Driving Down a New Road: New Energy Vehicles in China’s Green Transition

China is driving down a new road, emerging at the forefront of the NEV market.

By Deborah Lehr, as featured on The Diplomat

 

China has rapidly emerged at the forefront of the new energy vehicles (NEV) market — not by choice, but by necessity. As the largest carbon emitter in the world, lowering energy emissions from transportation is a core part of its war against pollution. The Chinese government mandated that by 2025, one out of every five cars sold in China must run on alternative fuel. Transportation accounts for 10 percent of China’s greenhouse gas (GHG) emissions so transforming this sector could have an important impact on reducing the country’s carbon emissions. Beyond the production mandates, innovative green finance mechanisms could be applied to NEVs, or electric car sales to encourage the intended results of promoting sustainability.

In the past three years, China has emerged as a trendsetter in the growing field of green finance. Since China launched its green bond market in late 2016, it has grown to be one of the world’s largest at $36.4 million. The national carbon market, established in December 2017 with trading in just one industry — power — has already eclipsed the European Union’s carbon exchange in operation since 2005. China added green finance to the agenda of the G20 under its leadership in 2016 to help create the international framework for sustainable finance.

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