SHENZHEN: NEW TRAILS FOR A REFORM PIONEER 

By Huang Ping

Since the Industrial Revolution, the Earth’s ecological environment has dramatically deteriorated due to human activity. Global warming has caused frequent extreme weather disasters. The surging COVID-19 pandemic has posed an unprecedented challenge for global public governance. Against this backdrop, climate change, sustainable development, and low-carbon transformation have become central topics of international political discourse. As the world’s second largest economy and a major carbon emitter, China is actively assuming its international responsibilities. In September 2020, Chinese President Xi Jinping solemnly pledged at the 75th UN General Assembly that China would strive to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060 (“carbon peaking and neutrality” goals).

In the process of achieving these goals, cities are playing an increasingly crucial role. According to statistics from the UN Human Settlements Programme, cities consume 78 percent of the world’s energy while releasing over 60 percent of the world’s greenhouse gas emissions. The 21st UN Climate Change Conference in 2015 identified cities as the main battlefield for tackling climate change. The 3rd UN Conference on Housing and Urban Sustainable Development (Habitat III) in 2016 adopted the New Urban Agenda as a program for urban sustainable development for the next 20 years.

As early as 2010, China started pilot work on low-carbon cities. Now, 81 pilot cities have been listed for low-carbon development, low-carbon industry, low-carbon innovation, and low-carbon governance. As one of China’s first pilot cities for low-carbon development, Shenzhen has accumulated considerable successful experience.

Productive interaction between government and enterprises in the city has set an impressive example for low-carbon urban development

Low-Carbon Practice

Shenzhen International Low Carbon City (ILCC), located in the city’s Longgang District, was officially launched at the end of 2012 as a key area for low-carbon development and a flagship project of China-Europe sustainable urbanization cooperation. The ILCC’s buildings and surrounding environment have been renovated to the three-star level, the highest of the national green building standards, adopting green and low carbon technologies such as green buildings, clean transportation, sewage recycling, waste recycling, and low-carbon energy. After the “carbon peaking and neutrality” goals were declared, the Longgang District government started working on planning documents for low-carbon development including a comprehensive development plan and an action plan to make ILCC a national pilot demonstration zone for carbon peaking and neutrality.

In the realm of construction, Shenzhen promulgated and implemented China’s first building energy efficiency regulation in 2006, and it was the first Chinese city to comprehensively enforce building energy efficiency standards in new civil buildings. In 2013, Shenzhen promulgated China’s first local government regulation on green building to promote the comprehensive development of green buildings. So far, 1,481 projects in the city, with a total construction area of over 140 million square meters, have been determined to meet the Chinese standards for green building evaluation. Eighteen of them won the National Green Building Innovation Award.

In the financial sector, Shenzhen was one of China’s first pilot cities to launch carbon emissions trading. To provide institutional guarantee for the practice of carbon emission rights trading, the municipal government promulgated two documents regulating management of carbon emissions and temporary measures for management of carbon emissions trading. Today, a total of 706 enterprises in the city are active in the carbon market, covering 31 sectors such as manufacturing, electricity, water, gas, public transportation, airports, and sea ports.

In the transportation sector, Shenzhen was one of China’s first pilot cities for the demonstration and promotion of new energy vehicles as well as the world’s first city to fully electrify its bus and taxi fleet. As of September 2020, the number of registered new energy vehicles in Shenzhen had reached 442,800, accounting for 12.6 percent of the total motor vehicles of the city. In March 2021, the municipal government promulgated a work plan for promoting usage of new energy vehicles across the city. According to the plan, during the 14th Five-Year Plan period (2021- 2025), the proportion of new energy vehicles in the city’s new registrations (excluding replacement and renewal) will reach about 60 percent. By 2025, the city will register around a million new energy vehicles.

BYD’s Rise in Shenzhen

A city’s industrial development is often driven by leading local enterprises. Shenzhen’s new energy vehicle development has always been closely associated with the rise of the BYD Auto Industry Company.

In 1995, Wang Chuanfu, general manager of PKCELL (a battery manufacturing company), resigned and founded BYD Technology Company, specializing in the R&D of batteries. By 2003, BYD became the world’s second largest cell phone battery manufacturer, with its Li+, Ni-Mh, Ni-Cd batteries taking third, second, and first places respectively in terms of market share and accounting for 23 percent of global market share.

A turning point arrived in 2003, when BYD acquired the Xi’an Tsinchuan Auto Company and founded BYD Auto Industry Company. In September 2006, the company kicked off the construction of a modern production base in Shenzhen with an annual capacity of 200,000 automobiles which created as many as 40,000 job opportunities. The company’s roots in the city run deep.

With its expertise in batteries, electric motors, electronic controls, chips, and the broader industrial chain, BYD launched F3DM, the world’s first plug-in hybrid automobile, and began operations in the new energy vehicle market in 2008. In 2010, BYD offered solutions for “urban battery-electric buses/taxis” and took the lead in Shenzhen’s demonstration operations. When Shenzhen hosted the 26th Summer Universiade in 2011, as the exclusive vehicle supplier of the event, BYD brought 200 K9 battery-electric buses into operation across the city, becoming the world’s first enterprise to facilitate commercial usage of new energy buses. Beginning in 2015, BYD has topped global sales of new energy vehicles for four consecutive years.

BYD electric buses at a bus terminal in Shenzhen. (BLOOMBERG VIA GETTY IMAGES)

Government-Enterprise Interaction

The rise of BYD would not have been possible without support from Shenzhen, a special economic zone that provided the soil for entrepreneurs to innovate. “Shenzhen wouldn’t have succeeded without the country’s reform and opening-up policies,” BYD founder Wang Chuanfu once opined. “Similarly, BYD wouldn’t have succeeded without the support of the city.”

When BYD was founded in 1995, Shenzhen was amidst the first round of industrial transformation and structural adjustment from labor-intensive processing and manufacturing to high-tech industry led by electronic information. BYD was categorized as a new material and new energy enterprise, making it eligible for priority development status with the municipal government. The company received major support from the government in its initial stage.

After the turn of the century, the municipal government of Shenzhen directed its attention to developing the local auto industry, and the BYD Auto Industry Company was established. In June 2003, the municipal government introduced a strategy of “moderately developing heavy industry” and began to formulate special plans for a number of industries including automobiles and related electronic products. Against this backdrop, BYD’s new production base was constructed in Shenzhen. “Shenzhen decided to moderately develop heavy industry, including automobiles,” recalled an industry insider. “However, there were no joint ventures of that kind in the city at that time. China was lagging far behind the West in fuel-powered car manufacturing anyway. Considering its advantages in the electronics industry which already had a complete industrial chain for rechargeable batteries and electronic components, the city decided to invest in electric vehicles. The municipal government reached out to BYD about building a new production base in Shenzhen.”

BYD received strong support from the Shenzhen government to construct the new base. Government departments in Longgang District opened “green channels” to ensure rapid progress of the key project. Neighboring Pingshan District, where some of BYD’s production facilities are located, was honored as a “national demonstration area for the creation of well-known brands in the new energy vehicle industry,” helping shape a new energy industry cluster composed of nearly 300 enterprises in the industrial chain.

In 2010, BYD put forward a creative solution of “battery-electric buses/ taxis” to combat urban air pollution. The proposal was initially challenged for a number of reasons like battery safety, expensive construction of charging facilities, public acceptance, and others. However, the idea was readily accepted by the municipal government of Shenzhen, which actively carried out cooperation with the company to promote building an electric public transit system across the city. The Shenzhen Bus Group and BYD jointly established Pengcheng, China’s first battery-electric taxi company. The company encountered a number of difficulties in the early stages of its operation including high cost of vehicles, insufficient recharging facilities, and low passenger popularity. In the first half of 2013, Pengcheng turned things around and now makes profits of 20 million yuan (US$3 million) a year. “The Pengcheng Model” has been copied by other Chinese cities.

A decade of hard work has resulted in remarkable achievements in the promotion of new energy vehicles in Shenzhen, providing valuable experience for the low-carbon transformation of other Chinese cities and earning Shenhen a sterling international reputation. Shenzhen has been awarded as a “global urban climate leader” for its contribution to promoting the use of new energy vehicles by the C40 Cities.

It would be hard to dispute Shenzhen’s role in nurturing the development and growth of BYD, which in turn boosted the city’s low-carbon transformation as a local leading enterprise of new energy vehicles. The positive interaction between the government and the enterprise forged the Shenzhen model of low-carbon urban development.

Low-carbon transformation is not only about reducing carbon emissions, but a central developmental issue. It is crucial to look at carbon peaking, carbon neutrality, and sustainable development in a comprehensive and coordinated manner and integrate the targets into the grand strategy for ecological progress. Cities have vital roles to play in achieving low-carbon development.

Chinese cities’ exploration of low-carbon development paths will have a direct bearing on the country’s success or failure in achieving the “carbon peaking and neutrality” goals, avoiding the “middle-income trap,” and promoting wider sustainable development. Shenzhen’s attempts have provided a useful reference for low-carbon transformation in other cities.

Urban low-carbon transformation will be difficult, but it’s definitely not impossible. Cities of different sizes should be fully aware of the specific opportunities and challenges they face in the new energy revolution, learn from pilot cities’ experiences and lessons, and explore their own unique paths of low-carbon transformation.

About the author: Dr. Huang Ping is a research associate at the Urban Institute of the Interdisciplinary Centre of the Social Sciences at the University of Sheffield and a visiting scholar at the Advanced Institute of Global and Contemporary China Studies of the Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen).

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