The 33rd China International Exhibition on Electric Power Equipment and Technology
Shanghai International Energy Storage Technology Application Expo / Hydrogen Energy Expo
Carbon neutrality (also called net-zero carbon or climate neutrality) refers to achieving a balance between greenhouse gas emissions produced and greenhouse gas emissions removed from the atmosphere, resulting in net-zero emissions. For an organisation, this involves measuring all direct and indirect emissions (Scope 1, 2, and 3), reducing emissions through energy efficiency, fuel switching, and renewable energy adoption, and offsetting remaining emissions through carbon credits, reforestation, or carbon capture. For a country, carbon neutrality requires transforming the entire energy system — power generation, industry, transport, buildings, and agriculture — to eliminate fossil fuel combustion and manage residual emissions. China has committed to achieving carbon neutrality by 2060 and peak carbon emissions before 2030, driving massive investment in renewable energy, energy storage, and clean technology.
5 Key Questions About Carbon Neutrality
Carbon neutrality and net-zero emissions are often used interchangeably, but have subtle differences. Carbon neutrality typically refers specifically to CO₂ emissions, while net-zero emissions covers all greenhouse gases (CO₂, methane, nitrous oxide, fluorinated gases) measured in CO₂ equivalent. Some definitions of carbon neutrality allow for carbon offsets to compensate for residual emissions, while net-zero typically requires actual emissions reductions with offsets only for hard-to-abate residual emissions. China's 2060 target is described as carbon neutrality (碳中和), which in practice means net-zero greenhouse gas emissions across the economy.
The power sector is central to China's carbon neutrality strategy, both as the largest single source of CO₂ emissions (approximately 40% of total) and as the key enabler of decarbonisation in other sectors through electrification. Decarbonising the power sector requires: massive deployment of wind and solar (targeting 1,200 GW by 2030); development of energy storage and grid flexibility to manage variable renewables; retirement of coal-fired generation (while managing energy security); development of nuclear power; and deployment of carbon capture and storage for remaining fossil fuel plants. The electrification of transport, heating, and industrial processes then transfers emissions reduction from those sectors to the already-decarbonised power sector.
Energy storage is essential for carbon neutrality because it enables the high penetrations of variable renewable energy required to decarbonise the power sector. Without adequate storage, grid operators must maintain large reserves of fossil fuel generation to balance renewable variability, limiting the achievable renewable penetration. Battery storage provides short-duration (2–4 hour) flexibility for daily solar and wind cycles; pumped hydro provides medium-duration (8–12 hour) flexibility for multi-day weather events; and long-duration storage technologies (compressed air, hydrogen, flow batteries) are needed for seasonal balancing. China's 14th Five-Year Plan targets 30 GW of new energy storage by 2025 as a foundation for the carbon neutrality pathway.
China's national carbon trading market (全国碳排放权交易市场) launched in July 2021 and is the world's largest by covered emissions, initially covering the power sector (approximately 2,000 power plants). Under the cap-and-trade system, covered entities receive free carbon allowances based on their output and emission intensity benchmarks; entities that emit less than their allowances can sell surplus credits, while those that emit more must purchase additional credits. The carbon price incentivises emission reductions by making it economically advantageous to invest in clean energy and efficiency. China plans to expand the market to cover additional sectors including steel, cement, aluminium, and chemicals.
Chinese companies are increasingly setting carbon neutrality targets under pressure from international customers, investors, and government policy. The process typically involves: conducting a greenhouse gas inventory (Scope 1, 2, and 3 emissions); setting science-based reduction targets aligned with China's 2060 national goal; implementing reduction measures (renewable energy procurement, energy efficiency, electrification, process innovation); and offsetting residual emissions through China Certified Emission Reductions (CCERs) or international carbon credits. Large Chinese companies including Alibaba, Tencent, Baidu, and major manufacturers have committed to carbon neutrality targets, driving demand for renewable energy, energy storage, and carbon management services.
Key Takeaways
Carbon neutrality is the defining strategic imperative of China's energy sector, driving the transformation of the power system, industry, transport, and buildings over the next four decades. The technologies showcased at EP Shanghai and ES Shanghai — renewable energy, energy storage, smart grids, hydrogen, and power electronics — are the building blocks of China's carbon neutrality pathway. EP Shanghai is the premier platform for connecting the suppliers of these technologies with the buyers driving China's energy transition.
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