Nature Positive Role of the Automotive Sector China Deep dive

China is a leading producer and consumer in the global automotive market, and a high percentage of its key materials are produced and consumed in-country. Given the significant capacity of parts and vehicle manufacturing, water consumption in production requires more attention from industry players. China has established standards for water consumption, reuse rates and emissions in raw materials production (such as steel and nonferrous metals).61 Currently, regulators aim to reduce water use per unit of economic output by 16% by 2025 compared to 2020 levels, with an additional target of achieving a national industrial water reuse rate of around 94% for industrial enterprises above a designated size.62 Driven by these economy-wide goals, sectors involved in materials, parts and vehicle manufacturing are making progress. For example, the China Iron and Steel Association reported that from January to August 2024, its key member companies’ water withdrawals decreased by 3.34% compared with the same period last year, and their reuse rate reached 98.30%. Water consumption still increased by 1.69%, indicating higher water use from recycling. China’s automakers have begun disclosing more specific details about their water use in recent years. For example, Li Auto stated that its water consumption per vehicle is 2.9 cubic metres (m3) and that its water reuse reached 98.8% in 2023.63 Meanwhile, other brands have implemented initiatives to reduce water consumption. Land-use change and ecosystem disturbance China’s updated NBSAP highlights significant land-use-related challenges – “intensified land-use changes have reduced natural ecological space, while overuse and uncontrolled exploitation of biological resources harm biodiversity”.64 Upstream activities in the automotive sector place significant pressure on land both in China and overseas. Increased automotive production drives higher demand for raw materials like metals, rubber and leather, leading to mining or farming activities that impact land and surrounding ecosystems. In the midstream, land used for automotive production sites is typically industrial land in China. From 2007 to 2018, the amount of land supply used for industrial purposes increased by 26%, much higher than for residential or commercial land.65 Given this trend, the developing automotive sector in China, along with other industrial land occupiers, should improve responsible land use and ensure responsible treatment of ecosystems surrounding sites.While supporting the rapid growth of EVs in China, charging infrastructure may cause disputes over city green space and suburban ecosystems. By the end of 2022, China owned more than half of the global stock of public slow chargers, and 90% of the growth in the global fast charger sector also came from China.66 Given this rapid development, it’s crucial to conduct evaluations of the sector’s impacts on land and ecosystems throughout the life cycle – especially before implementation – to support climate and nature conservation goals in China. China has been developing the Green Mine Construction initiative since 2017 to encourage sustainable mining practices. As a result, over 1,000 national-level green mines were built by April 2024. Since 2024, there has been a comprehensive country-wide push to promote green mining practices and ensure that 90% of large- and 80% of medium-sized mines meet the requirements of Green Mine Construction by 2028. In the meantime, China is also widening the scope of relevant standards to encompass smaller mines. Production and manufacturing have also been approached in a similar way, with initiatives such as Green Factories setting standards for compact land use, reuse of waste, reduction of GHG emission and so on. In August 2023, the Ministry of Natural Resources of China announced that terrestrial ecological conservation red lines cover over 30% of the country’s land area.67 How the remaining 70% of land is used will significantly influence the economic transition towards nature positive. Currently, the primary focus in the automotive industry remains on resource efficiency and energy consumption, with insufficient attention given to land-use- related assessments. Pollution Given its large scale, China’s automotive industry produces huge quantities of solid, liquid and gaseous waste. While motor vehicles are major contributors to air pollution in China,68 the sector’s upstream and direct operations also impact land, freshwater and oceans.69 End-of-life vehicles are a major source of solid waste in the sector, generating scrap metals, plastics and rubber that can be reused. With particularly high activity levels in China (see Table 4), end-of-life batteries can cause solid waste challenges and potential pollution when treated improperly. In 2023, there were 580,000 tons of end-of-life batteries in China – a 140% increase from 2022.70 China has issued several regulations to manage waste – including the Air Pollution Prevention and Control Law, the Guidelines for Feasible Technologies for Pollution Prevention in the Automotive Industry and the Battery Industry From 2007 to 2018, the amount of land supply used for industrial purposes increased by 26%, much higher than for residential or commercial land. Nature Positive: Role of the Automotive Sector – China Deep-dive 22