing to the achievement of the 'carbon neutrality' goal.

Fuel Cell - Fuel cells are chemical devices that directly convert the chemical energy of fuel into electrical energy. At the same time, fuel cells use fuel and oxygen as raw materials without mechanical transmission components. Therefore, they have advantages such as high efficiency, low emissions of harmful gases, and long service life. Fuel cells are applied in portable power sources, stationary power generation, transportation, and other fields, and are one of the important power sources for achieving low-carbon emissions.

Optimization of High Energy Consumption Equipment - Compared to the use of new equipment, industries such as heavy industry manufacturing and non-ferrous metal smelting tend to prefer traditional energy supply methods, while also undergoing transformation and optimization of existing equipment. Enterprises have made the combustion equipment-related industry more mature and standardized by developing efficient combustion equipment, accelerating the digital and intelligent transformation of equipment, and improving the level of intelligent control of equipment. This has promoted the sustainable development of the traditional combustion equipment industry.

Among the above energy equipment, hydrogen fuel cell devices are expected to become one of the biggest drivers for 'carbon neutrality' in manufacturing.Hydrogen energy is currently recognized worldwide as the most environmentally friendly and readily available source of energy, capable of achieving 'zero' emissions and is hailed as the 'ultimate clean energy'. The hydrogen energy industry is characterized by high technological content, significant capital investment, a long industrial chain, and a wide range of industries it can drive. The downstream application market for hydrogen is very extensive, including industrial manufacturing, construction, transportation, and other sectors.

The rapid development of the hydrogen fuel cell industry will bring tremendous impetus to the application of hydrogen energy in the transportation sector, which is currently the main application area for hydrogen fuel cells. Fuel cell systems are a type of power generation device that can convert chemical energy into electrical energy through an electrochemical reaction without combustion, producing no pollution during the process.

Hydrogen fuel cells are the core components of the power system of hydrogen fuel cell vehicles, having a significant impact on aspects such as the range, power performance, cost structure, and safety of hydrogen fuel vehicles. Hydrogen fuel cells are mainly used in fixed power generation scenarios such as backup power, household cogeneration systems, and distributed generation. Hydrogen fuel cell backup power has advantages such as high efficiency, environmental friendliness, rapid response, and long lifespan, and can be widely used in communication, power, internet data center rooms, medical, and public utility sectors. Household cogeneration systems generally use devices ranging from 1 to 5 kilowatts, with fewer domestic market products developed at present; distributed power stations have advantages such as strong module performance, good scenario adaptability, and good scalability, and can serve as a supplement to the main grid or be built in remote areas for independent power generation.

At the same time, hydrogen fuel cells are expected to become the mainstream of portable energy systems. Currently, most portable power systems use traditional portable power sources such as lithium-ion batteries. However, compared with hydrogen fuel cells, lithium-ion batteries have lower competitiveness in terms of service life, energy density, and power durability. Hydrogen fuel cells possess environmentally friendly, silent, and durable characteristics and are expected to become one of the ideal alternatives in the future.

• The explosive demand for fuel cell vehicles has promoted the development of demands for stacks and systems

Hydrogen fuel cells have advantages such as high power generation efficiency, low operating noise, and high reliability. They are mainly used in transportation, portable power sources, fixed power supplies, and other fields. In recent years, with the continuous adjustment and optimization of China's energy structure by the government, the hydrogen fuel cell industry has encountered tremendous development opportunities against the backdrop of the formulation and implementation of various new energy strategies such as 'carbon neutrality'.

Fuel cell commercial vehicles, due to their advantages in fuel refueling time, range, and durability, will form a long-term complementary advantage with electric vehicles, helping China transform from a major automobile manufacturing country into a powerful one. It is expected that the ownership and sales of hydrogen fuel cell vehicles in China will grow rapidly, which will greatly promote the rise in demand for hydrogen fuel cell stacks and the continuous improvement of the industrial chain.

• The application of hydrogen fuel cell markets will be more widespread.

With continuous technological breakthroughs, the application scenarios of hydrogen fuel cells will become more extensive and integrate with more different industries. Currently, China's fuel cell commercial vehicles have entered the initial stage of industrial development. Benefiting from national policy support and driven by major events such as the 2022 Beijing Winter Olympics, the fuel cell commercial vehicle industry will maintain a rapid development trend.

In the field of commercial vehicles, forklifts, buses, light and medium-duty trucks have always been at the forefront of fuel cell commercial vehicle applications. After fuel cell commercial vehicles were first applied in urban public transportation and material circulation, with the development of hydrogen energy and fuel cell technology, cost reduction, and the improvement of infrastructure, fuel cell vehicles will expand into more fields such as port terminals, mines, rail transit on specific routes, intercity logistics, intercity passenger transport, and ships. At the same time, with the increasing awareness of hydrogen fuel cell vehicles and the continuous decline in their prices, hydrogen fuel cell vehicles will gradually enter the commercialization promotion stage in the field of passenger cars.

In addition to transportation, the penetration rate of fixed and portable hydrogen fuel cell applications is expected to increase in the future. Hydrogen fuel cells, which have advantages such as environmental protection, quiet operation, and long lifespan, can be used as portable power sources for consumer electronics. In the field of stationary power generation, hydrogen fuel cells will be further applied in scenarios such as distributed power generation, household cogeneration systems, and backup power sources.

Energy conservation and emission reduction technologies - Energy conservation and emission reduction technology refers to modern manufacturing techniques that, while ensuring product functionality, quality, and cost, comprehensively consider environmental impact and resource efficiency. Compared with other countries, China's manufacturing industry has always been tasked with hard targets for economic growth, often struggling to balance efficiency and the environment. Due to the higher costs of green and environmentally friendly production processes, Chinese manufacturing typically chooses an extensive production and operation model. In recent years, as issues such as environmental degradation and resource depletion have become increasingly prominent, Chinese manufacturing has gradually begun to pay attention to the application of environmentally friendly processes and low-carbon technologies.

Specifically, energy-saving and emission-reduction technologies focus on reducing emissions and absorbing carbon dioxide throughout the entire lifecycle of products. They improve production and resource utilization efficiency in aspects such as product packaging, recycling treatment, green management, and equipment utilization, ensuring that economic development, resource utilization, and the environment remain in harmony with each other. Ultimately, this achieves low-carbon manufacturing of products.

In June 2022, the European Commission adopted a new proposal for a Carbon Border Adjustment Mechanism (CBAM), which mentions that carbon tariffs will be implemented starting from January 1st next year. The transition period for the implementation of carbon tariffs is from 2023 to 2026. Starting from 2027, the EU will officially and fully introduce carbon tariffs. Importers need to pay for the direct carbon emissions of their imported products, with prices linked to the EU ETS. For Chinese manufacturing enterprises, this will be both a challenge and an opportunity. Enterprises should seriously consider how to produce environmentally friendly products that meet international standards, while also actively promoting the low-carbon transformation of their own supply chains to cope with new requirements of international trade. Specifically in practical applications, the application of energy-saving and emission-reduction technologies in manufacturing will greatly help enterprises achieve 'carbon neutrality', reduce production costs, and make their business more sustainable.

Industrial manufacturing enterprises are an important sector in China's carbon emissions. Whether China can achieve its strategic goal of 'carbon peak' on time is directly constrained by the level of carbon emissions from industrial manufacturing. Manufacturing enterprises achieving a low-carbon transformation is not only beneficial for their own environmental protection but also helps them better cope with the volatile market.Energy conservation and emission reduction technology is an attempt by China to transform its manufacturing industry towards green and low-carbon development, and it is also an important means for China to achieve the 'carbon neutrality' goal. It will accelerate the gradual transformation of traditional Chinese manufacturing from a resource-intensive one to an advanced technology-intensive one, ultimately effectively enhancing the competitiveness of China's manufacturing industry in the international market.

Digital Energy Conservation and Emission Reduction Technology - Against the backdrop of the '3060 Dual Carbon' goal, digital technologies and industrial systems represented by big data, artificial intelligence, fifth-generation mobile communication (5G), industrial Internet, cloud computing, etc., will be deeply integrated with the real economy, becoming an important engine for low-carbon development. In August 2022, the Ministry of Industry and Information Technology released the 'Implementation Plan for Carbon Peak in the Industrial Sector', proposing to adhere to innovation-driven development and digital empowerment, promote research and development of major low-carbon technologies, processes, and equipment, strengthen the innovative application of new-generation information technology in green and low-carbon fields, and achieve digitalization, intelligence, and empowerment for greening. The digital transformation in the manufacturing sector will effectively reduce carbon emissions during production through optimizing production processes, upgrading industrial structures, and improving environmental governance.

• The standardization system for energy conservation and emission reduction is gradually being implemented.

Energy conservation and emission reduction technologies, through technological innovation, transform and phase out backward equipment and production methods, forming a manufacturing industry structure conducive to sustainable energy use and environmental protection. Through the standardization system for energy conservation and emission reduction, it can effectively empower the research and development, commercial implementation, and industrial application of related technologies. It covers all aspects of manufacturing production, including production, recycling, and utilization, playing an important role in improving raw material and energy utilization efficiency, reducing pollutant emissions, promoting enterprise technological innovation and industrial upgrading, optimizing product structure, etc. In the future, China's energy conservation and emission reduction standards will be gradually implemented. According to national, industry-specific, and local standards for energy conservation and emission reduction, quantifiable emission targets can be achieved through relevant technical means, helping to achieve 'carbon neutrality' as soon as possible.

• Energy conservation and emission reduction technologies will develop towards comprehensive solutions.

In recent years, a number of energy-saving and emission-reduction technologies have begun to be widely applied in all aspects of production and manufacturing, such as waste heat power generation technology, waste-to-energy technology, motor energy-saving technology, frequency converter energy-saving technology, soft start technology, etc. However, most of these technologies are only targeted at a specific link in production and manufacturing and have not yet formed an overall solution. In the future, energy-saving and emission-reduction technologies will develop towards comprehensive solutions, achieving low-carbon or zero-carbon development of the entire production and manufacturing industry chain by combining multiple technologies. By integrating green big data technology, artificial intelligence technology, Internet technology with the thinking of Industry 4.0, we can deeply empower the green transformation and reform of the manufacturing industry.