In The Era Of Net-Zero Transition, Where Should High Energy-Consuming Industries Go?

“Calculating according to the existing way of power generation, electric vehicles are almost meaningless,” said Mitsuo Hitomi, an automotive technology expert in Japan known as the father of Mazda SKYATCTIV Technology. In early 2016, he slammed electric vehicles, believing it was unreasonable to change vehicles’ power generation method. He argued that a coal-powered electric vehicle production chain may actually produce higher emissions than gasoline vehicles, and if the actual fuel consumption of the internal combustion engine (ICE) can be improved by approximately 25%, CO2 emissions would reach similar levels as that of electric vehicles.

With the increase of Tesla’s popularity around the globe, the rapid emergence of electric car-making powers, and the elimination of traditional vehicles on the agenda for many countries around the world, net-zero electric vehicles have become an integral part of the automotive market and society in general. Although the viewpoints put forward by Hitomi are seen as, to some extent, an attempt to extend the life of traditional cars, whether electric vehicles are actually 100% net-zero is still a hot topic.

Although electric vehicles achieve zero-emissions during usage, the electricity used for charging comes mainly from coal power, and the production of the batteries requires large amounts of energy. Therefore, the total carbon emissions from electric vehicles throughout their lifecycles may not actually be less than that of fuel vehicles.

Taking lithium-ion batteries (a key component of electric vehicles) as an example, the production process includes homogenization, coating and drying, slitting, cell winding, battery assembly, and liquid injection and formation. When making ternary cathode materials, electric heating and sintering are involved, and the mainstream five-series ternary materials require the sintering temperature to be at approximately 900 degrees Celsius. At this stage, ternary materials generally use two sintering processes, resulting in a relatively high overall energy consumption. On one hand, the lithium iron phosphate cathode material also requires a sintering process, but at the same time, the upstream procedure from phosphate rock to phosphate, to ferric phosphate, and to lithium iron phosphate also has considerable energy consumption requirements.

Among which, the drying process of the electrodes and the operating of the drying unit during the battery production process consumes a more significant amount energy. As an example, if 400 batteries are produced per day, the operating power of the drying unit and lithium-ion battery production equipment would reach approximately 64.8 kilowatts.

However, as it stands, traditional vehicles can only be powered by traditional fuel, but electric vehicles have a wider range of available energy sources. As the proportion of power generation resources such as nuclear power, wind power, and hydropower are set to rise in the future, the sources of power will evidently become more environmentally friendly. If net-zero emissions in the manufacturing process can be achieved, electric vehicles will be free of doubt and debate.

In Ordos, Inner Mongolia, the “Envision Net-Zero Industrial Park,” with an investment of tens of billions and an output value of hundreds of billions, is being built. The industrial park will use 100% renewable energy in the production and operation of high energy-consuming industries, which will not only support China in realizing its carbon peak and carbon neutrality goals, but also aid in initiating a new industrial revolution.

Envision Group’s aspiration with the establishment of a net-zero industrial park in Ordos is to use the abundant renewable energy resources to realize 100% green electricity in the production of lithium batteries. Compared with other net-zero parks, the companies in the Envision Net-zero Industrial Park will continue to consume a great amount of energy, all of which will be entirely from renewable energy resources.

In addition, with the Envision Ark “Dual Control of Energy and Carbon Consumption” platform as the digital base for the industrial park, it will be able to conduct real-time monitoring, timely warnings, and the overall optimization of important indicators of carbon emissions and energy consumption. As such, the products from the park can also be also labelled as net-zero.

Using the Envision Net-Zero Industrial Park to achieve drastic transition

The proven coal reserves of the Ordos Plateau stand at 210.2 billion tons, accounting for approximately one-sixth of the country’s supplies, and the proven natural gas reserves stand at nearly 5 trillion cubic meters, accounting for one-third. In the past 20 years or so, a large number of high-energy-consuming projects such as coal power, coal chemical industry, iron and steel, electrolytic aluminum, and big data centers have been developed in the region, resulting in a rapid increase in carbon emissions. The annual carbon emission in Inner Mongolia averages out as 700 million tons, of which Ordos accounts for one-third.

Following China’s stated carbon peak and neutrality goals, the resource-based city has faced unprecedented uncertainties and pressure, with the future of its economic growth directly blocked by its energy consumption.

If high energy-consuming industries are able to trade coal for renewable resources, the drastic transition will not only greatly alleviate the pressure on Ordos and open up new spaces for economic growth, but also aid in the formation of a new transition model for China’s manufacturing industry and the world’s.

Major economies around the world have begun to price carbon emissions, and carbon tariff barriers now may be the “sword of Damocles” hanging over China’s manufacturing industry. If the industry does not achieve a timely net-zero transition, the exporting industry of the whole country will suffer huge losses and a loss in competitiveness. As such, developing net-zero industries is the only viable way forward for China to progress.

For Ordos’ transition, its abundant renewable energy resource is the trump card. According to estimates, the total reserve of wind energy with development values in Ordos is more than 50 million kilowatts, and if the city’s desert land can be fully utilized to build grid-connected solar photovoltaic power stations, the installed photovoltaic capacity will be able to reach more than 60 million kilowatts.

On Oct. 12, at the “2021 Ordos Net-Zero Industry Summit,” Envision Group announced the launch of “Envision Net-Zero Industrial Park” in Ordos, and jointly issued “International Standards of Net-Zero Industrial Parks” with Bureau Veritas. At the summit, Guangdong Kaijin New Energy Technology Co. Ltd., which produces battery anode materials, and Inner Mongolia Shengfan Technology New Energy Co. Ltd., which manufactures cathode materials, both formally signed contracts to settle in the park.

According to Zhang Lei, CEO of Envision Group, the energy in the Net-Zero Industrial Park will come directly from wind power, photovoltaics and energy storage, of which 20% will be sold to the grid when the power produced become excessive; stored green energy will be retrieved from the grid when needed, ensuring a 100% net-zero energy supply, electricity safety, and low prices.

The Net-Zero Industrial Park project covers wind turbine equipment manufacturing, battery production, hydrogen energy production and their upstream and downstream industrial chains, with an estimated annual output value of 100 billion yuan. At present, the Envision Power Battery Manufacturing Base in Ordos has a planned total production capacity of 20GWh. It will provide more than 30,000 electric heavy trucks with power batteries of high safety, high energy density, high durability and high-cost performance each year, and support comprehensive smart energy demonstration projects such as wind and solar hydrogen storage with more than 10GWh energy storage batteries. These could solve the problem of renewable energy consumption, and significantly reduce power costs. The manufacturing base will be completed in three phases, with a capacity of 10GWh in Phase I. At present, the power battery manufacturing base has been planned to realize the supply of 100% renewable energy including green power and green steam.

Ordos is an important coal-producing region, with over 330,000 heavy-duty diesel trucks in usage, of which accounts for more than 30 million tons of carbon emissions annually. If the trucks were to be replaced by electric counterparts, Ordos will not only benefit from reduced carbon emissions, but also see the operating costs of heavy-duty trucks dropped by more than half. As an example, if the calculation for electricity prices is at 0.26 yuan/kilowatts, 30 billion yuan in operating costs will be saved annually, and if the current domestic carbon market price is at approximately 50 yuan per ton, the carbon cost saved will be as high as 1.5 billion yuan.

In order to complete the objective of replacing 50,000 heavy-duty trucks within the 14th Five-Year Plan period, Ordos will build supporting green power projects with an estimated annual power generation capacity of 15 billion kilowatts.

Tian Qingjun, senior vice president of Envision Energy, said: “Envision Net-Zero Industrial Park will not only turn the resource advantages of renewable energy-rich areas into industrial advantages, and solve the challenges of both energy and carbon reduction in the region, but will also drive the agglomeration of upstream and downstream emerging industries and build new industrial systems.”

Tame green electricity

It’s easy to say that the whole park will achieve net-zero, but there are many practical difficulties to overcome.

Fragmentation and volatility are two significant disadvantages of renewable energy power generation — in a nutshell, it is weather dependent. The enterprises in the net-zero industrial park are not only high energy consuming, but also high value-added industries, and once the equipment starts running, any outage may lead to serious losses. Therefore, ensuring complete reliability is a heavy task for the designers of the net-zero industrial park to overcome.

No matter how the power generation of renewable energy fluctuates, the power transmitted to the terminal over a long distance must be controllable. This is made possible through a smart grid. Based on high-speed two-way communication technology, advanced sensing and measurement technology, control methods and decision support systems, the automation of controlled grid operations can be realized. In addition, a smart grid can fully connect different links such as power generation, transmission, transformation, distribution, use of power grid, energy storage, micro-grid and load to participate in power grid dispatching and operations. As such, for example, wind power can achieve a stable output comparable to that of thermal power, no matter whether the sun is seen or the wind turbine is turning. Through the real-time dynamic balance of power generation and load power, the optimization of resource allocation, maximization of efficiency across the network can be achieved.

To provide a stable, low-cost, 100% green power system, it is not only necessary to accurately predict the wind and solar output load, but also whether it can be adjusted flexibly. At present, the Envision Net-Zero Industrial Park has planned a large number of wind power and photovoltaic energy storage configurations.

Wang Wen, deputy general manager of State Grid Electric Vehicle Service Co. Ltd., pointed out that the current grid structure needs to change from continuous and reliable thermal power to strong uncertainty and weak controllability new energy — from original pure consumption and a rigid load to a flexible load and a merger of production and consumption. In terms of grid form, it needs to change from one-way step-by-step transmission to AC/DC and energy composed of an adjustable load, and the operation of the power grid from the mode of power generation following load and the realization of real-time balance, to the mode of power generation, load and energy storage synergistic interaction. As such, the promotion of clean energy consumption in the context of ensuring grid security, and meeting social and economic development, is vital.

According to Zhang Lei, the new power system formed by wind power, photovoltaic, energy storage, hydrogen energy and AIoT will become a green, stable and reliable energy system. As the only technology enterprise in the world that provides a “source-grid-load-storage-hydrogen” end-to-end net-zero solution, Envision believes that the transition to renewable energy will bring great opportunities, and that the net-zero industrial park is key infrastructure in the building of a net-zero new industrial system.

New net-zero industry

Jiang Kejun, a researcher at the Energy Research Institute of the Chinese Academy of Macroeconomics, and his team analyzed the concept of new net-zero industries in China. The analysis suggested that, considering a variety of technologies will be in demand to achieve extensive carbon emissions reduction, many industries will turn to regions with rich and low-cost renewable energy, especially to regions with cost advantages in photovoltaic power generation, so as to realize the serialization of local photovoltaic power generation, hydrogen production and product manufacturing.

This is suggestive that regions rich in renewable energy resources, such as the southwest and the three northeastern regions, will see a rise in net-zero industrial clusters. On Dec. 4, 2020, the People’s Government of Ejin Horo Banner of Ordos City and Envision held a cooperation agreement signing ceremony. According to the plan, in the first half of 2022, Phase I of the Envision power battery manufacturing base with 10GWh production capacity will be put into operation. In February this year, Envision also signed a cooperation framework agreement with Jilin’s provincial government. Here, Envision will help Jilin province turn its rich green resource advantages into high-end energy advantages, and help Jilin build a new net-zero industrial system through the implementation of technologies in the fields of wind power, energy storage, power battery, hydrogen energy and AIoT.

Jules Kortenhorst, CEO of Rocky Mountain Research Institute, believes that Inner Mongolia has unique regional advantages due to its rich and cheap renewable energy resources. Inner Mongolia does not need to transport energy to the region where the industry is located, but to pull the industry to the local regions with rich and cheap clean energy. It is believed that this model has great potential to be replicated and extended to other rich energy resource regions, and move the industries to the location of energy resources, rather than transmitting energy to the locations of the industries.

Using Ordos as an example, Qian Zhimin, chairman of State Power Investment Corp., believes Ordos’ renewable energy will lead industries to the region, which will play a great role in stimulating investment, driving growth, and increasing employment.

More upstream and downstream enterprises in the green energy industry chain are also set to settle in “Envision Net-Zero Industrial Park” in Ordos, and green hydrogen will play an important role in the interconnecting of renewable energy and decarbonization of the industrial systems in Ordos. Green electricity hydrogen production will be developed in the net-zero industrial park, and will be applied to downstream industries such as green hydrogen steel making, green hydrogen coal chemical industry, and biosynthesis. This will further reduce the coal consumption of the chemical industry in Ordos.

On the construction site of the net-zero industrial park in Ejin Horo Banner, a large lithium battery plant has been built, surrounded by staff dormitories, management centers and sports grounds. Here, not only lithium batteries will be produced following a net-zero approach, but also non-resource-based high-tech industries developed focusing on high-end equipment manufacturing, electronic information, new energy and new materials, photoelectric industry, bio-pharmaceuticals, and energy conservation and environmental protection.

In the future of net-zero industries, production will be powered by 100% green electricity. The heating system will be powered by green electricity, steelmaking will use green hydrogen instead of blast furnace coke, the fuel system of automobiles and ships will be replaced by power and hydrogen fuel batteries, and green electricity hydrogen making biosynthesis technology will replace the traditional chemical industry using fossil raw materials to produce net-zero and recycled materials.

Zhang Lei said, “the integration of green energy, transportation and the chemical industry will drive the vigorous development of the net-zero industrial park in Ordos. China will not only provide a net-zero industrial park for the world, but also take on the responsibility to popularize net-zero industrial park practices to countries. To move towards realizing carbon neutrality on a global scale, we should put our ‘best practice’ into standards and promote it. Together with Bureau Veritas, we have formulated international standards for net-zero industrial parks, and hope that it can be adopted as the standard around the world.”

Author: Yu Dawei, researcher at Caixin Insight

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