1、 Economic short-term pain relief is inevitable
China’s transformation from “high-speed” development to “high-quality” development must bear a certain price. According to Goldman Sachs, to achieve 75% decarbonization transformation under the existing technical conditions means that China will spend an additional $720 billion a year, and the cost curve will quickly become steeper. When it is completely decarbonized, the cost will increase to $1.8 trillion a year. China’s economic growth target of more than 6.0% this year is not high. It seems conservative, but it is actually based on long-term considerations. On the one hand, the goal of this year is to “prevent risks” rather than “stabilize growth”. On the other hand, it is to better connect the economic development goals of next year and even the next few years, and reserve space for economic structural upgrading. To a large extent, the reserved space is to provide a buffer for the short-term economic downside risks that may be caused by the dual carbon target downlink industry and enterprise transformation.
The pressure of “steady economic growth” next year is still great. At the same time, the dual carbon task needs to be continuously promoted, and the low-carbon transformation is a long-term process. Technology renewal, equipment iteration and energy storage development all need a certain development time and space. Therefore, the decarbonization test of various industries and enterprises may further put pressure on the economy next year, especially the manufacturing industry. But at the same time, we are optimistic that behind the low growth rate figures is the accumulation of high-quality development of cage for bird, which contains great development potential in the future.
Second, the industry concentration increases, and industrial alliances may emerge gradually
In the future, the industrial pattern under the dual carbon goal will change, and the industrial concentration will be further improved. Clean energy belongs to the manufacturing industry, and the manufacturing industry has scale effect. The larger the scale, the lower the apportioned unit cost. For the leading enterprises, the scale advantage is reflected not only in manufacturing technology, but also in human resources. With the price reduction of costs and the improvement of profits, leading enterprises will have more funds to invest in R & D and recruit talents, so as to form positive feedback. Further, the improvement of industry concentration will also enable leading enterprises to assume more social responsibilities, guide the low-carbon transformation of the whole industry, promote the formation of industrial alliance with leading enterprises as the leader, and help promote technical cooperation, technical exchange and technology transformation among members of the alliance, For example, the global low carbon metallurgical innovation alliance led by China Baowu was announced to be established in November this year, with members from 62 enterprises, colleges and universities and scientific research institutions in 15 countries. We judge that similar industrial alliances may gradually emerge in the future, and the first ones may be industries with urgent low-carbon transformation, such as power, steel, coal, transportation and other high energy consuming industries.
Third, subsidies + policy support is the key to the early decarbonization reform
Capital is profit driven, but in the early stage of low-carbon transformation, it is difficult to match the cost and income, and the market expectation for the future is uncertain, resulting in many social capital holding a wait-and-see attitude. Therefore, we believe that in the early stage of the dual carbon reform, subsidies + financial support is the necessary driving force and catalyst. Only when subsidies or financial support enable enterprises to reach the boundary of profit and loss balance, social capital will flow in and boost the accelerated growth of industries. For example, in order to support the development of Cecep Solar Energy Co.Ltd(000591) industries in the United States, the federal government gives Cecep Solar Energy Co.Ltd(000591) industries 30% tax reduction. In addition, low-carbon transformation also involves the concept of “externality”, that is, the profits of enterprise production are exclusive, while the environmental pollution caused by carbon emissions in the production process should be borne by the society. This externality also needs policy correction, otherwise the enterprise itself has no motivation and motivation to carry out low-carbon transformation. At present, China’s dual carbon support policy continues to be issued. It is expected that such policy documents will continue to push through the old and bring forth the new, and the content of the policy will be adjusted according to different stages of development and different objectives to be achieved at different stages, but it is easy to loosen but difficult to tighten on the whole.
Fourth, establish and improve the long-term mechanism
Under the dual carbon goal, it will inevitably be accompanied by short-term shocks such as economic downturn and increase of unemployment caused by the process of reform exploration. Establishing and improving a long-term mechanism can alleviate or reduce the pain caused by short-term shocks and reduce possible risk spillovers. In the process of low-carbon transformation, traditional high energy consuming enterprises may lay off a large number of employees, but at the same time, there will be a large number of employment opportunities in the field of clean energy, but the unemployed may not be able to meet the employment requirements of new jobs, resulting in structural unemployment. This requires the establishment of a long-term mechanism to carry out reemployment training for such groups, improve their business level and meet the new job requirements. At the same time, at the enterprise level, it is also necessary to establish relevant long-term investment and financing mechanisms. On the investment side, the concept of ESG is becoming more and more popular, which is undoubtedly a blessing for enterprises that practice low-carbon transformation as soon as possible. With the influx of capital, enterprises will develop faster and better, and feed back to investors through the rise of valuation and stock price, so as to form a virtuous circle; On the financing side, improve the long-term mechanism of financial support, including credit preference of policy banks, loan interest discount policy, fiscal and tax preferential policy, R & D subsidy policy, export tax rebate policy, etc., so as to better contribute to the early realization of the dual carbon goal.
Fifth, the global demand for clean energy equipment may bring huge increment to China’s manufacturing industry
As more and more countries or regions commit to carbon neutrality, the global capital expenditure on relevant clean energy equipment will also rise rapidly. According to IEA estimates, the global average annual investment in carbon neutralization is about US $2 trillion from 2016 to 2020, and will rise to US $5 trillion in 2030. China has comparative advantages in the field of clean energy infrastructure. After decades of development, China has changed from the situation of “three supplies and one compensation” in the past to a large country of energy equipment. According to Professor Huang Qifan’s statistics, 60% ~ 70% of the clean energy equipment used in the world, whether wind power, hydropower or photovoltaic equipment materials, come from China, China’s market share is as high as about 70%. According to the prediction of zero emissions in 2050 by the International Energy Agency, the proportion of clean energy in the global power structure will reach 90% in 2050, of which wind energy and Cecep Solar Energy Co.Ltd(000591) photovoltaic account for nearly 70%, while at present, wind energy and Cecep Solar Energy Co.Ltd(000591) account for only about 10%. Therefore, there is a huge growth space for clean energy equipment in the future. With the advantages of technology and scale, China, It will undoubtedly play an important role in the whole capital expenditure chain and bring huge increment to China’s related manufacturing industry.
Risk tips:
Policy exceeds expectations, sports carbon reduction, technology and cost bottlenecks exist for a long time.
