Nature Positive Role of the Automotive Sector China Deep dive

China’s extended producer responsibility system – impacts and outlook BOX 1 To accelerate the advancement of green and low-carbon development, China introduced the extended producer responsibility (EPR) system in 2016, mandating that producers assume responsibility for waste recycling.35 In 2021, the Ministry of Industry and Information Technology (MIIT), the Ministry of Science and Technology, the Ministry of Finance and the Ministry of Commerce jointly issued the Notice on the Issuance of the Pilot Implementation Plan for the Extension of Producer Responsibility for Automotive Products, setting an expectation of 95% recyclability of vehicles by 2023.36 Following the momentum in 2022, the four key ministries announced the list of pilot enterprises with EPR for automotive products, with 11 Chinese automotive companies selected to test and exemplify circularity in production and operations.37 Many of these companies set significant targets – for example, Geely Auto aims to achieve 75% of resource reuse, and First Automotive Works (FAW) aims to improve to 76% by August of 2023.38 To build sector capacity, relevant government departments have taken measures such as issuing technical guidance and creating information platforms.39 Notably, power battery enterprises emerged as a primary focal point within the EPR system. In August 2024, the MIIT issued draft industry standards on the comprehensive use of pre-used NEV batteries for public consultation, including specific requirements for recycling metals. For example, it specified that the recycling rate should be at least 98% for copper and aluminium, at least 90% for lithium during the smelting process and at least 98% for nickel, cobalt and manganese.40 By 2030, there will be more than 26.3 million passenger vehicles41 and 708,000 tonnes of power batteries42 retired in China. Enhancing the sector’s recycling capacity is critical to ensuring its sustainability and creating supplementary material supply. Enhance charging infrastructure Energy replenishment infrastructure is crucial for the EV industry’s development. To improve the charging infrastructure system,43 China has issued several documents since 2022 (including the Implementation Opinions on Further Enhancing the Service Capability of Electric Vehicle Charging Infrastructure and the Guiding Opinions on Further Building a High-Quality Charging Infrastructure System) to improve the supporting environment for energy replenishment infrastructure. As a result, China witnessed rapid development, contributing almost 90% of the global growth in fast chargers in 2022 and rising to the forefront of battery swapping.44 Some other key initiatives were launched with the following aims: –Promote new technologies: The New Energy Vehicle Industry Development Plan (2021- 2035) advocates for new technologies and applications, including EV integration with the power grid. The 2023 Implementation Opinions on Strengthening the Interaction between New Energy Vehicles and the Power Grid aims to establish a preliminary vehicle-to-grid interaction technology standard system by 2025 and achieve large-scale application by 2030. –Develop rural charging infrastructure: In 2023, the National Development and Reform Commission, along with other agencies, issued the Implementation Opinions on Accelerating the Construction of Charging Infrastructure to Promote New Energy Vehicles in Rural Areas and Support Rural Revitalization. This initiative focuses on deploying charging stations in rural areas and enhancing the planning and construction of charging and battery-swapping facilities in key villages and towns, thereby expanding EV applicability and use.vehicles31 and heavy-duty vehicles32 and has fully enforced the new emissions standards across the country since July 2023.33 Any new production, import or sale of vehicles must meet these standards. To promote the phase-out of high-emission vehicles for cleaner air, China implemented “trade-in” subsidy programmes. For example, the Shanghai municipal government offers a one-time subsidy for consumers scrapping or transferring vehicles and purchasing low emissions (Stage 6) fuel vehicles. Additionally, a subsidy is offered for those who scrap or transfer their vehicles and purchase EVs. Scrapped vehicles are then recycled for material reuse.34Build a recycling system To address the environmental impact of solid waste generated from end-of-life vehicles and parts, and to maximize residual value, China introduced the Pilot Implementation Plan for Extended Producer Responsibility of Automotive Products in 2021 (see Box 1). This plan included pilot schemes (such as the establishment of a recycling system, comprehensive resource use and the implementation of a green supply chain). Participants of the pilot schemes were designated in 2022. By 2030, there will be more than 26.3 million passenger vehicles and 708,000 tonnes of power batteries retired in China. Nature Positive: Role of the Automotive Sector – China Deep-dive 16