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China Transport Sector Policy Briefing – 2019, Issue 3

The newest issue of our China Transport Sector Policy Briefing is here! The Sustainable Mobility Team at GIZ in China provides you with regular summaries of important policies in China’s transport sector.

Please click here to download: China Transport Sector Policy Briefing Issue 3 2019

NEV purchase subsidies, VAT reform, methanol-fuelled cars, green logistics

On 5 March 2019, Premier Li Keqiang presented the 2019 Government Work Report at the National People’s Congress. Each year, the Government Work Report summarises economic and social achievements from the previous year and the general direction for the current fiscal year. For the transport sector, the 2019 Report reiterates many of the goals set out in policies previously and names several key topics, such as innovation and research in the field of Big Data, Artificial Intelligence and mobility. As for investments in transport infrastructure, the Report sets concrete targets: 800 billion RMB (ca. 100 billion EUR) will be invested in railway and 1.8 trillion RMB (ca. 240 billion EUR) in road transport and shipping infrastructure. We will see more centralisation around the regional hubs like the Greater-Bay-Area (Hongkong, Macao, Shenzhen and Guangdong), the Jing-Jin-Ji region and the Yangtse River Delta.  Motorised transport is again named as one of the three large contributors to air pollution, which shall be significantly reduced, supported by improved parking services and pedestrian zones.

One region that already serves as a blueprint for China’s ambitions and has made headlines as becoming the first Chinese province to have 100 percent new energy vehicles by 2030, is the island Hainan in Southern China. Now, the Provincial Government of Hainan goes even further and will stop building new coal power plants and gradually phase out existing ones. Hainan goes green! The new Action Plan promotes green development of a wide range of industries, setting concrete targets for the transportation sector.

Another great example is Tianjin’s municipal government which plans to increase Tianjin’s NEV fleet by 20,000 vehicles annually until the end of 2020. The ‘Three-Year Action Plan for the Development of NEVs in Tianjin (2018- 2020)’, released on 9 March 2019, sets the target that NEVs should make up 4.5% of the total vehicle volume in the city at the end of 2020. The Action Plan sets out to improve charging infrastructure and to promote NEVs in transportation hubs such as Tianjin Port, railway freight yard areas or the airport. The plan also takes aim at the city’s public and municipal transportation: All buses shall be electric until the end of 2020 and at least 80% of all newly purchased sanitation, post, taxi and light logistic vehicles shall be NEVs or clean energy vehicles.

But it won’t be that easy to get subsidies in the future. MoF, MIIT, MoST and NRDC on 26 March 2019 set stricter technical requirements for purchase subsidies for NEV passenger vehicles, small busses and trucks. The policy includes stricter requirements in terms of battery density, energy consumption and driving range. This policy marks an important step on the central government’s way to save on subsidies and phase out subsidies for NEVs after 2020.

However, the government supports the automotive industry through other incentives like tax releases. On 26 March 2019 the Chinese government announced to further deepen its VAT reform, effective from 1 April 2019 on, and thus further supports certain key industries with cost reductions. The rate of 16 percent in the manufacturing industry is lowered to 13 percent, and the rate of 10 percent in the transportation and construction sector is lowered to 9 percent. These tax cuts are the second VAT reduction within one year and significantly decrease costs for companies that operate in China’s key industries.

But the Chinese government not only aims at promoting battery electric vehicles. MIIT, MoST, NDRC, MEE, Ministry of Transport (MoT), National Health Commission (NHC) and State Administration for Market Regulation (SAMR) on 19 March 2019 jointly promoted the use of methanol-fuelled cars. They name Shanxi, Shaanxi, Guizhou, and Gansu as key provinces in this process, as their rich coal resources can easily be synthesised into methanol and as they are experienced with methanol-fuelled vehicles.

Last but not least, on 1 March 2019, NDRC jointly with 23 other departments issued an orientation guideline which focuses on building a high-quality logistics infrastructure network and on accelerating the development of green logistics. This includes building the first batch of 15 national logistic hubs in municipal cluster regions and increasing the total volume of rail transport to ca. 3.37 billion tons. The guideline encourages research on how to increase the use of LNG, trolley buses and electric vehicles and vessels for logistics purposes and demands infrastructure expansion of shore power, LNG fuelling stations, and EV charging stations.

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China Transport Sector Policy Briefing – 2019, Issue 2

The newest issue of our China Transport Sector Policy Briefing is here! The Sustainable Mobility Team at GIZ in China provides you with regular summaries of important policies in China’s transport sector.

Please click here to download: China Transport Sector Policy Briefing Issue 2 2019

World’s first  EV energy consumption standards, stricter emissions standards, pollution control of diesel trucks, shift from road to rail

China has unveiled the world’s first technical standards on energy consumption of electric vehicles (EV). The national standards specify the energy consumption limits for different types of EVs, according to the State Administration for Market Regulation (SAMR) and the Standardization Administration of China (SAC). This standard is aiming to accelerate the process of implementing energy-saving technologies as well as to facilitate the reduction of energy consumption, in order to achieve energy-saving targets and to encourage a sustainable development of the EV industry. The standard is not binding but recommended by the authorities, with a scheduled ratification on 1 July 2019.

We see that the Jing-Jin-Ji Metropolitan Region (Beijing, Tianjin, Hebei) is strengthening its measures towards achieving the full implementation of China’s strictest vehicle emission standards (CHINA VIb). Take the expample of Tianjin: From 1 July 2019 on, Tianjin will no longer allow the selling and registering of light-duty vehicles which do not meet the CHINA VIb standard.

Hebei Province, where the sale of diesel or gasoline vehicles non-compliant with CHINA VIb has been forbidden since the start of this year, has now announced similarly comprehensive measures towards light-duty vehicles to take effect on 1 July 2019: Besides selling, the registration and re-registration of vehicles which do not comply with CHINA VIb will also be forbidden.

The city of Beijing focuses on heavy-duty vehicles which are registered in Beijing and powered with compressed natural gas (CNG) or liquefied natural gas (LNG) or which are used for public transport and sanitation. They must meet the national level CHINA VIb standard 4 years earlier – from 1 July 2019 onwards.

Standards is only one side of the coin. Another one is the shift from road to rail and waterways. Cleaner freight transportation and thus improved air quality is the theme in China’s transport sector today.

Shandong’s provincial government for example announced a plan to prevent and control pollution caused by diesel trucks on the one hand. By 2020, the province aims to improve the quality of diesel fuels, increase the number of clean diesel engines, decrease nitrogen oxides and particulate matter emissions, and strengthen quality control capacities. Furthermore, it aims to increase the proportion of NEVs used for public transport, sanitation, postal services, car rental, and light logistics in urban areas: NEVs shall account for 80% of those fleets by 2020. On the other hand, the province will promote the shift from road to rail, aiming to increase rail freight volume and promote green freight mechanisms.

Hunan Province launched an Implementation Scheme for adjusting its transport structure based on the national Three-Year Action Plan, which focuses on the shift from road to rail and waterway. The main objective of the implementation plan is to optimize the provincial railway and waterway transportation network. The plan targets an increase of railway transportation volume by 18% (7.55 million tons) and an increase of waterway transportation volume by 10% (3.95 million tons). Besides, multi-modal transportation volume shall see an annual increase by 20%. The achievement of the objectives is planned for 2020, with 2017 as the base year.

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China Transport Sector Policy Briefing – 2019, Issue 1


The newest issue of our China Transport Sector Policy Briefing is here! The Sustainable Mobility Team at GIZ in China provides you with regular summaries of new important policies in China’s transport sector.

Please click here to download: China Transport Sector Policy Briefing Issue 1 2019

In the beginning of 2019, the Chinese government is planning to strengthen China’s automotive industry, with a focus on ICV and NEV industries, while curbing pollution caused by diesel trucks.

Strengthening the automotive industries, restrictions over diesel trucks

Based on the “Implementation Plan on Improving and Promoting the Consumption System (2018-2020)”, NDRC on 29 January 2019 released an “Implementation Scheme on Supply-Side Measures for Further Promoting Steady Growth of Consumption and Forming a Robust Domestic Market (2019)”. The scheme sets forth a series of measures to stimulate consumption and to upgrade the industry structure in China.

In the automotive area, local governments should implement measures according to their local conditions, such as promoting the upgrading of vehicles through subsidies for the purchase of new cars in exchange for the scrapping of old vehicles (those falling under CHINA III emission standards) or subsidies to rural residents for scrapping three-wheelers and purchasing light duty and passenger vehicles (trucks under 3.5 tons or passenger vehicles with up to 1.6 liter engines). The central government will financially support local governments in their implementation of effective pollution control measures, such as promoting the use of NEVs and phasing out heavy-duty trucks, and will continue working on improving NEV subsidies.

Two provinces and one major city are on the way of implementing concrete measures:

Zhejiang Province (home to the Geely Holding Group Co., Ltd) is one of the richest and most developed provinces in China. They issued a plan which targets the building of a world-class automotive industry cluster by 2022. By then, the province’s auto production should reach over 3.5 million units, of which more than 800,000 units should be NEVs. Moreover, the province will build various national innovation and technology centers focusing on manufacturing, technology and testing in the automotive industry.

Liaoning Province (home to BMW and the Brilliance Automotive Group) wishes to improve the international competitiveness of its advanced equipment industry. Therefore, Liaoning Province released the “Implementation Scheme for the Construction of an Advanced Equipment Manufacturing Base”, which includes a sub-project related to NEVs.

The plan stipulates that Liaoning Province will focus on the development of energy-saving vehicles, ICVs and core components. In the field of special vehicles, the province will focus on the development of pure electric and hybrid vehicles for airport shuttle services, snow removal, police and sanitation services and other fields of application. A project management office for coordinating and managing the manufacturing projects, specifically for those projects on energy-saving vehicles and NEVs, will be set up and located on the premises of the Brilliance Automotive Group.

Shenzhen (home to BYD) announced a first round of support plans in order to accelerate the development of the green and low-carbon industries of the city. One focal point lies on supporting the NEV industry. This includes the development of key components, materials, manufacturing and equipment for batteries, electronic controls, motors, charging equipment and DC converters.  Research and development and commercialization of hydrogen production, storage, and filling technologies are another focus area.

The war on pollution continues

On 4 January 2019, eleven departments including the Ministry for Ecology and Environment (MEE), the National Development and Reform Commission (NDRC), the Ministry for Industry and Information Technology (MIIT) and the Ministry of Transport (MOT) jointly issued the “Action Plan for the Pollution Control of Diesel Trucks”, based on the targets stipulated in the “Three-Year Action Plan for Defending the Blue Sky 2018-2020”. It calls for strengthening the supervision of environmental protection standards for newly produced vehicles. It furthermore restates that key areas (Jing-Jin-Ji region, the Yangtze River Delta, the Pearl River Delta) and the Chengdu-Chongqing region will implement CHINA VI emission standards for motor vehicles ahead of the original schedule. Instead of following the deadlines put forward on a national level (July 2020 and 2023), it reconfirms these regions will start implementing CHINA VI starting from 1 July 2019, as announced in the Three-Year Action Plan, which seems to be a realistic goal. Whereas the 2023 goals pose a major challenge to the local industry as this standard is even stricter than the Euro 6 standard.

Just last week, MEE again encouraged cleaner fuels and announced to crack down harder on substandard diesel vehicles in its war on smog. Furthermore, they encouraged a stronger shift from road to rail. We have seen in the past month that intermodal transport is taking up. Fujian province, one of the centers of e-commerce in China, promotes a shift from road to rail and ship. The same accounts for Tianjin: A new set-up for bulk cargo transportation is scheduled to take basic shape by 2020, with a focus on enhanced efficiency, last-mile solutions, railway hubs, as well as collection and distribution channels within ports. Tianjin will also set up a demonstration project on combined container transport via waterway and rail and will promote the interactive sharing of information on multimodal transport.

Sandra Retzer & the GIZ in China Sustainable Mobility Team

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China Transport Sector Policy Briefing – 2018, Issue 6

The newest issue of our China Transport Sector Policy Briefing is here! The Sustainable Mobility Team at GIZ in China provides you with regular summaries of new important policies in China’s transport sector.

Please click here to download: China Transport Sector Policy Briefing Issue 6 2018

In the end of 2018, the Chinese government started significant measures to advance its logistics industry, while planning to strengthen the hydrogen fuel cell production in Jiangsu. Furthermore, new developments regarding New Energy Vehicle (NEV) and Intelligent and Connected Vehicle (ICV) industries were omnipresent.

Reinventing the logistics industry, cleaner air for Beijing, intelligent ship building, battery recycling and hydrogen fuel cells

Beijing intends to aid the phase out of heavily polluting heavy duty vehicles (HDVs) in the capital city. Since 1 December 2018, CHINA III diesel-fueled HDVs registered in Beijing are no longer permitted within the city’s fifth ring road. And from 1 November 2019 onwards, all CHINA III diesel-fueled HDVs will be prohibited to enter the whole administrative area of Beijing, an area as large as Belgium.

Increasing e-commerce and an ever growing logistics industry are a huge burden for Chinese politics. In order to get control of this, on 21 December 2018, NDRC and MOT jointly released a new “National Logistics Hub Distribution and Construction Plan”, a three-step development plan for the Chinese logistics industry. The government aims to have built 30 modern national logistics hubs by 2020 and 150 by 2025, as well as to reduce logistics costs to under 12% of Chinese GDP. Until 2025, the proportion of freight turnover attributed to rail is to increase to 30%. Currently this lies at only 13% (2017) (in comparison: in Germany we are at 24%).

But also transportation by ship should increase under two conditions: it has to be clean and intelligent/ connected. Therefore, on 28 and 29 December 2018, MIIT consecutively released the “Action Plan on Intelligent Ship Development 2019-2021” and the “Action Plan on the Promotion of Intelligent Transformation of Ship Assembly and Construction 2019-2021” where clear targets and development goals for Connected Smart Ships (CSS) are set for the next three years.

In July 2018, MOT released its “Draft Adjustment Plan for the Shipping Emission Control Zone“. Obviously there has been quite a lot of feedback from stakeholders on this draft as the “Implementation Scheme of the Domestic Emission Control Areas for Atmospheric Pollution from Vessels” published by MOT on 10 December 2018 shows significant changes and less restrictions. From 1 January 2022 the sulphur content of any fuel oil used on board sea-going vessels should not exceed 0.1% m/m when operating in the coastal emission control area in Hainan waters. This date was previously set two years earlier, for 1 January 2020. Furthermore, from 1 January 2020, the sulphur content of fuel oil used on board sea-going vessels should not exceed 0.1% m/m when operating in inland river emission control areas. In the draft version this goal has been applied to all vessels on berth in sea emission control areas.

When it comes to intelligent and connected, of course, the automotive industry takes the lead. MIIT issued an Action Plan on the development of China’s ICV industry on 25 December 2018.

Also NDRC focuses on the further development and expansion of NEV and ICV industries. On 10 December 2018, NDRC announced the “Automotive Industry Investment Management Regulations”, which came into effect on 10 January 2019. With these regulations, NDRC intends to impose strict control on additional production capacity for vehicles with conventional engines. On the other hand, the regulation simplifies the approval of automobile investment projects and lays out project scopes in the areas of engines, batteries, battery recycling, vehicle assembly, special purpose vehicles and fuel cells.

Fuel Cells are also predominant in the city of Zhangjiagang, a city home to numerous hydrogen-related enterprises in Jiangsu province. On 24 December 2018, the “Three-Year Municipal Action Plan to Promote the Hydrogen Industry” has been published. By 2020, the annual output value of the hydrogen energy industry value chain in Zhangjiagang City is planned to exceed 10 billion RMB (ca. 1.3 billion EUR), out of which 1 billion RMB (ca. 130 million EUR) should be attributed to hydrogen production, 4 billion RMB (ca. 522 million EUR) to key components of hydrogen energy installations, 2 billion RMB (ca. 261 million EUR) to fuel cell systems and 3 billion RMB (ca. 392 million EUR) to fuel cell vehicles. The local government will provide financial subsidies for the construction of hydrogen stations, procurement of hydrogen-fueled vehicles, research and development on key component technology as well as the construction of public service platforms providing quality checks and certifications.

It is all about New Energy Vehicles! Aimed at implementing the “Interim Measures on the Management of Recycling and Utilization of New Energy Vehicle Power Batteries” and improving the recycling and utilization of NEV traction batteries in the Jing-Jin-Ji Region, the Beijing, Tianjin und Hebei governments jointly published the “Implementation Scheme for a NEV Traction Battery Recycling Pilot in the Jing-Jin-Ji Region” on 18 December 2018. The implementation scheme identifies targets for a Jing-Jin-Ji pilot on traction battery recycling. By 2020, the Jing-Jin-Ji region is to have a standardized, efficient and sustainable recycling system as well as a fair and competitive market environment. By 2020, a traction battery tracing system is to be established and able to trace the entire life cycle of each traction battery.

Sandra Retzer & the GIZ in China Sustainable Mobility Team

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China Transport Sector Policy Briefing – November 2018

The November edition of our China Transport Sector Policy Briefing is here! The Sustainable Mobility Team at GIZ in China provides you with a monthly summary of new important policies in China’s transport sector.

Please click here to download: China Transport Sector Policy Briefing November 2018

In November, the Chinese government focused on the development of New Energy Vehicles (NEVs) and Intelligent and Connected Vehicles (ICVs), while singling out Jing-Jin-Ji as a demonstration zone for structural adjustments in the transport sector. Additionally, the first standards for the transportation of dangerous goods and a report on the environmental impact of the transport sector were released.

NEV and ICV development, measures for structural adjustments, environmental impact of emissions and standards for the transportation of dangerous goods

After major national-level policies on New Energy Vehicles (NEVs) have been released in 2018, several Chinese provinces and cities in November released their own plans to translate national policy into action on a local level:  for example, the Province of Henan released the “Three-Year Action Plan on NEV and ICV Development 2018-2020 in Henan” on 28 November 2018. Henan aims at a NEV production capacity of 300,000 vehicles, 50% of which shall be intelligent and Connected Vehicles (ICVs), as well as a local sourcing rate of automobile parts of 60%. The province also plans to launch ICV pilot zones.

During the 2018 congress, the China Society of Automotive Engineers (SAE) released an “Implementation Plan of Eight Key Projects for Medium and Long Term Development of the Automotive Industry”. The Plan envisions that until 2025, NEV ownership shall reach 20 million units with a yearly sold amount of 7 million NEVs, including 50,000 fuel cell vehicles. 500 hydrogen refueling stations are to be added and the market share of hybrid vehicles shall reach 20%. Fuel consumption of passenger cars shall be reduced to 4.5l/100km and fuel consumption of trucks shall drop by 30-35% compared to 2015.

Nevertheless, the healthy development of NEV charging infrastructure remains an obstacle for the Chinese government. Therefore, the National Development and Reform Commission (NDRC), the National Energy Administration (NEA), the Ministry of Industry and Information Technology (MIIT) and the Ministry of Finance (MOF) jointly released the “Action Plan on Promoting the Reliability of NEV Charging”. The Plan promotes high quality technologies, and aims at increasing operational efficiency, optimizing charging infrastructure, ensuring electricity supply and establishing relevant norms and standards. Specific tasks have been formulated for each target. The Action Plan announces that effective implementation shall be supported by innovative business models and governmental policies as well as a strengthened role of industry associations.

When it comes to NEV development, the city of Shenzhen has always been the frontrunner. In order to make the management of NEV charging infrastructure more efficient and to improve its safety, the city government issued new approval criteria for the construction of charging infrastructure. These criteria include quality, electric and fire safety, as well as charging and communication coherence. Operators will have to comply with those criteria and will be supervised by the city government.

And where will China go when it comes to ICV? The goals are clear: In a Working Plan, MIIT announces that by 2020, China aims to develop several key ICV technologies, including computer processors, intelligent software algorithms, automated driving systems and vehicle communication systems for conditional automated driving (level 3). In the areas of image processing, information exchange and intelligent decision support, China aims to reach international standards.

In its “China Vehicle Environmental Management Annual Report (2018)”, the MEE lays out administrative measures to limit the environmental impact from vehicle emissions in China, such as improving regulations, eliminating old vehicles and improving fuel quality. Furthermore, it published data on vehicle distribution and emissions: In 2017 China’s vehicle stock reached 310 million units, out of which vehicles powered by gasoline, diesel and natural gas accounted for 89%, 9.4% and 1.6% respectively. The report also shows diesel trucks to account “only” for 7.8% of the total number of vehicles, but they are responsible for 57.3% of nitric oxide and 77.8% particulate matters emitted by motorized vehicles in 2017.

China’s truck market is still quite fragmented and the number of trucks sold reached a new peak in 2017 with more than 1.1 million vehicles (in comparison: European trucks sales have been slightly above 300 thousand vehicles in the same year). The increasing number of trucks and the lack of standardization lead to several severe accidents in the past years, in particular when it comes to transportation of dangerous goods. That is why the Ministry of Transport issued the “Regulations concerning road transportation of dangerous goods” as the first integrated regulations for road transport of dangerous goods in China. It refers to the European Agreement Concerning the International Carriage of Dangerous Goods by Road (ADR) in a step to adopt ADR in China. The new standards came into effect on 01 December 2018.

Dear readers, in China everything slows down right now as the Chinese New Year is coming up next week. Therefore, we wish all of you a Happy New Year of the Pig! Like we say in German: “Schweine bringen Glueck”. The Chinese think alike. So we do wish lots of luck for you and your families for the New Year.

Sandra Retzer & the GIZ in China Sustainable Mobility Team

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China has been struggling to meet the growing demands of urban delivery. With urban population continuously growing at about 15 million people per year, 58.52% of Chinese citizens now live in cities (up from 36.22% in 2000). At the same time, consumption spending per capita in China has grown by 25% in just 3 years from RMB 18,487 (about EUR 2,370) in 2013 to 23,079RMB (about EUR 2,960) in 2016. A lot of this increased consumption spending has been driving the fast growth of e-commerce, which saw a 60% annual growth (CAGR) for the past 7 years. These developments have provided a boom for logistics companies in China, which saw their express deliveries rise from 9 billion shipments in 2013 to an estimated 40 billion in 2018.

Figure 1: Shipments in Billion in China

However, this development also provides many challenges to both the traffic in the cities as well as the environment. With numbers of both delivery and private vehicles soaring by 20 million from 2016 to 2017, the Chinese Ministry of Transport (MOT) started a green urban delivery program in 22 pilot cities to explore and implement low-carbon measures to improve urban delivery.

On 27 and 28 September  2018, MOT with support from GIZ in China organized a workshop to discuss current developments, best practices and challenges. Participants of this conference included representatives from local governments (Departments of Transport, Economy, Public Security), from think tanks (e.g. Shenzhen Electric Vehicle Application and Promotion Center), from industry (e.g. JD.com) and start-ups (e.g. Juma Logistics). GIZ had invited experts from the UK and Japan to introduce their experience in developing innovative modes towards sustainable urban delivery.

In the discussions and presentations, particularly three main pathways to better manage the urban deliveries emerged: electrification of the fleet, shared delivery and connectivity.

Electrification: developing New Energy Vehicles (NEVs)

Diesel delivery vehicles are a major source of pollution in cities. With further increases in urban transport to be expected, one important pathway to lower emissions is the introduction of new energy delivery vehicles. During the workshop, Xie Haiming from the Shenzhen Electric Vehicle Application and Promotion Center explained the status of this transition.

One particular success factor, as explained, was the provision of subsidies by the city of Shenzhen for the purchasing and operation of NEVs, which give NEVs a comparative advantage over traditional vehicles. The subsidies depend on the battery sizes: operators receive subsidies ranging from 700RMB/kWh for batteries lower than 30kWh (about 90 EUR/kWh), to 600 RMB/kwH for batteries between 30kWh and 50kwH (about 77 EUR/kwH), and to 500RMB/kWh for batteries over 50 kWh (about 64 EUR/kWh). In order to avoid an abuse of the subsidies, the government introduced the requirement that the vehicles have to operate over 30,000 km per year.

To further incentivize logistic companies to purchase and operate NEVs, Shenzhen gives favorable access permits to NEVs. This provides a comparative advantage. Moreover, since 1 May 2018, when procuring new light duty trucks, logistics companies are only allowed to procure NEVs .

Another factor to accelerate the introduction of NEVs in urban logistics is the availability of charging facilities. Shenzhen has used big data analysis to better understand the amount of charging stations needed as well as the location of charging poles. With about 9,000 charging poles for non-bus NEVs in Shenzhen, Mr. Xie explained that Shenzhen has an urgent need for more charging facilities. For this, policy makers need to ensure that challenges such as finding space, ensuring quality standards, and navigating the unwillingness of gas stations to install charging stations (as charging an NEV delivery vehicle takes longer than filling the gas tank) are circumvented.

So far, a total of 40,363 light duty NEVs were sold July 2018 in Shenzhen. Shenzhen aims to have a total share of 30% NEV in light trucks by the end of 2020.

Figure 2: Sales of NEVs and NEV logistics vehicles in Shenzhen, 2015-2018

However, further challenges for NEVs remain. One challenge mentioned was the lack of second-hand markets and prices for NEVs in logistics: whereas ordinary delivery vehicles can be easily re-sold and re-sale prices can be factored into the original purchasing decision, this mechanism is thus far absent for NEVs.

Our take-away: The path to NEVs in logistics seems achievable, yet many hurdles still need to be taken. Among them are charging infrastructure, quality issues, and proper life-cycle analyses to better understand the environmental impact of the different modes of technology for urban delivery. The city of Shenzhen continues to be a leading city in China for the introduction of NEVs and relevant NEV policies.

Shared delivery: policy and practice

Shared delivery has been a topic for discussion in Japan, Germany, the UK and China for many years, as was presented by the different experts. The idea is that logistics companies share resources to bundle deliveries to increase efficiency (e.g. by pooling delivery runs), reduce the use of resources (e.g. by cutting idle times and empty runs) and thus reduce cost and externalities (e.g. pollution, space use).

Local Chinese governments have set up a series of policies to promote shared delivery. For instance, the city of Chengdu set up access control policies to allow only a specific number of vehicles to enter the city area. It decided to stop issuing access permits in 3 years. The city government aims to effectively control the types of delivery vehicles entering specific parts of the city, with preferential access for shared delivery vehicles. To provide logistics services in the affected areas, logistic providers thus have to operate in a shared delivery mode.

To further strengthen shared delivery, the city of Chengdu has built three centralized distribution centers with 1.5 million square meters of standardized storage facilities. During the workshop, participants had the chance to visit a local shared delivery warehouse for fast-moving consumer goods, including cold-chain freight.

One example from Chengdu was particularly highlighted: Renrenle Supermarket. By increasing its proportion of shared delivery from 30% to 70%, they increased the average working time for a vehicle from 6.1 h/d to 7.5 h/d, the load factor from 74% to 86%, and decreased the number for vehicle trips from 100 to 25.

During the workshop presentation, participants also discussed the challenges of shared delivery. They include:

  • If shared delivery is applied on the last mile, the question for logistics companies could be how to differentiate themselves from their competitors or brand themselves
  • As shared delivery requires sharing information, companies may wonder how to keep a competitive advantage that comes through ownership of data.
  • As shared delivery requires a high degree of standardization (e.g. vehicles, containers, information systems), it is unclear how much investment is necessary.

Our take-away: Addressing these challenges in shared delivery will require either more government action through incentives/disincentives or regulation. While the advantages for the environment of shared delivery are mostly evident, successful implementation examples of large-scale shared delivery are still lacking.

Connectivity: information platforms for monitoring

The application of information technology, digitalization and big data in urban delivery can help not only operators to increase efficiency, but also cities to promote green urban delivery, as was introduced by representatives from the cities of Chengdu, Shenzhen and Suzhou. One particular goal is to better manage traffic flow to reduce congestion. With 9 out of the 30 most jammed cities in the world being in China, Chinese city governments are hard pressed to use every tool available to improve traffic efficiency. For urban delivery it is particularly illegal parking that exacerbates the problem, according to MOT. Although parking regulations are often in place, effective enforcement of regulations would require more timely and precise monitoring. Therefore, Chinese cities explore the idea of an information platform for urban delivery monitoring.

Chengdu, for example, set up an urban delivery information system that monitors the speed, location, stop-times, and temperature of the freight compartment (particularly relevant for cold-chain delivery vehicles) of every delivery vehicle. Employees of the city administration can then analyze traffic efficiency and lawful behavior of drivers on the central information platform. This helps to monitor when a vehicle violates, for example, the access control policy, or whether a cold delivery vehicle has maintained the temperature of goods.

Figure 3: Joint Distribution Monitoring Center in Chengdu

Our take-away: This information platform is currently used predominantly for the enforcement of laws and regulations. Other use cases seem also possible, e.g. to integrate these data into the shared-delivery planning.

International experiences and lessons

Recognizing the uniqueness of Chinese rapid development and the scale of the challenge in urban delivery, Dr. Jaques Leonardi from University of Westminster, Dr. Ueta Minoru from Nittsu Research Institute and Consulting in Japan, and Dr. Christoph Nedopil, project director of the Sino-German Cooperation on Low-Carbon Transport at GIZ in China, shared international experiences and best practices in planning, managing, regulating, and innovating green urban freight delivery.

Environmental zone in London

Dr. Leonardi focused his presentation on the holistic approach of logistics planning necessary to overcome sustainability challenges in urban delivery. He highlighted the necessary mix of technology, infrastructure, markets, behavior (e.g. drivers), energy composition and generation as well as regulation. He  raised many examples to highlight the possibilities of increased efficiency in urban delivery, e.g. San Sebastian in Spain which introduced urban consolidation centers with cargo bikes. He showed pathways for cities to better manage local emissions, e.g. by introducing environmental zones and access limits for vehicles, e.g. in Paris or London. A particular highlight was his emphasis on using waterways for inner-city freight, e.g. for construction material.

Using waterways for urban freight

Dr. Ueta explained the trends and solutions of urban deliveries in Japan. While economic growth, and with it the growth of urban delivery, in Japan seems much slower than in China, the freight structure in China and Japan are comparable. For instance, most trucks in China and Japan are private trucks, while commercial trucks have a much higher efficiency (in tons transported per day). To increase efficiency, also Japan introduced shared delivery principles, for example by building four public truck hubs around Tokyo. Apart from this, Tokyo also encourages the set-up of shared delivery zones for many shops. In regards to fighting pollution in cities, Tokyo has introduced environmental zones that prohibit heavy-duty trucks from entering the city. Similarly to China, Japan faces an on-street parking problem. To overcome the problem, the Tokyo government introduced fines for both owners and drivers of vehicles with the option to withdraw operating licenses for repeat violators.

Example for Parking and Loading Zones in “Smooth Tokyo” Yasukuni Street

At the same time, Tokyo introduced better parking space management by better making use of empty spaces in cities. Another policy to reduce parking time is the necessity to have two operators in a delivery truck: one driver, one loader.

Dr. Nedopil introduced the concept of intermodal urban deliveries. Intermodal urban delivery is employing, for example, rail-based trams to deliver goods to a micro-hub, from where the goods are then delivered by a low-carbon vehicle (e.g. cargo-bike) to the recipient. The German city of Frankfurt just announced a pilot to employ a shared passenger-cargo-tram to deliver goods. Other examples of such intermodal transport using trams are or were found in Switzerland to transport garbage, in France to transport goods to supermarkets, and in the German city of Dresden to supply materials to the Volkswagen car factory. While this form of intermodal urban delivery requires a high level of coordination among many stakeholders (e.g. logistics providers, public transport operators, legislators), it can be seen as one pathway to contribute to reducing emissions in urban deliveries. This form of delivery is particularly successful if external circumstances (e.g. entry limitations for trucks, weather-induced difficulties for road deliveries, space limitations) and regulations make this form of delivery more attractive than conventional delivery.

Using a tram for to supply small shops in Amsterdam, Netherlands Outlook for green urban delivery

China will continue to face an uphill battle to limit the externalities, such as emissions, from urban deliveries. Many solutions present themselves and combining the relevant solutions that are applicable for the specific urban circumstances requires more analysis and design than simply copying the solutions from one city to another.

This workshop allowed cities to present and exchange ideas amongst each other and with international experts. It has allowed for critical thinking, but it has also shown that a mix of more innovations, enforcements of laws as well as the introduction of more market mechanisms – and thus a close cooperation and coordination among private and public stakeholders – are necessary to manage the challenges in urban delivery to make urban delivery green in result and not in name only.

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With rapid economic development and accelerated urbanization, Chinese cities are experiencing a substantial growth in vehicle population and motorized mobility. Yet, vehicle ownership rates are still a fraction of those in developed countries—118 motor vehicles per 1,000 persons in 2015 compared to 748 per 1,000 persons in Germany. Against this background, we expect continued growth of vehicle demand in China, especially in tier 3 and tier 4 cities.

The rapidly growing number of motorized vehicles puts high pressure on the cities’ transport systems, while greenhouse gas emissions and local air pollutants, as well as external costs of traffic congestion, are increasing. Neither the provision of additional road infrastructure nor the development of new car technologies can overcome all these challenges. A sustainable solution to the city’s traffic problems can only be achieved by implementing travel demand management (TDM) strategies. Particularly parking management as one of the most effective TDM policies can contribute to alleviate a wide range of transportation problems.

A contribution to liveable cities

As this report on efficient parking management shows, parking management combined with various pricing schemes can play a positive role in leveraging vehicle ownership and vehicle usage. Furthermore, good parking management can generate income that can provide financial support for the development of other sustainable transport modes, for example non-motorized transport and public transportation.

One particular lesson is that more parking space is not the solution for parking problems. In the past, cities tended to solve parking problems simply by increasing supply, for example, by converting more curb lanes and sidewalks into parking, subsidizing the construction of municipal parking facilities and by increasing the number of parking spaces required in new development.

However, this strategy is costly and unfair. It encourages motorists to use parking facilities inefficiently. Abundant, subsidized parking encourages increased automobile ownership and use, which exacerbates other transportation problems, including traffic congestion, accidents, energy consumption and pollution emissions. Parking subsidies are unfair because they force everybody to pay for parking facilities regardless of whether they use them.

Instead, in the new era of urbanization, applying a new parking planning paradigm will allow Chinese cities to explore how to integrate and implement parking policies in a more effective way. This includes the following factors:

  • Parking facilities should be managed for efficiency, to maximize their value and minimize the number of parking spaces needed to serve each area;
  • As much as possible, users should pay directly for the cost of parking facilities;
  • Intelligent and information technology should be implemented to simplify the parking process, such as checking for parking space availability and quick payment options;
  • Parking requirements should be flexible to adapt to demands in each situation.

Based on the site visits and technical exchanges with local research institutes from the cities of Qingdao and Tianjin, Dr. Paul Barter together with the GIZ transport team drafted the policy proposal of parking management in Chinese cities.

Click below to download the report in English or Chinese.

Download: Report on Parking Management – English Download: Report on Parking Management – Chinese
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On 11 November 2018 Chinese e-commerce volume reached more than 27 billion EUR, on a single day by a single retailer – Alibaba. This is more than half of Germany’s overall e-tailing in one year, which is expected to be 53.6 bn EUR in 2018. Adding other online-shops to the statistics, the total sum spent in Chinese e-commerce on that one day will probably be about as much as Germany’s yearly e-commerce volume (JD.com sold about 20 bn EUR worth of goods).

The so called Singles Day, or Double Eleven (Shuangshiyi, 双十一) or also „chop-off-your-hands-day“ (in order to stop shopping) happens on 11 November. The four 1s could be understood as singles, which is one of the stories of the origin of Singles Day. It has become  the biggest shopping event in the world., dwarfing its American equivalent – Cyber Monday – which reached sales of 6.59 bn USD (about 5.75 EUR) in 2017 – a number reached in 30 minutes in China in 2018.

Figure 1: Alibaba Sales on 11 November 2018. Source: click here.

Alibaba launched the shopping festival in 2009, potentially as a way to overcome the sales-slump between the Chinese National Holiday at the beginning of October and Chinese New Year in late January or February. In its first year, it sold about 6 million EUR worth of goods. Only one year later, in 2010, other companies, notably JD.com, joined the fray to offer discounted groceries and cosmetics, electronics, cars or hotel nights to its customers on this day. In a close race, Alibaba with its marketplaces Taobao and Tmall could retain the lead in luring customers to shop online on that one day, increasing its sales over the past 10 years (CAGR) by 113.05% every year.

Figure 2: Alibaba’s 11/11 sales 2009-2018. Source: click here.

This development required not only heavy investment in IT infrastructure to handle billions of transactions, mostly online payments through Alibaba’s own Alipay system, but also investment in logistics. In 2018, 1.35 billion deliveries had to be delivered for 11/11 in China, which is equivalent to about 80% of DHL parcel deliveries in Germany in a year. Alibaba’s own logistics provider Cainiao handled about 1.04 billion packages, and chartered 51 flights to Western Europe, Russia and South East Asia to deliver to its increasingly international shoppers during 11/11. To better manage commissioning and packaging, Cainiao has invested in automated warehouses, for example in the city of Wuxi – in the Eastern Part of China, where 700 robots fulfill the orders (a video can be found here).

In 2018, the China Railway Corp employed 850 high-speed trains and 350 slow trains between 11 and 20 November to support the transportation of packages in cooperation with SF Express, China’s largest courier carrier. To stem the flow of packages, the Chinese railway temporarily refurbished some of its high-speed trains. In several high-speed train carriages, seats were removed to allow the high-speed train to carry 5 metric tons each.

The shopping frenzy was also clearly visible on China`s streets, with packages piling high waiting for their rightful owners.

Figure 3: Packages being unloaded and waiting for their owners in front of apartment houses in Beijing Figure 4: Even more packages.

The environmental impact of the packages itself is, however, serious. In 2017, Chinese news outlet Xinhua reported that waste facilities in Beijing could not handle the packaging waste of 11/11, when a total of about 300,000 tons of packaging waste was created from that event. Greenpeace estimated that the 2017 Singles Day generated an additional 52,400 tons of CO2 emissions.

Ideas how to make deliveries greener and deal with packaging waste have been discussed: China’s State Post Bureau announced in 2017 that by 2020, packaging material should per package should be cut by 10% and half of all external packaging should be degradable. Suning, another retailer in China, has promised to introduce 200,000 reusable yellow plastic boxes for delivery in 2018, which, if used 1,000 times, would reduce waste of about 200 million cardboard boxes. Also, Alibaba promised to recycle cardboard boxes in 10 Chinese cities (including Beijing, Shanghai and Guangzhou) and encouraged its users to return the packaging materials at designated distribution centers or had delivery vehicles pick them up.

The Ministry of Transportation (MOT) has also taken actions to tackle the challenges of green urban deliveries – challenges that are reaching further than 11/11. The MOT supports logistics operators and government institutions in 22 pilot cities, including Beijing, Shenzhen, Guangzhou, and Chengdu in developing less polluting means to deliver the increasing amount of express deliveries. GIZ is supporting this work, for example by co-organizing the workshop on green urban delivery in Chengdu in September 2018 with international experts from the UK and Japan. However, in order to lower the environmental impacts of “shopping festivals” like 11/11, an even more coordinated effort needs to take place for recycling as well as efficient delivery.

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China Transport Sector Policy Briefing – August, September 2018

The October edition of our China Transport Sector Policy Briefing is here! The Sustainable Mobility Team at GIZ in China provides you with a monthly summary of new important policies in China’s transport sector.

Please click here to download: China Transport Sector Policy Briefing October 2018 

In October, the Three-Year Plan on the Restructuring of the Transport Sector has set its focus on the shift from road to rail and waterway, while provincial and municipal policies targeted the promotion of new energy industries and new energy vehicles (NEVs). Safety has received prioritization in Beijing with a series of regulations for light electric vehicles.

Restructuring of the transport sector, new energy and NEV promotion at provincial and municipal level, light electric vehicle regulations in Beijing

This month another major plan for the transport sector has been released by the State Council. The Three-Year Plan on the Restructuring of the Transport Sector focuses on the shift from road to rail and waterway. By 2020, key ports, both coastal and inland, shall be covered with a distribution railway network. Furthermore, by 2020, over half of new and updated vehicles in urban areas, shall be new energy vehicles or clean energy vehicles, with a target of 80% in key areas.

The State Council handed this task over to the following ministries: Ministry of Commerce (MOFCOM), Ministry of Industry and Information Technology (MIIT), National Development and Reform Commission (NDRC), Ministry of Transport (MOT), Ministry of Finance (MOF), State Administration of Taxation (SAT), Ministry of Natural Resources (MNR), Ministry of Housing and Urban and Rural Development (MOHURD), Ministry of Ecology and Environment (MEE) and General Administration of Customs (GACC). The State Council officially asked them to come up with policies and administrative measures to promote NEVs, Intelligent Vehicles, the import of foreign cars, the trade of second-hand cars as well as the recycling of cars.

At provincial level, we already see many moves to further promote NEVs through long-term actions. Shandong Province has just released its Ten-Year Plan for the Development of New Energy Industries in Shandong Province (2018-2028): Electric vehicles, plug-in hybrids and hydrogen fuel cell vehicles are expected to be the most important pillars of this development. At the same time, The Yunnan Provincial Government announced its Working Plan for Accelerating the Promotion and application of NEVs in Yunnan.

The city of Tianjin with its population of more than 12 million people sets another example with its Three Year Action Plan for the Development of New Energy Industries in Tianjin (2018-2020), which promotes hydrogen energy and fuel cells, NEVs as well as the development of lithium-ion batteries.

Beijing’s government has been very active again this month: It issued a Beijing White Paper on Intelligent and Connected Vehicles (ICVs) that forecasts that the ICV industry will be worth 13 billion EUR by 2022. In the long-term, the White Paper envisions Beijing to be home to a top of the world cluster of ICV industries, with a vibrant and innovative ecosystem for automated driving complemented by a “secure, efficient, green and civilized ICV society”. In the near future, we may see Beijing establish a world-class system of ICV technologies which can satisfy the requirements of Level 4 automation, an efficient and secure demonstration zone of new intelligent mobility of more than 500 square kilometers, and an ICV manufacturing and user service system.

And it seems Beijing prepares itself for reducing complexity and vulnerability of the transport environment. One major source of accidents in the city is its electric scooters and three-wheelers. Therefore, The Standing Committee of the Beijing Municipal People’s Congress released the new Regulations on the Administration of Light Electric Vehicles, valid from 1 November 2018. This affects all non-commercial electric bikes, electric scooters, electric hoverboards as well as electric three-wheelers and light electric four-wheelers.

All light electric vehicles in Beijing need to be registered with the Beijing Traffic Management Bureau before 30 April 2019, but only electric bicycles with a maximum speed of less than 20km/h, a maximum weight of less than 40kg may receive permanent license plates which allow for unrestricted access to Beijing’s roads. All others may access Beijing’s roads for a three-year interim period with a temporary license plate but will not be allowed on public streets after that. All electric self-balanced scooters and hoverboards will strictly be prohibited on public streets from 1 November 2018 onwards. Any violation will be fined, vehicles or license plates may be confiscated by the police.

We hope you enjoy reading this month’s policy briefing. Any feedback or suggestions are welcome.

Sandra Retzer & the GIZ in China Sustainable Mobility Team

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How can firms like Mobike and Meituan reduce their environmental footprint while simultaneously advancing their business models? This was the central theme of the Beijing Cleantech Hackathon, held at Innoway, a start-up space in Zhongguancun, Beijing’s well-known science and technology park, on 20 and 21 October 2018. GIZ sponsored the 12-hour hackathon which was organized by The Beijing Energy Network (BEN) and New Energy Nexus.

Hackathon participants pose for a group picture

The event brought together some of Beijing’s most talented students, professionals, developers, and entrepreneurs to come up with innovative solutions for tackling the wide array of sustainability challenges facing China today. The individual challenges were sponsored by Mobike and Meituan, two firms which have been instrumental in shaping the wider developments of China’s contemporary mobility and food-delivery sector. While Meituan’s Qingshan Foundation asked participants to develop solutions to promote the recycling of delivery waste at universities, Mobike challenged participants to come up with innovative solutions for improving the wider environmental footprint of shared bikes.

The participants had a period of twelve hours to construct well-reasoned solutions for the given challenges and to prepare their pitches. On day one, the participants received support from mentors in their preparations. Daniel Hsu, Vice President of Village Capital, gave an introduction on how to develop ideas that can feasibly improve a business model’s sustainability. With his key message being “start with the problem, not the solution”, he emphasized the importance of addressing a firm’s actual pain points. All too often, he argued, entrepreneurs make the mistake of developing sophisticated solutions or technologies that, while being creative and innovative, do not have a convincing or feasible underpinning business model. Andrew Chang from New Energy Nexus held a tutorial on how to deliver convincing and successful business pitches.

Andrew Chang from New Energy Nexus holds a tutorial on how to deliver the ultimate pitch

Sunday was game day. The time to present the eagerly-awaited pitches had come and the rooms in Innoway’s Innoplanet were packed by 9am. In addition to twelve groups of excited participants, several representatives from each sponsor were present. A panel of five judges decided on the competition’s winners which were to receive a cash prize of 6,000 RMB. Besides representatives from Meituan and Mobike, the jury was comprised of members of the financial community and international cooperation and development: Wu Fan, Executive Director at Cathay Capital, Peter Sailer, Project Director of the Sino-German Urbanization Partnership (SGUP) at Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH; and Cao Qiyong, Consultant for the Asian Development Bank (ADB) decided on the winners together with Qin Hao, Senior Sustainability Expert at Mobike, and Guan Li, Senior Manager CSR at Meituan Maiwai.

The pitches ranged from creative VIP bike membership schemes and incentives to promote environmentally friendly user behaviour to ‘smart bins’ for delivery waste. The winner of the mobility challenge, ‘Billion Bicycle Ltd.’, proposed an inter-bike bluetooth connectivity solution to be able to more accurately check the parking positions and functional status of bicycles. The team contended that their solution could dramatically improve the sustainability of Mobike’s business model by reducing bicycle mistreatment and damage. Complementing the localization of bikes, they also suggested a simple reorientation of the brake protector outwards in order to prevent brakes from bending out of shape. The runner-up of the mobility challenge argued that by cooperating with event organizers, Mobike can boost the availability of bicycles for high-demand situations. Cyclists, they proposed, should be incentivized to park bikes at certain designated areas in order to provide for sufficient bicycle availability.

Qin Hao, Senior Sustainability Expert at Mobike, challenges a team’s ideas

The winning team of the circular economy challenge proposed the combination of developing water and oil repellent food packaging with innovative back-end waste treatment  to substantially reduce the environmental footprint of food packaging waste at Chinese universities. The runner up of the challenge proposed that Meituan’s sustainability could be substantially improved by reducing the unnecessary distribution of disposable utensils. The team argued that simple changes in Meituan’s delivery app, an opt-in button rather than an opt-out button for the inclusion of chopsticks in delivery, would dramatically reduce needless delivery waste.

Perhaps the message of the Beijing Cleantech Hackathon is best summarized by Peter Sailer, hackathon judge and project director of the Sino-German Urbanization Partnership, who concluded that “on the road to sustainability, it does not only need big ideas, but also small changes in our everyday life. The two winning teams have shown how small adjustments in business strategy could have the potential to create larger impacts on sustainability.”

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