Boosting renewable energy growth through responsible value chains: A case study from China
Over half of the carbon emissions in the renewable value chain comes from upstream activities. Image: Unsplash/Nuno Marques
- Meeting the Paris Agreement’s 1.5 degrees Celsius ambition requires a profound shift in energy production and consumption, with renewable energy transitions contributing over a quarter of all efforts.
- Over half of the carbon emissions in the renewable energy sector come from upstream activities. As global renewable energy capacity rapidly expands, responsibly delivering net-zero, trusted and circular energy is becoming a crucial growth driver for the sector.
- The World Economic Forum’s Centre for Energy and Materials working group – Scaling up Renewable Energy in China – with the International Energy Community China and the Clean Power, Grids and Electrification initiative, analyzes China’s renewable energy value chain with recommendations for companies to achieve net-zero emissions.
Recent research indicates that the global average temperature in 2023 may have already exceeded 1.5 degrees Celsius above pre-industrial levels. This underscores the urgency for all governments, particularly major emitters, to enhance their nationally determined contributions for emission reduction, in order to meet the goals of the Paris Agreement.
At the 2023 United Nations Climate Change Conference (COP28), parties achieved the United Arab Emirates Consensus on Global Stocktake. This milestone includes dialogue around the transition from fossil fuels with targets to triple current renewable energy and double energy efficiency.
China’s carbon emission in 2023 was among the top country emitters and was the leading producer of renewable energy. Its emissions reached a staggering 12.6 gigatons, accounting for 35% of the global total. Furthermore, China’s installed renewable energy capacity surged to 1.45 terawatts by the end of 2023, surpassing thermal power installed capacity for the first time.
As China is well into its 14th five-year plan and works towards its long-term goals for 2035, the acceleration of renewable energy development is a critical step towards achieving its ambitious carbon neutrality target by 2060. However, despite renewable energy’s low carbon nature, emissions associated with its value chain must not be overlooked amid its rapid expansion.
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The energy value chain and emissions
Over half of the carbon emissions in the renewable energy value chain stem from upstream activities.
- Upstream: During upstream activities, raw material procurement, processing, and equipment manufacturing are critical stages contributing to increased carbon emissions. These processes typically involve high energy consumption and reliance on non-renewable energy sources.
- Midstream: While carbon emissions from energy production, operations, and distribution are relatively lower in the midstream segment, the energy consumption associated with operations, maintenance and long-distance transmission should still be addressed.
- Downstream: End-user consumption at the downstream end of the value chain significantly influences the product’s lifecycle carbon emissions. Inefficient battery usage and inadequate recycling of waste materials are primary factors contributing to elevated carbon emissions.
Building a responsible renewable energy value chain
Forging a responsible value chain for renewable energy companies is a pivotal catalyst for competitive advantage and a vital contribution to global climate goals.
Reaching net-zero emissions across the value chain is complex and demanding, requiring renewable energy companies to dedicate themselves to strategy planning, operational optimization and ecosystem partnerships.
The Scaling up Renewable Energy in China working group under the World Economic Forum’s Centre for Energy and Materials recommends that these companies take immediate action to enhance renewables’ low-carbon nature, accelerate responsible transformations in the value chain and align the transition to renewable energy with economic growth and decarbonization goals.
1. Measure and report on Scope 3 emissions
- Establish an emissions baseline: Set a clear baseline for emissions covering the entire value chain activities, including scope three emissions.
- Align standards: Ensure the alignment with internationally recognized standards, such as the Greenhouse Gas Protocol (GHG Protocol), to increase the data accuracy and comparability.
- Improve transparency and communication: Regularly publish reports on value chain emissions and maintain transparent communication with stakeholders, including investors, consumers and regulators.
2. Engage suppliers to decarbonize collaboratively
- Strengthen building supply chain partnerships: Establish collaborative relationships with suppliers to set shared emissions reduction targets.
- Provide training and technical support: Offer training and technical assistance in low-carbon transformation, share best practices with suppliers, help them improve energy efficiency, and increase the adoption of clean technologies.
- Establish incentive mechanisms: Motivate suppliers to reduce emissions through incentives such as preferential pricing and extended contracts and prioritize suppliers actively engaged in decarbonization efforts.
3. Improve energy efficiency and transit to 100% renewable
- Improve energy efficiency: Innovate and optimize processes to decrease energy consumption intensity in production and operations.
- Procure renewable energy: Transit to 100% renewable energy by increasing the use of wind and solar power.
- Secure renewable energy certificates: Purchase recognized renewable energy certificates to support the development of renewable energy projects.
Leading by example
Some successful results accelerating decarbonization can already be seen as a result of collaborative actions across the value chain.
Science-based targets
“As a renewable energy company, if we operate in a responsible way, producing solar with solar, manufacturing green with green, it will create a tremendous force for good in business,” says Chenchen Yao, head of environment, social and governance at JinkoSolar.
JinkoSolar leads in the the global photovoltaic sector as it is the first in its sector to have its short-term, long-term and net-zero emission reduction targets validated by the Science Based Targets initiative (SBTi). SBTi is an organization that helps companies determine how much and how quickly they need to reduce their greenhouse gas emissions to prevent the worst effects of climate change.
JinkoSolar aims to fully adopt renewable energy by 2030 and is actively working with its partners to reduce emissions throughout its value chain. Specifically, the company seeks to decrease emissions from purchased goods and services by 58.2% per megawatt of solar-related products produced by the year 2032.
JinkoSolar explores effective approaches to reducing the environmental impact of products throughout their entire lifecycle – including research and development, procurement, manufacturing, transport and recycling – and embeds greenhouse gas emissions into supplier admission, management and risk assessment processes to drive supply chain sustainability improvement for the renewable energy industry.
As a renewable energy company, if we operate in a responsible way, producing solar with solar, manufacturing green with green, it will create a tremendous force for good in business.
”Dual carbon goals
“Sunwoda is dedicated to the deep recycling of materials. We collaborate with ecosystem partners in technology innovation and battery recycling management, offering solutions for diverse renewable energy application scenarios, driving progress and development in the renewable energy industry,” says Rui Liang of the company where he is vice president and chief sustainability officer.
Sunwoda has defined its sustainability strategy around China’s dual-carbon goals. The company is committed to reaching a carbon peak by 2029 and neutrality by 2050 in operations, and it aims to reduce societal carbon emissions by 6.84 million tons by 2030 and 42.37 million tons in transportation by 2040.
The company implements a complete lifecycle carbon reduction strategy, powering manufacturing with renewable energy via photovoltaic and storage systems and pursuing technological advancements in raw materials, battery data management and recycling with partners to lower carbon across the battery supply chain and support the energy shift for various industries.
Sunwoda is dedicated to the deep recycling of materials. We collaborate with ecosystem partners in technology innovation and battery recycling management, offering solutions for diverse renewable energy application scenarios, driving progress and development in the renewable energy industry.
”Future opportunities
Regions with potential for renewable energy are typically areas rich in biodiversity. Mitigating the impacts of the renewable energy value chain on nature and biodiversity – from risks associated with raw material extraction to daily operation effects on marine and terrestrial habitats – is crucial for renewable energy companies dedicated to shifting from net-zero to net-positive.
Amidst the competitive landscape of the renewable energy sector, leveraging value chain synergies to establish a responsible ecosystem gives industry players a strategic advantage. As the world transitions towards net-zero emissions, the renewable energy industry must stand poised to lead with innovation, driving sustainable growth and fundamentally transforming the global energy paradigm.
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