Tencent Sees the Path to a Carbon-Neutral Future


Tencent on Thursday announced its plan to achieve carbon neutrality in its own operations and across its supply chain by no later than 2030. 

With the company opening this new chapter of sustainable development, Tencent Vice President of Sustainable Social Value Xu Hao shares his insights on the company's net-zero pledge.

As a technology company, Tencent has a unique perspective on carbon neutrality and how we, as a society, can use existing and emerging technologies to mitigate the impact of human activity on our planet. Tencent is taking various steps to reduce our own carbon footprint and we’re applying our knowledge and expertise to help others address climate change from a global perspective. 

The issue of carbon neutrality and climate change is highly complex, mainly because it is both a "gray rhino" event and a "black swan" event. 

As a gray rhino event, climate change is a high probability event with severe consequences. In fact, climate change is already affecting the planet, but it might not seem that urgent to us because its full impact won’t be felt for 50-100 years. 

For the black swan event, we can point to extreme weather like floods, droughts, hurricanes and once-in-a-century events like the wildfires in Australia and the Amazon. From the scientific aspect, it is hardly possible to establish a direct correlation between a single extreme weather event and climate change. It’s impossible to relate a certain flood or wildfire to the carbon emissions of a certain company.

Global average temperature has increased by 1.1 degrees Celsius since the pre-industrial revolution, while many scientists regard 1.5 degrees as a relatively safe range. At this rate, global average temperature may increase by 3.5 to 4.5 degrees by the end of this century. That rise in temperature is enough to cause various negative impacts – from the destruction of the ecosystem to the melting of glaciers to the thawing of the permafrost. 

This is a global problem. Although negotiations on climate change have generated relatively positive effects, there are still a wide variety of problems and controversies as each country has its own stage of development. But the fact is that If China fails to become carbon neutral, other countries will be unable to solve this problem alone, and vice versa.

Addressing Climate Change: Where Do We Start? 

We can just start with four key sectors:

Electricity. How can we shift from fossil fuels to renewable energy sources? This is very important to China, where fossil-fuel power accounts for 70 percent of total energy generation. This includes the use of 4.2 billion tons of coal per year, of which 2 billion tons are used for power generation and heating. 

There are relatively clear solutions to the power generation problem, including a shift from the current power system to a renewable energy-based and more distributed electrical power system. Corresponding technologies to solving a variety of problems are already in place. It is more about how to manage the short-term process.

Heating. There are two types of heating. One is indoor heat supply, such as air-conditioning and central heating in North China; the other is the industrial heating process. Currently, coals are still used for central heating. It will be easier to realize green power if electricity can be used. Combustion remains the main route to reach over 500 degrees in industrial processes, as it is less efficient to use electricity. Therefore, it is critical to identify clean fuels to reduce harmful emissions. 

Transportation. Short-distance transportation in cities can be improved through electric-vehicle technology, which has developed very quickly. Other transportation modes include diesel-powered long-distance freight trucks, ships and aircraft, which are difficult to improve through electrification. Therefore, it is also critical to find sustainable fuels for transportation. 

Materials. Many of the products we use are made from crude oil, natural gas and coal chemicals, fabricated into various materials such as plastics and composite materials. Finding alternatives, like biobased materials, is an imperative. 

Three Technical Routes to Carbon Neutrality 

Achieving carbon neutrality may rely on our ability to expand electrification, use hydrogen as an energy source and avoid discharging carbon into the atmosphere. 

Electrification. Moving to the broader use of electrical power is a feasible direct alternative to other forms of energy. As long as the green electrical power system is widely available, this alternative offers a relatively clear technical route.

Hydrogen. Hydrogen is an ideal energy carrier that can be produced cleanly through water electrolysis, burned and then turned into water again. However, there are a series of problems. The energy density per unit of mass is high, but the energy density per unit of volume is rather low because of hydrogen’s small molecular weight. Thus, the hydrogen economy is a technical route with both a great potential and a series of technical challenges.

As an energy carrier, hydrogen is far more power-efficient than oil and gas. The hydrogen economy will account for 10 percent of the global energy composition in the future. If there is a shift from fossil fuel to renewable energy resources, hydrogen may replace oil and gas as the primary energy source. 

Carbon capture, utilization and storage (CCUS). CCUS is a critical technical route for China, as our energy intensity is fairly high. If we want to continue to use chemical energy, we must capture and store carbon dioxide. The technologies for CCUS are already available, but we must solve the problems of high cost and industrialization. In addition, large-scale storage may result in a series of safety issues. 

Moving Forward With Sustainable Energy Sources

Every country has access to sunlight and wind, thus making it easy to produce renewable energy. In this context, the global attention on this industrial chain will move to the upstream part. Nowadays, people are concerned about where to purchase oil and natural gas. In the future, people will focus on where to get solar, wind and hydrogen energy, and the equipment needed to produce it. 

In 2020, China's installed power generation capacity was about 200 gigawatts and thermal power accounted for 70 percent of that. The demand for electricity will rise significantly by 2050 due to electric power development, hydrogen production through water electrolysis and electrification. 

The main growth will come from renewable energy sources. Wind energy will experience marked growth until 2030. After 2030, solar energy will grow due to reduced generation costs. This will bring about changes in the electrical power system. 

China accounts for about 70 percent of global solar component exports today. Polysilicon accounts for more than 90 percent of these exports. China has a strong foundation for the upstream part of the industry chain. 

may not have as much of an advantage in wind energy as in solar energy, but China accounts for 60 percent of global production of wind energy equipment, most of which is used domestically. Most of the world's top 15 wind-energy companies are in China. 

Almost half of the world production and consumption of hydrogen energy is found in China. China's hydrogen economy uses hydrogen produced from coal chemicals and coal-water slurry. When China gradually switches to blue hydrogen and green hydrogen, the climate is favorable for China to become the world's largest producer and consumer. 

Now Is the Time for the Industries to Transform Themselves 

Now may be a good time for the industries in China to transform itself and move towards carbon neutrality. One of the challenges is that the electrical power system should achieve carbon neutrality as soon as possible, because many industries are counting on electrification to reduce emissions. But that cannot be realized when electrical power systems are mainly fueled by coal.

Industries are the second challenge. For example, it's more difficult for the steel and cement industries to reduce emissions. Iron ore, for example, needs coal as a reducing agent to make steel. If we don't use coal, we need to use hydrogen as a reducing agent. The cost of CNY 500 per ton for carbon dioxide emission reductions generated by adopting CCUS is now unfeasible. 

In addition to technology, mechanisms, partnerships, climate change negotiations and country-driven policies can contribute to reducing carbon emissions. Carbon neutrality involves a process of industrial and economic restructuring, in which a definite technical framework is required. 

China expects to hit its carbon emissions peak by 2030 and achieve carbon neutrality by 2060. Enterprises can move forward when a stable framework for the plan is in place. The country’s newly released plan in October 2021 provides policy certainty. New thermal power plants may face enormous pressure. The policy states that future new renewable energy sources will not be included in the total energy management and control. Renewable energy and its corresponding downstream industries are not included in energy monitoring, which can better promote the development of the energy industry. 

The Tencent Approach to Climate Change  

As a technology company, Tencent is not a big carbon emitter, but we are moving forward with an ambitious plan to achieve carbon neutrality. Tencent will promote emission reduction across the supply chain and encourage low-carbon behaviors among employees. Some carbon will eventually be offset through the carbon sinks.

We have just released an official carbon neutrality report by using the carbon emission data of Scope 1, 2 and 3 in 2021. Our long-term goal is to achieve carbon neutrality in Tencent's operation and the entire supply chain by 2030. The plan includes the reduction of carbon emissions from power consumption in data centers and buildings in Scopes 1 and 2, as well as the reduction of indirect carbon emissions from the supply chain in Scope 3, such as infrastructure materials, purchased servers and energy use in company-leased data centers. 

Tencent’s fourth-generation T-Block technology can lower the power usage effectiveness (PUE) to 1.3. We are also exploring use of green power. For market-based transactions, we are considering investments in distributed and centralized renewable resources.

Tencent also is using the power of digitalization to help industries become carbon neutral through digital transformation, consumer awareness and low-carbon technologies. We will help more industrial and high-emission companies achieve carbon transformation through digital technology. We also will take the lead in promoting a more planet-friendly lifestyle and make the low-carbon lifestyle “cool” and interesting for young people, to encourage them to reduce their carbon footprints. Finally, we will enable low-carbon technologies like CCUS and the heat pump technology critical for expanding the use of hydrogen as an energy source. 

From a digital perspective, capabilities such as real-time measurement of carbon emissions and high-frequency trading are needed to achieve carbon neutrality. This infrastructure layer is about digital tools and their application in the field of carbon reduction. Tencent is using artificial intelligence (AI) and advanced climate models to help industrial companies monitor carbon-emissions data in different dimensions, such as the spatial, behavioral and product dimensions. 

Monitoring carbon dioxide based on different dimensions could be of great significance. In the energy and industrial sectors, there is enormous potential for using AI to improve the efficiency of the industrial process. Examples including reducing the coke ratio of blast furnaces, improving the combustion efficiency of boilers, and enhancing the operation, maintenance and power-generation efficiency of wind or solar photovoltaic power plants. 

In the future, advanced technologies such as digital twins and blockchain will have wide applications in the field of carbon neutrality. Blockchain can be used for supply chain management and as the basic data source for many high-frequency, distributed transactions. 

Taking Carbon Neutrality to a New Level  

The potential for universal carbon neutrality is massive. If half of China’s 1.4 billion residents reduces emissions by one ton, we can curb emissions by 500 to 700 million tons each year and achieve our carbon emission peak in 2030. It won’t be easy, but the impact of hundreds-of-millions of people making small changes is very powerful. 

Currently, it is unrealistic to achieve carbon neutrality overnight. Instead, we want consumers to benefit from emissions reduction through low-carbon behaviors. Low-carbon product providers, partners and social institutions can build a strong connection between the Chinese market and universal carbon neutrality. 

We will have an open market in the future. For Tencent, our QQ and Weixin applications can access the market as can the other apps. This market is an independent third-party platform that can enable a company to fulfill its social responsibility in the field of carbon reductions. Consumers can benefit while companies create a business model. This is an important aspect for achieving universal carbon neutrality and the transition towards a low-carbon lifestyle. We know that there are still a lot of challenges in this area, therefore, we hope to explore these opportunities with more partners.

We continue to look for investments in various areas where technology is critical like CCUS, hydrogen power, grid flexibility and heat pumps. We will have various types of cooperative arrangements from the most basic theoretical research to pilot projects at scientific research institutes and large-scale commercialization of mature technologies from start-ups.

In these ways, we hope to support the value chains and promote the development of low-carbon technologies and move steadily toward achieving carbon neutrality. Climate change is essentially a resource issue for the seven billion people on this planet, whose population could reach nine to ten billion this century. Moving to the moon or Mars is not a near-term option, so we need to focus on managing energy and greenhouse gas emissions here on Earth.