Nature Positive Role of the Automotive Sector China Deep dive

The upstream automotive value chain, involving raw material extraction and production, significantly impacts nature. This report focuses on high-impact commodities identified by SBTN, including critical minerals for batteries (lithium, cobalt, nickel) steel, aluminium, rubber, leather and plastics. Industries related to these key materials are highly active in China, with over half of global midstream and downstream activities (production and consumption) occurring in China. Upstream activities are less active, however, with only 23% of total bauxite mining and lower than 20% of mining for other materials occurring in China, indicating a high dependence on imports. Notably, the demand for battery materials like lithium and nickel, largely for the automotive sector, has increased overseas mining activities. Investments and operational activities in mining these critical minerals and cultivating rubber for tyres should be based on comprehensive assessments on nature.’ 2.2 Identify opportunity to address impact on nature As discussed in the global report, the automotive sector causes impacts on nature through four impact drivers: water use, land-use change and ecosystem disturbance, pollution and GHG emissions. These impact drivers are not new to China. The Chinese government has implemented relatively strict regulations addressing environmental issues. From 2013 to 2016, the Chinese government issued action plans for prevention and control of air pollution, water pollution and soil pollution. After issuing the “1+N” policy framework in 2023, which aimed to achieve the goal of peaking GHG emissions before 2030 and achieving carbon neutrality before 2060,57 key industrial sectors, such as energy and transport, have undertaken numerous measures to reduce GHG emissions. Recent studies underscore notable progress in China’s endeavour to mitigate GHG emissions, reduce air pollutants and conserve water resources.58 Reversing nature loss will require a greater degree of collective effort, however.This section analyses economy-wide goals and progress observed in publicly available information and identifies opportunities for the automotive sector in China to support national and global goals on nature. Water use China faces severe challenges around water. Globally, the issue is often overlooked. The 2022 Baker Institute for Public Policy report How China’s Water Challenges Could Lead to a Global Food and Supply Chain Crisis states that China’s economy consumes 14 million barrels of crude oil per day, while its daily average water consumption is equivalent to 10 billion barrels on average, a quantity 700 times larger.59 The water use pressure of China’s automotive sector is most significant in the upstream extraction of raw materials. For example, the steel industry, a major material supplier, accounts for approximately 9% of China’s total industrial water consumption.60 Nature Positive: Role of the Automotive Sector – China Deep-dive 21