As China’s government lays out goals to hit carbon neutrality by 2060, Chinese tech companies are pledging to follow Beijing’s lead by drastically reducing their own emissions.
In the leadup to and aftermath of the annual meeting of China’s national legislature in early March, China’s biggest companies have been making big promises. Alibaba-affiliate Ant Group has vowed to hit carbon net zero by 2030. JD Logistics has pledged to go completely renewable by the same year. Tencent has announced that it has a plan for eventual carbon neutrality, without a timeline. None have laid out exactly how they’ll reach their goals.
Wind and solar energy sources have reached parity with coal in parts of the country, but China’s companies have so far been slow to increase the share of electricity they get from renewable sources. Tech firms’ growth in carbon emission is eclipsing their growth of renewable energy use.
Search giant Baidu’s total carbon emissions increased 53% year-on-year to reach 499 million tons in 2019, according to the company’s report on low carbon development. At the same time, the proportion of electricity it sourced from renewables hit 8.6% in 2019, up 38% during the same period.
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Similarly, social media and gaming firm Tencent’s carbon emissions from its offices and data centers increased to 857 million tons in 2019, up 20% on the year, according to the company’s 2019 annual report. It did not disclose what percentage of electricity it sources from renewables.
Previous top-down initiatives, including the government’s poverty alleviation initiative, have led to new opportunities for the country’s tech firms. Opportunities mean money, but cutting emissions means scaling back or potentially costly new investments.
The carbon pledges
Since September, when Chinese President Xi Jinping announced that China would reach carbon neutrality by 2060, several companies have laid out plans to control their emissions. These press releases typically lack detail on how the companies will reach their carbon goals.
Net zero doesn’t mean that companies won’t produce carbon but they’ll offset their emissions by investing in carbon capture technologies or by planting trees, among others.
In a November press release, e-commerce giant JD said its delivery arm JD Logistics would reduce its carbon emissions by half of its 2019 levels in 2030, and only use renewable energy sources from the same year. JD Logistics is one of six branches of JD’s empire, and has filed for a Hong Kong IPO. The unit is the largest polluter of all JD companies, according to a company spokesperson..
JD.com, the JD brand’s flagship e-commerce platform, has yet to outline a plan to cut emissions.
We’ve heard nothing about how e-commerce marketplaces plan to tackle carbon neutrality. That’s likely because the task is particularly difficult for these companies. They’d have to decide whether to make emissions standards for the millions of merchants who use their platforms.
On Jan. 12, Tencent, the company behind popular messaging app WeChat, unveiled its own plan to reach net zero emissions in a 2,500 character WeChat post. The document, which focused primarily on reducing emissions from its buildings and data centers, detailed methods it could use to do this, including reusing heat generated by its data centers and using novel liquid technology to lighten its electricity usage. The company placed heavy emphasis on using AI to cut emissions, but did not set a timeline to reach carbon net zero.
“In the future, I expect the biggest part will be powering data centers with clean energy. It will be difficult, but we will work hard at it,” Pony Ma, CEO of Tencent, said in a WeChat post commenting on Tencent’s plan and shared by Chinese media.
Alibaba and Ant
Alibaba-affiliate Ant Group, the world’s largest fintech company, has been the most explicit and ambitious. It plans to hit carbon net zero by 2030, according to a press release dated March 12. The company said it had created a roadmap to eliminate emissions from its electricity usage this year, and that it would completely cut emissions from its supply chain, which includes data centers and infrastructure, by 2030.
Alibaba also hasn’t released a plan aimed at cutting emissions, but ranked highest in a recent Greenpeace study focused on renewable energy use among Chinese tech companies.
Baidu detailed its work on lowering its carbon emissions in its report on low carbon development, which came as a response to Beijing’s latest carbon goals. It also laid out the ways it is greening its data centers, but has not made public any emissions targets. At this year’s Two Sessions in Beijing, CEO Robin Li made a number of proposals for cutting emissions in transportation, including policies to promote rolling out autonomous vehicles, and increasing the efficiency of transportation systems using AI, big data, and 5G.
Big data, big challenges
Key to these plans will be how companies deal with data centers. Explosive energy use from these facilities are not a uniquely Chinese problem. Tech giants from the US have also been working on making their storage and computing facilities more efficient and eco-friendly.
For tech companies, data is money, and the billions of WeChat messages, emails, photos, and videos uploaded by internet users everyday need to be stored somewhere. But more storage means more pollution.
In 2018, data centers in China used 161 terawatt-hours (TWh) of electricity, according to 2019 research by Greenpeace and the North China Electric Power University. That’s enough to power a mid-sized nation, and is four times higher than New Zealand’s total energy consumption in 2018.
During the same year, around 73% of all the electricity data centers in China used was generated by coal and bought from the grid, according to Greenpeace’s report.
Total energy demand from data centers is expected to reach 267 TWh by 2023, around 4% of China’s total energy consumption in 2019. Should China’s energy mix not change, its tech industry will be responsible for generating 163 million tons of carbon dioxide, more than that generated by the entire population of Venezuela.
Data centers in China have seen some improvements, with the efficiency of tech companies’ data centers rivalling their international counterparts. “While China’s data center industry has made significant improvements in terms of energy efficiency, the industry’s massive carbon footprint is proof that much more action is needed to increase reliance on clean energy sources,” said Greenpeace East Asia climate and energy campaigner Ye Ruiqi.
As these companies push for growth, they’ll undoubtedly need more data centers to process and store information from their users. Last year, Alibaba said it would invest $28 billion in data centers over the following three years. Similarly, Tencent announced plans to pile $70 billion into new infrastructure, which includes data centers, cloud computing, and artificial intelligence.
Increasingly, Chinese companies like Alibaba and Tencent have begun locating new data centres in areas that are rich in renewable energy, including northern China’s Hebei and Inner Mongolia, as well as Guizhou and Sichuan provinces in the country’s southwest.
Nevertheless, officials in some provinces are becoming increasingly cautious of power-hungry data centers. Beijing, Shanghai, and Guizhou have mandated that new data centers meet efficiency benchmarks. Meanwhile, Inner Mongolia last month proposed controlling the growth of new data centers in the region after it was censured by Beijing for failing to meet energy consumption control targets.
Mountains of trash
Aside from energy usage, some of China’s biggest e-commerce firms are responsible for producing mountains of waste. As firms like Alibaba, JD.com, and Pinduoduo see record-breaking sales figures, their plastic waste footprint increases.
During last year’s Singles Day shopping festival, which ran from Nov. 1 to 11, China’s postal and express services delivered nearly 4 billion packages, according to the country’s postal regulator. There are no official figures on how much waste was produced during this time, but one estimate shows the 1.88 billion parcels delivered during the 2019 festival period produced 250,000 tons of garbage. Around 20% of that total can’t be reused, though far more goes unrecycled because of the costs.
E-commerce platforms have attempted to deal with the issue. Last year, Alibaba’s logistics arm Cainiao said it had introduced biodegradable packing and cut down on tape usage. It also said it cut down on paper used for shipping labels.
Long way to go
While China’s tech companies have shown increased interest in reducing their carbon emissions, there is still a long way to go.
In a separate report from Greenpeace and North China Electric Power University at the beginning of 2020, researchers said China’s tech companies need to “dramatically scale up their procurement of clean energy.”
“Internet companies and data center operators should set targets for 100% renewable energy use,” the researchers wrote.
To do this, companies can build or invest in renewable energy, an option used by data centers around the country by installing solar panels in their roofs. Additionally, companies can purchase renewable energy for provincial generators or buy green power certificates.
“Buying green power certificates allows companies to claim environmental benefits associated with renewable energy generation, even if electricity from a renewable power plant does not feed directly into a data center facility,” Greenpeace said.
But the Chinese government is taking renewables more seriously, and that could spur tech companies to action. These companies often respond to policy priorities—for example, tech giants including Alibaba, Pinduoduo, and JD took Beijing’s drive to alleviate poverty seriously by narrowing in on China’s rural communities. Developing new markets in China’s hinterland was lucrative for the country’s tech firms, powering much growth seen in the past few years.
Could greening tech play out the same way? It’s not clear. The plans we’ve seen so far are promises to cut back, or install costly new systems, not develop new markets. Lasting change may rely more on companies who figure out how to get rich by going clean—and that’s the topic we’ll look at next month.