2024 Wishing everyone a prosperous start to the year! May you be full of energy and spirit!
This year's Spring Festival was a long holiday, originally thinking of taking a good break, not writing the opening article for the year. But on New Year's Eve, a colleague's New Year greeting specifically mentioned looking forward to the post-holiday "Carbon Neutrality 2024", so I had no choice but to write it. So, as always, Carbon Footprint's opening article has arrived. "Carbon Neutrality 2024" hopes to review 2023 together with Carbon Footprint's readers and followers and look forward to 2024. The article mainly discusses the following important topics:
1. Top Ten Events in the Carbon Circle in 2023
2. How Long Will Carbon Neutrality Remain Relevant?
3. What Is the Future of Carbon Footprints?
4. Will "Greenwashing" Become a Stumbling Block for Carbon Neutrality?
5. What Will Happen in 2024?
Top Ten Events in Carbon Neutrality in 2023
What memorable important events happened in 2023? Let's take a look back at this unforgettable 2023 (lunar year). After reviewing the data from the whole year of 2023 and all the important industry information that occurred in the carbon circle up to the Spring Festival in 2024, it was found that there was a dense release of major news, especially in the second half of 2023, particularly in January 2024, and even just a few days before the Spring Festival.
1. 2023 Was the Warmest Year on Record Globally
The World Meteorological Organization recently confirmed that 2023 was the warmest year on record, with an annual average temperature 1.45 ± 0.12 °C higher than pre-industrial levels (1850-1900), significantly exceeding the warming level of the previous warmest year and further approaching the 1.5°C warming target set by the Paris Agreement. Details: Confirmed! 2023 Was the Warmest Year on Record Globally!
2. SBTi Announced Exclusion List, Notable Companies Such as Amazon Were Included
In August 2023, the Science Based Targets initiative (SBTi) updated its list: companies that submitted emission reduction commitments to the organization but did not pass the target verification within two years were marked with a 'Commitment Removed' label. Over 121 companies (21 from China), including Amazon, Yahoo Japan, Trina Solar, Qinhuai Data, and ZTO Express, were included in the exclusion list.
The exclusion action by SBTi caused a certain negative impact on the companies involved and brought significant repercussions to the industry. Enterprises need to make their carbon reduction targets or carbon neutrality paths increasingly feasible and serious!
3. Apple Launched Its First Carbon Neutral Product, Causing Industry Buzz
On September 13, 2023, Apple launched its first carbon neutral product - the Apple Watch, which immediately sparked the biggest buzz in the industry upon its release. Earlier, Apple announced its goal to achieve carbon neutrality across all product lifecycles by 2030, and the launch of the first carbon neutral Apple Watch represents a solid step towards this ambitious goal in 2030.
The Carbon Footprint team also made an interpretation right away: Apple w0w
The launch of Apple's first carbon neutral product excited the entire industry and has positive value in driving other peer companies and Apple's entire supply chain towards carbon neutrality.
4. CBAM Entered Transition Period
On October 1, 2023, the European Union's Carbon Border Adjustment Mechanism (CBAM) officially entered the transition period and will come into effect in 2026. The original submission deadline for the first report was extended by one month. Despite much attention and controversy, CBAM will continue to move forward with some bumps along the way.
5. Four New Methodologies Released Under CCER
On October 24, 2023, the release of four new methodologies meant that the door of CCER would reopen after a seven-year stagnation period. However, the newly announced methodologies still prioritize stability. A notable feature is that all new methodologies require registration with the Ministry of Ecology and Environment.
6. NDRC Jointly with Five Ministries Issued "Opinions on Accelerating the Establishment of a Product Carbon Footprint Management System"
In November 2023, the National Development and Reform Commission (NDRC) jointly with five ministries issued "Opinions on Accelerating the Establishment of a Product Carbon Footprint Management System," proposing quantifiable goals. By 2025, standards for calculating 50 key products should be issued, reaching 200 by 2030, and a batch of carbon footprint background databases should be established in key industries.
7. COP28 Concluded in Dubai
On November 30, 2023, the United Nations Climate Change Conference COP28 was held in Dubai, attracting over 100,000 participants worldwide to Dubai. This was the first COP conference since the pandemic, providing a global climate inventory since the Paris Climate Conference. Key outcomes of the conference included commitments such as "transitioning away from fossil fuels" and partial climate funding. COP29 will be held in Baku, Azerbaijan, and the global ambition to combat climate change needs concrete implementation.
8. CCER Officially Restarted After Seven Years
The launch ceremony of the national voluntary greenhouse gas emission reduction trading market (CCER market) was held in Beijing on the morning of January 22, 2024. Politburo Standing Committee member and State Council Vice Premier Ding Xiang attended the event and announced the launch of the national voluntary greenhouse gas emission reduction trading market. Following the opening of the national carbon emission trading market in July 2021, the official restart of the CCER market will complete an important "puzzle piece" missing from our national carbon emission trading system.
9. Li Qiang Signed the State Council Order, Announcing the "Interim Regulations on Carbon Emission Trading Management"
On February 4, 2024, Premier Li Qiang signed a State Council order, announcing the "Interim Regulations on Carbon Emission Trading Management", which will come into effect on May 1, 2024. This means that carbon trading finally has a legal basis.
10. The Shanghai Stock Exchange, Shenzhen Stock Exchange, and Beijing Stock Exchange Simultaneously Released Major Guidelines — "Guidelines for Self-Regulation of Listed Companies — Sustainability Reports (Trial Version for Public Comments)"
On February 8, 2024 (the twenty-ninth day of the first lunar month), under the unified guidance of the China Securities Regulatory Commission (CSRC), the Shanghai, Shenzhen, and Beijing stock exchanges simultaneously released sustainability report guidelines. This means that China's ESG and carbon disclosure will gradually become standardized and mandatory, which is a significant benefit for the industry!
Today is the first working day of the Dragon Year 2024. Looking back on 2023, what is the most memorable event of the year for you? What do you think about its impact? We welcome your heartfelt sharing.
How Long Will Carbon Neutrality Remain Relevant?
The dual carbon goals have been proposed for more than three years. In these three years, the entire industry has experienced unimaginable rapid growth, whether in terms of the number of enterprises, scale, or the driving forces behind corporate participation in carbon neutrality. Along with this rapid growth, the carbon neutrality effort has also encountered many negative voices and phenomena, such as the "campaign-style carbon reduction" when the dual carbon goals were first proposed, the energy crisis brought about by the Russia-Ukraine war leading people to doubt the longevity of carbon neutrality, the economic slowdown due to the pandemic causing delays in carbon neutrality efforts, including recent "greenwashing" and severe overcapacity in new energy production, all of which have impacted the long-term healthy development of carbon neutrality.
Carbon neutrality has indeed been hot in recent years, but how long can it remain relevant? Perhaps everyone has this doubt in their hearts.
The author believes that carbon neutrality is a global endeavor that will last at least 50 years, if not a century or more. Carbon neutrality is built on the foundation of the global challenge of addressing climate change. As mentioned in the earlier major events:
We have been shouting about the Paris Climate Agreement and the 1.5-degree target for years, and it seems almost destroyed at this moment, fortunately, there is a sentence at the end:
Speaking about global efforts to address climate change may seem distant, so let's talk about a case close to home. Some cities in China, such as Nanchang, will experience a deadly rapid temperature drop in the coming week. The spring warmth after the Lunar New Year will turn into freezing cold.
The temperature in Nanchang will drop sharply from 29 degrees to 0 degrees in the coming week; it is abnormal for temperatures to rise to 29 degrees after the Lunar New Year, and it is even more abnormal for them to drop sharply to 0 degrees a week later. Extreme weather disasters are also an important challenge that all professionals in the carbon neutrality field must address.
Of course, the author has always believed that the greater the challenge, the greater the opportunity. Whether for enterprises in various industries of society or organizations engaged in the carbon neutrality industry, responding to climate change is a long-term and arduous task. This process will reshape many industries, and many innovative enterprises can seize opportunities for rapid development. At any time, only enterprises that truly create value for society can gain opportunities for development.
The carbon sector has experienced ups and downs for over two decades, with both the frenzy and decline during the CDM era; the excitement and stagnation of the establishment of the Chinese carbon market; and the significant impact and subsequent cooling of enthusiasm following the proposal of carbon neutrality goals. Any industry has its cyclical nature. The author always feels that there are bigger opportunities ahead for carbon neutrality, and we all need to have sufficient determination and be well-prepared. Perhaps the upcoming US presidential election will bring another wave of changes to the carbon neutrality sector, but the overall trend cannot be reversed.
How long will carbon neutrality remain relevant? For most newcomers to this industry, carbon neutrality is a sunrise industry that can sustain us until retirement, and the investment of time, effort, and financial resources in it is expected to yield returns far surpassing the social average.
Recently, the author has learned about some very positive industry developments globally:
In the capital markets, American carbon neutrality technology companies like Watershed and Persefoni have recently completed C-round financing, indicating that the American capital market remains very optimistic about the carbon neutrality and carbon management industries!
- On February 1, 2024, Watershed in the United States announced the completion of a $100 million Series C funding round, valuing the company at $1.8 billion. Watershed disclosed that the key to this round of financing is the improvement and maturity of mandatory carbon disclosure markets, giving investors more confidence in the carbon management industry.
- In the second half of 2023, another American carbon management technology company, Persefoni, also announced the completion of a $50 million Series C funding round, focusing on heavy investment in AI + Carbon. Leading Climate Tech Company, Persefoni, Announces $50 Million Series C1 and Next AI Advancement.
The movements in the capital market generally serve as a barometer for the flow of funds throughout society. Where money moves, there will be more vitality. In 2023, apart from AIGC, the hottest industries should still be carbon neutrality and new energy.
Apart from the capital market, policy support has also been favorable, especially with a series of significant actions before the Spring Festival, making the entire industry excited and calling for All-in 2024!
The team has compiled a list of recent favorable policy documents:
💡In October 2023, the State Administration for Market Regulation released the "Opinion on Coordinating the Use of Quality Certification Services to Support Carbon Peak and Carbon Neutrality Work." Among them:
Article Fourth, Accelerate the Establishment of Direct Carbon-related Certification Systems:
"Based on the needs of carbon reduction, carbon removal, and carbon disclosure and the construction of standards, establish and improve a certification system directly related to carbon emissions around the requirements for low-carbon transformation of industrial and supply chains. Establish a state-unified product carbon labeling certification system in an orderly manner at the product level, unify the certification catalog, implementation rules, and certification marks, and gradually carry out product carbon footprint and other carbon labeling certifications according to the principle of 'establish one when mature.' At the organizational and service levels, gradually establish carbon-related management systems and service certification systems."
Eighth Article: Carry Out Certification Pilots and Demonstrations
Encourage regions and industries with conditions to lead the way based on practical experience, explore pilot programs for product carbon footprint and carbon neutrality certification in key areas and mature industries, and accumulate experience for the establishment of carbon peak and carbon neutrality certification systems. Support leading enterprises to play a 'leading role' and create a batch of quality certification services industry and regional carbon peak and carbon neutrality demonstration projects in key areas.
💡In November 2023, the NDRC jointly with five ministries issued "Opinions on Accelerating the Establishment of a Product Carbon Footprint Management System," proposing quantifiable goals. By 2025, standards for calculating 50 key products should be issued, reaching 200 by 2030, and a batch of carbon footprint background databases should be established in key industries.
💡On February 8, 2024, the Shanghai Stock Exchange, Shenzhen Stock Exchange, and Beijing Stock Exchange simultaneously released major guidelines — "Guidelines for Self-Regulation of Listed Companies — Sustainability Reports (Trial Version for Public Comments)"
The third point is to strengthen disclosure requirements related to carbon emissions. Listed companies need to disclose governance, strategy, and other contents related to addressing climate change based on four core aspects. The Guidelines also propose requirements for disclosing climate adaptability, transition plans, total greenhouse gas emissions, mitigation measures, and carbon emission-related opportunities.
💡On February 9, 2024 (New Year's Eve), the General Office of the State Council issued the "Opinions on Accelerating the Construction of a Waste Recycling Utilization System" (Guo Ban Fa [2024] No. 7).
(Ten) Strengthen the recycling and utilization of waste power batteries. Strengthen the traceability management of new energy vehicle power batteries. Organize and carry out actions for producer responsibility recycling targets. Establish and improve standards systems for ecological design, carbon footprint accounting, etc., of power batteries, actively participate in the formulation of international standards for the recycling of power batteries, and promote international cooperation and mutual recognition of standards.
(Nineteen) Improve the application mechanism for recycled materials. Improve the standard system for recycled materials. Research and establish a certification system for recycled materials, promoting international cooperation and mutual recognition. Conduct research on standards and methods for carbon footprint accounting of key recycled materials.
The direction and trend of responding to climate change are certain, but the paths and methods are uncertain. At the National Ecological and Environmental Protection Conference last July, President Xi Jinping mentioned in his speech that "Our commitment to the 'dual carbon' goals is unshakable, but the path and way, rhythm and intensity to achieve these goals should and must be decided by ourselves, and will not be dictated by others."
The future trend of carbon footprints is what?
This module mainly discusses an important aspect of carbon neutrality, namely the calculation of carbon footprints.
Currently, there are two main schools of thought in the field of carbon footprint accounting. One school believes that carbon footprints should be sufficiently scientific and detailed, describing unit processes through the compilation and quantification of input and output data, tracing back to original data such as mining operations and crop production. This method is generally applicable to basic energy or primary materials and is defined as a "process accounting" approach. The other school seeks rapid accounting, sacrificing some degree of data transparency but enabling quick widespread coverage, helping various industries to participate in carbon footprint calculations, carbon reduction, and carbon neutrality processes, such as the EEIO database. We define this approach as "rapid accounting," which is generally applicable to finance, consumer, technology, and other end-user industries.
Which of these two schools of thought represents the future? Since the dual carbon goal was proposed, it has sparked increasingly enthusiastic discussions.
From the observation of the Carbon Footprint team, both schools are needed; both can play their characteristics and advantages and can complement each other to a certain extent.
Very solid base-level emission factors are the foundation supporting the carbon management of various industries, requiring very scientific and rigorous measurement and calculation, after all, infrastructure-level data play a crucial role in realizing China's dual carbon goals.
While rapid accounting endows feasibility for achieving the dual carbon goals and calculating, reducing, and neutralizing carbon across society, the diversity of industries requires a universally applicable accounting method and emission factors to promote active participation of all sectors of society in the process of carbon neutrality.
From the perspective of actual business needs, our team believes that brands care more about the endorsement of product carbon footprints and how to convey them to consumers, while manufacturing enterprises with EU export business and subject to carbon footprint accounting requirements value the recognition of their calculated product carbon footprints in the EU. With the advancement of CBAM and the gradual deepening of carbon footprint requirements under regulations such as the EU Battery Law, an increasing number of companies are expected to feel more real pressure and motivation.
Will "greenwashing" become
a "roadblock" to carbon neutrality?
In recent years, discussions about corporate "greenwashing" have escalated, including information suggesting that the EU will prohibit companies from achieving carbon neutrality through Offsetting. This sounds almost unbelievable—will the carbon reductions developed by carbon asset companies over so many years just go to waste? Many companies, even those who genuinely want to make substantive efforts around carbon neutrality and ESG, are becoming increasingly cautious due to fears of being accused of "greenwashing" and lacking sufficient confidence. "Greenwashing" seems to have become a "roadblock" for global companies advancing their carbon neutrality efforts. The author believes this will have a significant impact on the global progress towards carbon neutrality.
The term "greenwashing" was first coined by American environmentalist Jay Westerveld in an article in 1986. He criticized hotels that encouraged guests to reuse sheets and towels under the guise of environmental protection rather than adopting environmentally friendly waste disposal methods. Westerveld believed that this practice was aimed at reducing laundry costs by hotel owners rather than minimizing their environmental impact. In China, "greenwashing" is often used to describe when a company, government, or organization claims to be environmentally friendly but acts contrary to these claims, referring to false environmental propaganda.
The introduction of the concept of "greenwashing" is beneficial for promoting sustainable development, helping to eliminate false environmental claims in society. After the early clamor, the carbon neutrality industry will gradually become purified, entering an era where good practices drive out bad ones. "Greenwashing" can indeed help drive out bad practices, at least serving as a deterrent.
The introduction of "greenwashing" is certainly well-intentioned, aiming for healthy and orderly development of carbon neutrality and green environmental protection. Becoming a "roadblock" for corporate carbon neutrality is definitely not the original intention of "greenwashing."Carbon neutrality requires the extensive participation of most companies, and providing a certain level of tolerance to companies during the initial stages of industry development is also necessary. Active deception cannot be tolerated, but many companies genuinely wish to contribute to low-carbon efforts. However, since carbon neutrality initiatives are often led by marketing or brand PR departments, the fundamental aim is to enhance brand reputation and business growth, leading many companies to inadvertently engage in "greenwashing."
For companies, avoiding "greenwashing" becomes particularly important. To avoid "greenwashing," the most effective method is to truly be "green." The CREOS carbon neutrality methodology promoted by Carbonfootprint over the years is based on this logic and sequence, encouraging companies to reduce first, then offset, and finally speak confidently about their efforts. The author consistently advises companies: "As long as you do solid carbon accounting, implement genuine carbon reduction, and communicate your carbon efforts effectively, while focusing on the performance of leading domestic and international companies, especially peers, you will be fine."
With the introduction and application of standards like ISO-14068, the threshold for companies to achieve carbon neutrality will become higher, emphasizing "completion" over "commitment," which can help eliminate some "greenwashing" phenomena to a certain extent.
For more information, please refer to: Guide for Chinese Enterprises to Avoid "Greenwashing" in Carbon Neutrality
What Changes Will Happen in 2024
Given the very dense release of favorable policy information before the Spring Festival, 2024 is certainly something to look forward to! What changes will happen in 2024? Let's take a look together:
1. CBAM Is Really Coming
The first reporting deadline for CBAM has arrived. According to feedback from our team, companies are not yet feeling strong pressure at this stage, which is very similar to the situation with CDP ten years ago, where many companies began receiving questionnaires but only responded perfunctorily. Over time, as downstream customers or investors place greater importance on this, more and more companies have started to focus on improving their CDP questionnaire scores.
When CBAM officially comes into effect and begins taxing in 2026, the impact will be much greater than just completing CDP questionnaires. The direct change brought by CBAM reporting is that companies need to start paying attention to their carbon emissions and understand whether these emissions represent a cost or a potential gain. This change will become more tangible in 2024!
2. Carbon + AI, the Future Is Here
ChatGPT swept through 2023, and Sora stirred up excitement before the Lunar New Year in China. The era of AI has already arrived, and how to reposition oneself and find new growth points in the AI era has become something every industry is considering.
Whether it's the sustainability departments within companies or organizations in the carbon circle, using AI effectively is a new challenge. In 2024, Carbon + AI will inevitably bring a different kind of impact. Without going into detail, 2024 will see whose products are more cleverly designed and more down-to-earth! Very exciting! Let's welcome the grand wave of AI together!
The Carbon AI product released by Carbonfootprint in 2023 is an innovation born in the wave of AI. This project was selected as a special project of the company in 2023. Everyone is welcome to experience it:
3. Carbon Neutrality Will Be More Within Reach
I have mentioned in many previous articles that carbon neutrality is a long-term effort worth striving for until retirement. Carbon neutrality will be closely linked to our daily lives, work, and production scenarios. With the improvement of product carbon footprint and carbon labeling systems, we believe that in 2024 we will see more and more carbon-neutral products and scenarios emerge around us.
Carbonstop, as an organization promoting carbon neutrality, has always strived to start from ourselves, to clean our own doorsteps, and to reduce carbon emissions in every aspect and scene around us. Let more products have carbon footprints, let every product have a carbon footprint.
Previously, we were exploring and trying to develop SOPs, but now, with the gradual accumulation of experience and the growing availability of low-carbon suppliers, achieving carbon reduction and carbon neutrality in various aspects of life and office settings is entirely possible. In 2024, carbon neutrality will become more attainable.
4. China's Carbon Trading Will Develop Rapidly
Recently, the 'Provisional Regulations on the Management of Carbon Emission Trading' was officially released, and CCER was formally restarted, continuously releasing significant information. As carbon trading rules become increasingly perfected, coupled with factors such as EU carbon tax pressure, China's carbon trading is expected to develop rapidly in 2024.
Expansion of included industries, rising carbon prices, increases in CCER methodologies, and issuance of projects are expected to be important developments in 2024.
5. Carbon Disclosure Will Become More Active
Before the Spring Festival, the CDP 2023 results were officially announced, three months later than in previous years. In 2023, over 21,000 companies disclosed (a 24% increase), with fewer than 400 companies (2%) listed in the A-score list for disclosing practical and high-quality environmental data. An increasing number of Chinese companies are beginning to join in and compete on their CDP scores.
On February 8th, the three major stock exchanges in China simultaneously released guidelines for sustainability reports, marking the arrival of China's version of ESG!
Article 3 of the guidelines mentions strengthening disclosure requirements related to carbon emissions. Listed companies need to disclose governance, strategies, and other content related to addressing climate change according to four core aspects. The guidelines also require disclosures on climate resilience, transition plans, total greenhouse gas emissions, reduction measures, and opportunities related to carbon emissions.
According to public information, approximately one-third of A-share listed companies released ESG reports in 2023. It can be anticipated that in 2024, Chinese companies will become increasingly active and competitive in carbon and ESG disclosures!
6. The Gap in Corporate Carbon Management Levels Will Widen
I believe that carbon neutrality primarily includes three major areas: carbon management (quantification, analysis, planning, management, etc.), carbon reduction (reduction technologies, renewable energy alternatives, etc.), and carbon offsetting (including removal, absorption, storage, etc.).
Three years after the proposal of the carbon neutrality goal, most companies have been at a similar level in terms of carbon management, but over time, especially with the national dual carbon goal and the driving factors of mandatory ESG disclosures, the gap in carbon management levels among different companies is showing signs of widening. Our team has observed that some companies, whether constrained by domestic carbon trading, required by EU CSRD reporting, or driven by CDP ratings, are raising their requirements for the quality and granularity of carbon data. Manual management of carbon emission data is becoming increasingly inadequate to meet the demands of advanced companies for carbon management. Digital and automated management of carbon emissions will see significant growth in 2024, which is also one of the reasons why carbon management tech companies like Watershed are gaining recognition in the European and American markets.
