Interview With Chen Wenhui, Vice President Of The National Social Security Fund Council, Stepping On The Rhythm In The High Certainty "Double Carbon" Investment Track

Coping with climate change is a systematic project, involving economic, political, cultural and social aspects.

The promotion of the "double carbon" goal will bring about a broad and profound economic and social systematic change, which will affect China's development direction in the next 40 years.

Chen Wenhui

China's "double carbon" goal is of great importance to the global climate change

21st century: at present, China is still in the late stage of industrialization, and the energy structure dominated by coal has increased the difficulty of carbon reduction. However, among 127 countries and regions that put forward the goal of carbon neutrality, the average time from "carbon peak" to "carbon neutrality" is 43 years, while China plans to use only 30 years. What do you think is behind China's "double carbon" goal? Can it be understood that this is a great power responsibility?

Chen Wenhui: the "double carbon" goal proposed by the Chinese government is, on the one hand, a major strategic decision based on China's responsibility to promote the construction of a community with a shared future for mankind and the inherent requirements for achieving sustainable development. On the other hand, it is also a rare opportunity for the Chinese nation to realize the great rejuvenation. It will be a broad and profound economic and social systematic change.

China's realization of the "double carbon" goal is of vital importance to the response to global climate change. In 2019, China emitted 10.17 billion tons of carbon dioxide, accounting for 28% of the total global emissions, almost equivalent to the sum of the United States, the European Union, the United Kingdom, Japan and other western developed economies. According to the estimation of relevant experts, if China successfully realizes the "double carbon" target, the time of global carbon neutralization will be advanced by 5-10 years, and the temperature rise target can be reduced by 0.2 ℃ - 0.3 ℃. This is very important to strengthen the determination of all countries to deal with global warming and jointly realize the sustainable development of mankind.

However, China's cumulative and per capita carbon emissions are not high. China's initiative to put forward the "double carbon" goal demonstrates the great power's responsibility and sincere concern for the fate of mankind. Developed countries have completed industrialization and emitted a lot of carbon dioxide in the last century, while developing countries are undergoing industrialization and undertaking high energy consumption industries in developed countries. As the world's factory, China undertakes the manufacturing of most of the world's commodities, but in terms of cumulative carbon emissions, it only accounts for 12.7% of the world's total, about half of that of the United States. The carbon emission per capita is only 7.28 tons, ranking 44th in the world. China's "double carbon" goal is an independent and voluntary "public welfare" action, which reflects the Chinese nation's feelings for the world and demonstrates China's responsibility as a responsible power.

At the same time, human society is transforming into green and low-carbon development, realizing the transition from industrial civilization to ecological civilization. The realization of the "double carbon" goal is conducive to our country to seize the opportunity in the global green and low-carbon transformation, and lay the foundation for the realization of the great rejuvenation of the Chinese nation.

21st century: global cooperation is needed to realize green and low-carbon transformation. Do you think that jointly tackling global warming will become an opportunity for western countries to abandon stereotypes and strengthen cooperation with China? How should China grasp the opportunity of cooperation in the field of climate change?

Chen Wenhui: at present, the international situation is grim. Some western countries are taking all means to encircle and blockade China, and climate cooperation is the way for China to break the situation. Climate change is a common challenge facing mankind, which is related to the future and future of mankind. No country can solve it alone. It is necessary to carry out global action, global response and global cooperation.

U.S. Secretary of state Abraham Lincoln and U.S. president's special envoy for climate change John Kerry said on different occasions that the United States hopes to cooperate with China in the field of climate change. Recently, 40 agencies from all regions and industries in the United States have jointly written to US President Biden and US Congressmen, calling for abandoning the hostile attitude towards China, giving priority to promoting multilateralism, diplomacy and cooperation with China to jointly address the climate change crisis. Europe has already carried out close cooperation with China in addressing climate change. In September 2020, China and the EU set up a high-level dialogue on environment and climate to build a green partnership between China and the EU. Since this year, leaders of China, France and Germany have held two video summits. Addressing climate change is the most important issue and will become an important pillar of China EU cooperation.

The realization of green and low-carbon transformation requires global cooperation, which can reduce the pressure on China's development process. In the process of climate cooperation with the western world, China should establish a high-level dialogue mechanism to avoid further deterioration of bilateral relations; To carry out academic exchanges and technical cooperation, jointly promote the research and development of clean technology, and gradually break the blockade of science and technology from the West; Export photovoltaic, new energy vehicles, power batteries, etc. to Europe and the United States, and increase economic and trade cooperation and interest binding. Realizing the great rejuvenation of the Chinese nation has entered an irreversible historical process, but it may be under increasing international pressure. We must play the card of climate cooperation.

In the future, photovoltaic power generation will transform the resource attribute of energy into the attribute of manufacturing industry. Xinhua News Agency

"Double carbon" should be combined with current hot spots

21st century: what role should the "dual carbon" strategy play in the construction of ecological civilization in China?

Chen Wenhui: "double carbon" is an important starting point for the implementation of ecological civilization in economic construction, promoting green development and industrial structure adjustment. After more than 30 years of rapid economic development, environmental problems accumulated in China have entered the stage of high intensity and frequent occurrence. We must adhere to the new development concept, integrate the construction of ecological civilization into the economic construction, and find a new development path. The achievement of ecological civilization construction depends on the economic structure and the mode of economic development“ "Double carbon" provides policy environment and market expectation for green and low-carbon development and industrial structure adjustment, and is the most direct driving force for industrial upgrading and economic transformation.

To promote the goal of "double carbon", we should not be simple and crude. We should strictly guard against the pursuit of political achievements in the construction of ecological civilization, regardless of the actual "double carbon" efforts. For example, in some places, in order to achieve higher emission reduction targets, power rationing has seriously affected enterprise production and residents' lives. Based on China's national conditions, development stage and actual capacity, we should adhere to the system concept, handle well the relationship between development and emission reduction, overall and partial, short-term and medium-term, and steadily and orderly promote economic restructuring and development mode transformation.

In addition, we should pay attention to the policy coordination of "double carbon" and ecological civilization construction. For example, not long ago, an autonomous region put 50.46% of the territory of the region into the red line of ecological protection, and made it clear that the important ecological function areas of grassland and forest would not be new wind power and photovoltaic projects. However, the construction of UHV power grid and the realization of cross regional dispatching of photovoltaic and wind power are the key to the large-scale development, consumption and wide use of renewable energy. It is essential to achieve the goal of "double carbon", and is essentially a part of the construction of ecological civilization. It should be treated differently from other activities. Environmental protection policies should give green light to the "double carbon" work.

It is worth mentioning that the orderly implementation of the "double carbon" work will continue to improve the environmental quality, enhance the level of ecological civilization construction, and will win more popular support.

21st century: as an industry supported by the development of the 14th five year plan, digital economy undertakes the important task of driving China's economic transformation and industrial upgrading“ As another key to promote economic restructuring, how should the "double carbon" and digital economy promote each other, develop together, and open a new era?

Chen Wenhui: in fact, the digital economy and the "double carbon" are mutually based, promote and complement each other. In 2020, China's carbon emission intensity will decrease by 48.4% compared with 2004 and 18.8% lower than that in 2015, reversing the situation of rapid growth of carbon dioxide emissions. However, we should also be soberly aware that there is still a long way to go from slowing down the growth rate to achieving the "double carbon" goal, and the digital economy will play an important role in this process. The essence of digital economy is digital modeling of complex resource allocation information, and using computer to quickly make the optimal scheme to guide the actual allocation and use of resources, to avoid waste and inefficiency caused by information asymmetry and limitations of decision makers.

In the era of mobile Internet, the digital economy has deeply transformed the consumption field, and the effect of carbon reduction is remarkable. For example, electronic maps can predict real-time traffic, guide vehicle diversion, and reduce congestion and carbon emissions. Compared with traditional taxis, online car Hailing can greatly reduce empty driving mileage and reduce carbon emission per unit passenger mileage.

At present, the digital economy is penetrating into the industrial field, and the industrial digital transformation is the only way to achieve the goal of "double carbon". For example, mine production is a high energy consumption industry. The mined ore is first ground into powder by grinding machine, and then the minerals are extracted by physical and chemical methods. Grinding needs to consume a lot of energy. China's mines are generally of low grade. The average grade of lead-zinc ore is 3.7%, while that of copper mine is only 0.87%. A lot of energy consumption is actually useless. Some mines are promoting intelligent mineral processing technology, using X-ray and artificial intelligence technology to select mineral free waste rock from the mined ore, which greatly improves the grinding efficiency. At present, the waste rock abandonment rate can reach more than 90%, which means that the new technology can achieve the same output with 10% energy consumption, which greatly reduces the carbon emission intensity. In addition, after the industrial enterprises realize the whole process digitization, the carbon emissions of all production links and the carbon footprint of products in the whole life cycle can be measured accurately with low cost, which is the basis for the work of enterprise carbon information disclosure, large-scale promotion of carbon trading, and timely introduction of carbon tax.

From another perspective, "dual carbon" will also vigorously promote the development of digital economy and accelerate the process of industrial digitization in China. The slow progress of digital transformation in the industrial field is mainly due to the high investment and long recovery period“ The smooth promotion of "double carbon" is expected to realize the environmental benefits generated by digitalization, thus shortening the investment return cycle of enterprises and accelerating the digital transformation of enterprises. For example, industrial robots are the basis of digital production. If industrial robots are used to replace workers, the payback period is about two years. However, many small and medium-sized enterprises only dare to make decisions on projects with a return period of less than one year. Only when the labor cost is doubled or the price of robots is reduced by half, can industrial robots be popularized in the small and medium-sized manufacturing industry, which may take several years. However, under the background of expanding the scope of carbon trading and increasing carbon tax expectations, enterprises are facing more and more endogenous pressure of environmental costs. The purchase of industrial robots can not only replace the labor to generate economic benefits, but also realize the unmanned factory, which can reduce the carbon dioxide emissions (workers commuting, catering, factory lighting, air conditioning will produce a lot of carbon dioxide), and save the carbon emission cost of enterprises. The shortening of return cycle and the rise of return on investment will strengthen the determination of small and medium-sized enterprises in digital transformation and accelerate the penetration of digital economy in the industrial field.

Digital economy and "double carbon" are mutually superimposed to create new formats and open a new era. Profound changes have taken place in the transportation industry, opening a new era of green and smart travel. For example, new energy vehicles are not only green transportation tools, but also gradually upgraded to intelligent assistants in people's travel. In the future, new energy vehicles may also become production tools. After work, low-cost green electricity will be full of. When going to work, they will be connected to the company's power grid to sell electricity at a higher price. Thus, smoothing out the volatility of renewable energy has become a key link in energy transformation. Customized production is reshaping the manufacturing industry and opening a new era of green and low-carbon development. At present, the clothing industry has run through the customized production mode, designed products according to the needs of consumers in digital sales channels, and then realized low-cost customized production through digital chemical plants. Handu clothing house can achieve 95% of the product sold out rate, basically realize the production on demand, greatly saving resources. With the deepening development of digital economy, more and more manufacturing industries will transform to customized production just like garment industry. Resources can be fully utilized, carbon emission intensity is lower, and product carbon footprint is smaller, which is more in line with people's demand for low-carbon life in the future.

Step on investment rhythm, jump out of "double carbon" and see "double carbon"

"21st century": with the "double carbon" has become a political consensus, with high certainty. From the perspective of investment, do you think investors can strengthen their confidence and increase their investment layout in the "dual carbon" field?

Chen Wenhui: Yes“ "Double carbon" is an investment track with high certainty, long time span and wide coverage.

"Double carbon" investment will last until at least the middle of this century, and capital can achieve long-term stable and sustained growth. Western developed countries generally achieve carbon neutrality in 2050, and China plans to achieve carbon neutrality in 2060. In this 30-40 years, there will be a global energy revolution and industrial change. If capital is actively distributed along the direction of green and low-carbon development, it can grow and grow together with the new economy and new industries, continuously share the dividends brought by low-carbon transformation, and obtain long-term and stable benefits.

A large number of related industries are still in their infancy. With the promotion of "double carbon" work, more and more new industries will emerge from the ground, iterate with each other, and cover a wider range of fields.

In the future, photovoltaic power generation will transform the resource attribute of energy into the attribute of manufacturing industry. With the expansion of scale, the cost of photovoltaic power generation will drop to a very low level, a large number of cheap electricity can be derived from many emerging industries. For example, seawater desalination is carried out on a large scale at a very low cost to solve the problem of water shortage.

When the "dual carbon" industry develops to a certain extent, there will also be "contradictions" in the digital economy, which will continuously generate new industries. With the continuous penetration of digital economy into various industries, information security problems are also brought about at the same time in improving efficiency, which is like a sharp spear. Therefore, the shield responsible for information security should be upgraded constantly, and the information security industry will rise and develop accordingly. In the "double carbon" industry, spear is a threat to the environment, and shield is to protect the environment. The development of new energy vehicles reduces the carbon dioxide emissions in the field of transportation, but new energy vehicles need to use batteries. After the batteries reach their service life, improper treatment will cause serious environmental pollution. Therefore, many companies are now laying out new energy battery recycling and harmless treatment technology. It can be reasonably speculated that in the process of battery harmless treatment, new environmental pollution problems may arise, and new industries are needed to solve this problem. In this way, each branch of the "dual carbon" industry will expand outwards iteratively and eventually interweave with each other, covering more fields and industries.

Therefore, as far as investors are concerned, along the main line of "double carbon" with high certainty, they can continue to find a large number of high-quality investment opportunities in the future for a long time.

21st century: how do you see the role of capital in the realization of the "double carbon" goal?

Chen Wenhui: it takes a lot of capital to build green infrastructure“ The key to "double carbon" is energy transformation. To replace fossil energy with sustainable energy, it is necessary to build a large number of photovoltaic, wind power and nuclear power plants, as well as build UHV transmission network, and upgrade the traditional power grid to a smart grid suitable for renewable energy power. According to the prediction of the International Energy Agency, before 2025, China will need to invest 350 billion US dollars annually to promote the construction of renewable energy. This is a very huge investment and needs the strong support of capital.

Capital can promote enterprises to accelerate the transformation of green and low-carbon development, and drive the development of leading clean technology. To promote the green and low-carbon transformation, on the one hand, relies on the national compulsion to introduce more stringent environmental protection policies, forcing enterprises to adopt new clean technologies. However, the policy is universal. Only technologies that have been accepted by most enterprises in the industry will be forced to promote. However, it is difficult to find the application market for some leading new technologies in the initial stage. Therefore, capital is also an important force to promote the green and low-carbon transformation of enterprises. For example, SF has the lowest cost of using traditional disposable packaging boxes.

21st century: specifically, which areas do you think the "dual carbon" investment can focus on?

Chen Wenhui: the renewable energy industry chain and green infrastructure have certain growth expectations and are high-quality assets for investment layout. The replacement of fossil energy by green energy is the most certain thing in the next 40 years. According to the proportion of renewable energy in the energy structure in 2060, it is easy to calculate the annual installed number of renewable energy. Chinese enterprises occupy an absolute advantage in the industrial chain, and invest in leading enterprises and hold them for a long time, which is expected to achieve higher investment returns. Renewable energy power stations have certain resource attributes. In recent two years, new energy central enterprises and state-owned enterprises have made a large number of high-quality resources and can participate in investment on a selective basis. Considering the infrastructure properties of the power station, it is difficult for such investment to have a high rate of return on investment, but it can guarantee a long-term stable return.

China's clean technology market is in the vacuum stage, and there are still many opportunities for start-ups to carry out early investment. At present, China's "double carbon" is launched ahead of schedule under the strong promotion of policies, and the demand for clean technology will grow rapidly. There are few mature suppliers in the domestic market. No matter energy enterprises or large industrial enterprises have made a systematic layout in clean technology, especially carbon reduction technology. With flexible mechanism and high efficiency, start-up enterprises can not make a systematic layout of clean technology, especially carbon reduction technology, Maybe the rate will stand out from this blue ocean. This is a good investment opportunity for early investors.

We will focus on the areas where "dual carbon" and digital economy are combined, and look for investment opportunities in the next trillion level industries“ "Double carbon" and digital economy are not simple "physical combination", sometimes produce violent "chemical reaction", and a new trillion level track is born. The prerequisite for the occurrence of "chemical reaction" is that the core of "double carbon" collides with the core of digitalization, and completely subverts the existing industry“ The core of "double carbon" is sustainable development, and the core of digitalization is intelligence. In the new energy automobile industry, the two are perfectly combined and redefined the automobile industry. With the development of "double carbon" and digital economy, we will find the second and third trillions of investment opportunities.

Studying carbon trading and its derived carbon assets in advance may become the next important asset category. Although China's national carbon trading market has just started, it has become the largest carbon trading market in the world. With the maturity of carbon trading, new assets, such as carbon sequestration, carbon options and carbon futures, will continue to emerge. The prosperity of carbon trading market is a key step to promote the realization of "double carbon" target by means of marketization. It is expected that the carbon assets related to it will have more and more strong financial asset attributes. From the European experience, the price of carbon assets is generally on the rise. China's market has just been established. Investment institutions should strengthen research, actively participate in the carbon market, enrich asset allocation, and contribute to the realization of the "double carbon" goal.

"21st century": in addition to finding the right track segments, how should investors grasp the law of "double carbon" investment and step on the right timing?

Chen Wenhui: first of all, we should study the cyclical law of "double carbon" industry and step on the investment rhythm. The successive "double carbon" policies will have a significant impact on market expectations, which is likely to amplify the cyclical fluctuations of related industries. For example, the photovoltaic industry has a strong policy periodicity. After the "double carbon" target is proposed, the market generally expects that the industry will usher in high-speed growth. However, it will take more than one year for some parts of the industrial chain to expand production, which will become the bottleneck of production capacity in the short term, and the price will rise sharply. With a large number of capital pouring into the photovoltaic industry chain, especially the current capacity bottleneck, there will be overcapacity in the future. Investors should carefully summarize the historical experience, recognize the cycle law, enter at the appropriate low point of the cycle, and appropriately reduce the position at the high point, so as to maximize the investment return.

Secondly, it is necessary to strengthen the research and analysis of the commercialization process of clean technology, and find the appropriate investment time point. There are two driving forces for the commercialization of clean technology. One is policy promotion, but this force is generally lagging behind. There is also a demand for downstream enterprises to accelerate the green and low-carbon transformation spontaneously, which should be combined with the enterprise ESG practice and the driving force of the capital behind. At the same time, we should insist on using systematic methods to analyze and make decisions, and look beyond "double carbon" to "double carbon". The Chinese government forces reform with the goal of "double carbon", and carries out comprehensive and deep-seated systematic changes in development mode, energy structure and social concept. Investors should observe the situation of systematic change from the overall perspective, including the progress of energy reform, the depth of industrial structure adjustment, the speed of social concept change and so on. These factors are very important for "double carbon" investment.