Pollutant Discharge Standards – and has promoted the conversion of waste into resources. For midstream automotive production, China has set the discharge standard of water pollutants for motor vehicle maintenance and repair.71 Much progress has been made in accordance with these guidelines, with many sector players addressing pollution from operations to meet relevant compliance requirements in China. There’s room for further enhancement in resource efficiency, however. For example: –In total, 22% of raw materials used for steel production in China come from scrap steel, and the comprehensive use rate of steel slag is less than 30%, both of which are below the global average.72,73 –In 2021, China’s output of recycled aluminium accounted for only 16% of total aluminium production,74 falling short of the global average (about 33%).75 –The recycling of power batteries primarily relies on authorized companies on the Whitelist for Power Battery Recycling. More detailed guidelines or regulatory documents are expected to support scaling circular practices and reducing solid waste from end-of-life power batteries. GHG emissions GHG emissions from the automotive industry primarily come from midstream and downstream activities. From a full-life-cycle perspective, improving vehicle fuel efficiency and standards can help reduce short-term carbon emission pressures, but the long-term solution lies in transitioning to alternative power sources. In China, the life cycle emissions of BEVs were projected to be 37% to 45% lower than those from comparable gasoline vehicles in 2021 and 48% to 64% lower by 2030.76 China’s fuel economy gap significantly impacts the sector’s GHG emissions. In 2023, fuel vehiclesaccounted for 96% of China’s GHG emissions, with an average fuel consumption of 6.26 litres per 100 kilometres (km), compared to the global average of 5 litres per 100 km for passenger cars.77 To address this, China has set a target to reduce the average fuel consumption of new passenger cars to 4 litres per 100km by 2025.78 Additionally, China has introduced the Stage 6 emission standards to push automakers to improve fuel efficiency. For raw materials such as aluminium, China is pursuing industrial transformation in line with its dual-carbon goals. This includes gradually shifting electrolytic aluminium production capacity from thermal power regions to hydropower regions. Some challenges hinder further emission reductions, however: –Energy sources: The carbon footprint of primary aluminium produced in coal-powered regions is about five times that in hydropower- based regions.79 Currently, about 13% of the aluminium industry in China uses clean energy. To meet the 2030 carbon-peaking target, the aluminium industry would need a 45% clean energy use rate.80 Transitioning to cleaner energy has huge potential. –Lack of aluminium scrap: China’s recycled aluminium industry faces challenges such as a lack of aluminium scrap supply and high import dependence.81 China emphasizes industrial transformation and promotes recycling and reuse to reduce GHG impacts in several documents like the Carbon Peaking Implementation Plan for the Non-Ferrous Metal Industry82 and the Recyclable and Renewable Design Guidelines for Plastic Products.83 In 2024, China started exploring including the electrolytic aluminium industry in the coverage of the national carbon emissions trading market,84 which may help accelerate action from related industries. While there is still a significant gap in the fuel economy within China’s automotive industry, issues related to energy structure, production capacity structure and recycling indicate room for optimization in the life cycle emissions of key raw materials. Currently, about 13% of the aluminium industry in China uses clean energy. To meet the 2030 carbon- peaking target, the aluminium industry would need a 45% clean energy use rate. Nature Positive: Role of the Automotive Sector – China Deep-dive 23

Nature Positive Role of the Automotive Sector China Deep dive