How are tech and management innovations driving a carbon-neutral journey for China’s industrial parks?

Industrial parks are evidence of the significant advancement resulting from China's reform and opening-up policy. They play a crucial role in fostering cluster development by providing shared infrastructure and vital public services customised to the needs of specific industries.

Since the inception of the first 14 national-level economic and technological development zones, spearheaded by the Tianjin Economic and Technological Development Zone in 1984, China's industrial parks have diversified in type and quantity. They have expanded from coastal regions to inland areas, emerging as crucial platforms for propelling the rapid progress of industrialisation, urbanisation and international engagement in China. There are now 403 national-level industrial parks, encompassing national-level economic and technological development zones, as well as national-level high-tech industrial development zones. These parks collectively contribute to a regional GDP of approximately 29 trillion yuan, accounting for around 25.3% of the national GDP in the respective year.

As highly concentrated hubs of industrial production activities, energy consumption and carbon emissions, industrial parks have become a focal point for local authorities to drive technological and managerial innovation, while pursuing the structural transformation of industry and its energy supplies.

According to estimates from Tsinghua University, industrial parks in China account for 31% of the nation's carbon emissions. Encouraging the transition of China's industrial parks towards net-zero carbon emissions is an inherent requirement for fostering high-quality economic development and a crucial step towards industry's response to global climate change and the pursuit of the 2°C temperature control target. Notably, the Chinese government has explicitly shown support for industrial parks in its policy document on Dual Carbon, which outlines pilot initiatives for carbon peaking and promotes the reengineering of industrial processes to achieve zero carbon emissions.

China is actively pursuing the objectives of new industrialisation and urbanisation. As economic development continues to grow steadily over an extended period, the demand for energy resources in industrial parks remains substantial. However, in the transition towards achieving a net-zero China, industrial parks encounter many problems and challenges.

As China has only recently set forth its dual carbon target, spanning a mere two years, the task of reducing carbon emissions encompasses numerous domains, involves a multitude of emission reduction stakeholders and presents a challenge in terms of managing the complexities effectively.

As a result, most industrial parks have not yet established a comprehensive coordination and management mechanism. Furthermore, both the management departments of these parks and the personnel working within the enterprises situated there typically lack theoretical knowledge and the proficiency to identify cutting-edge and suitable technologies. And, they have limited exposure to green finance options and other tools for emission reduction.

Due to the inconsistent geographical distribution, industrial structure and development levels of industrial parks in China, it is very difficult to efficiently match all industrial parks with economically viable decarbonisation and zero-carbon technologies.

This challenge becomes even more pronounced when addressing heavy industries, such as steel, cement and petrochemical sectors, which involve high-temperature and high-pressure production processes. Replacing these intricate processes with electrification is particularly hard, requiring significant technological advancements. Additionally, further investment in research and development is crucial to enhance the safety, economic reliability and breakthroughs in areas such as carbon capture, utilisation and storage (CCUS), energy storage and hydrogen energy.

To accelerate the transition of China's industrial parks to net-zero carbon emissions, collaboration among governments at all levels, enterprises, think tanks and financial institutions is essential. This multifaceted approach should emphasise technological and managerial innovations, enabling the resolution of challenges one step at a time.

The construction of a new power system, with a new energy source as its mainstay, proves to be an effective approach in driving industrial parks towards achieving net-zero emissions at scale. Simultaneously, parks can leverage innovative technologies in enhancing the industrial value chain, constructing intelligent microgrids and establishing circular networks to enhance system efficiency and attain carbon reduction goals.

For instance, the Tianjin Economic and Technological Development Area (TEDA) has successfully introduced several resource recycling projects within the automotive and electronics industries. Moreover, it has implemented projects aimed at upgrading energy and environmental infrastructure, such as reclaimed water plants, waste heat utilisation, geothermal development and hazardous waste disposal. These initiatives have significantly improved the park's system efficiency and circularity.

Additionally, the park, being the optimal setting for new energy utilisation, should actively engage in multi-party cooperation to facilitate and support R&D, as well as pilot demonstrations of technologies, such as renewable thermal energy, CCUS and hydrogen energy utilisation. This will effectively promote carbon reduction technologies, leading to cost reduction, enhanced safety and improved reliability.

The transformation of industrial parks into net-zero carbon zones relies heavily on policy and management innovation at the national and regional levels. This includes reforms in electricity tariffs and the implementation of neighbourhood-based PV generated electricity trading.

At the park level, it is crucial to foster internal momentum for transformation by establishing platforms that facilitate the acquisition of energy-saving and carbon-reducing knowledge and skills by enterprises. Additionally, the park should provide support for green investment and financing services.

Moreover, it is essential to explore the utilisation of technologies, such as IoT and AI, to enable real-time monitoring of energy consumption, industrial processes, logistics and environmental conditions. This will facilitate intelligent and precise management of carbon reduction efforts.

Suzhou Industrial Park, for example, has successfully implemented the Carbon Brain platform, which offers applications, such as energy-saving assessments for key projects, carbon emission monitoring in key areas and carbon footprint calculations for products. These initiatives have achieved initial results in terms of visualisation and digital management.

China's industrial parks face a challenging journey in their transition towards achieving net-zero carbon emissions. Among these parks, the Tianjin Economic and Technological Development Area (TEDA) has emerged as a pioneer by becoming the first national-level development zone and integrated industrial cluster in China to join the World Economic Forum’s initiative of Transitioning Industrial Clusters Towards Net Zero.

TEDA's participation in this initiative is expected to inspire other industrial parks across China to expedite their technological and managerial innovations, thereby hastening the transformation of industrial clusters towards achieving net-zero carbon emissions.