As the parks multiply, unified standards and better carbon accounting are needed to maximise their potential.
The drive to create “zero-carbon industrial parks” is here to stay. This was made clear last month at the annual plenary meetings of China’s top legislature, the Two Sessions. Such parks were assigned a prominent role in two key documents emerging from the meetings, namely the 15th Five Year Plan – China’s economic blueprint for 2026-30 – and the 2026 annual development plan.
The drive could be highly significant because industrial parks as a whole currently account for 31% of China’s carbon emissions, 50% of its industrial output value and 80% of its factories. They often contain a high concentration of companies involved in heavily emitting industries like steel, cement, autos or chemicals manufacturing.
In a recent report by Beijing-based think-tank the Institute for Global Decarbonization Progress, we analysed 85 pilot zero-carbon industrial parks in eight of China’s provinces.
What decarbonisation experiences have they been accumulating? What do they tell us about the challenges ahead as the national government doubles down on the initiative?
As China ramps up its zero-carbon industrial parks effort, our key prescriptive takeaways are that voluntary standards should be elevated to national ones, parks should shift from isolated decarbonization projects to integrated system-wide designs, and carbon market and green finance mechanisms should be expanded.
What is a zero-carbon industrial park?
While there is no one official definition of a “zero-carbon industrial park”, Chinese policy and pilot practices are converging around common features. These parks are clusters of industrial enterprises that aim to achieve near-zero or net-zero emissions by combining deep decarbonisation and carbon-management measures like offsetting and energy-efficiency gains. They are usually located outside but not far from urban centres and can host anywhere from a handful to several hundred enterprises.
In practice, the zero-carbon designation often applies to pilot zones within larger economic development zones, rather than entire administrative districts. As a result, most pilots currently occupy a modest area – generally 10-20 sq km, with some in the 20-50 sq km range.
That upper limit is roughly comparable to the size of Manhattan, underscoring both the manageability of pilot projects and the challenge of scaling up to larger industrial systems. Guiding indicators in the zero-carbon industrial park national framework require clean energy to account for at least 90% of total energy consumption; carbon emissions per unit of energy to fall 90% below the current national average for industrial parks; and industrial solid waste utilisation to exceed 80%.
Regional differences
While only seven of the parks we analysed appear in the first batch of 52 pilots, they offer a view into the parks’ development patterns and trends across different geographical and economic conditions.
The parks along China’s eastern coastal areas evince a “new-industry-driven” model that emphasises advanced manufacturing, export-oriented industries, “high-end services” like IT and finance, and leverages complete industrial chains and mature technology. They tend to focus on “strategic emerging industries” and promote use of renewable power, distributed energy and green building applications.
Wuxi, in Jiangsu, offers an interesting example. Early-mover advantages in solar photovoltaics and energy storage have enabled it to demonstrate pathways for green electricity consumption and industrial development, showcasing a zero-carbon development model driven by technological innovation.
China’s central areas have developed an “energy-transition-driven” model oriented towards adjustments in the energy structure. Because these regions have a high proportion of traditional manufacturing and coal-fired power, their challenge is to drive high-quality economic development through green transformation. Parks in Shanxi, for example, have focused on promoting the transition away from coal and toward new energy industries. They are searching for synergies between the need to upgrade existing industries and cultivate emerging green industries.
The parks in China’s south-west, meanwhile, display a “clean-energy-driven” model that draws on local advantages in hydro, wind and solar power, to couple clean energy with industrial production. Parks in Sichuan, for example, tend to focus on developing industries such as electrolytic aluminium, silicon materials and batteries for new energy vehicles. Yunnan has been promoting the use of hydropower in green aluminium and green silicon industrial chains to develop a competitive advantage in international markets.
Standards and technical challenges
The technical standards for China’s zero-carbon industrial parks have also been developing along different pathways.
Voluntary industry-association-led “group standards” have been spearheaded by bodies like the China Energy Conservation Association and the China Association for Engineering Construction Standardization. In addition, local government standards have been made in accordance with local resource endowments and industrial characteristics. Finally, divergent local implementation plans have been developed to bridge high-level national policy and ground-level operational needs.
Our report found that these multifarious standards have led to challenges such as inconsistent carbon accounting methodologies, a lack of unified third-party verification protocols, and difficulties in benchmarking performance across parks. This undermines the credibility of carbon reductions, raises compliance costs for businesses, and impedes the development of scalable financial instruments based on park-level carbon assets.
Building an energy supply system centred on green power is crucial for zero-carbon industrial parks, but practically challenging. The direct green power supply model – which sees a renewable power generator bypass the grid to supply an industrial consumer directly – often encounters issues such as complex approval procedures, high upfront investment costs, and imperfect market trading rules during implementation. Meanwhile, the technological challenges of integrating renewables into the grid at scale have yet to be resolved. Long-duration energy storage technology remains immature, for example.
High-quality carbon accounting data is the basis for measuring emission reduction effects, overcoming international trade barriers, and attracting green finance. However, current systems for carbon accounting have frailties.
First, measurement and monitoring suffer from weak underlying data-collection capabilities. Second, the accounting process is complex, professional talent is scarce, and unified, authoritative third-party verification and certification standards are missing. Third, the technological and economic bottlenecks of deep decarbonisation are becoming increasingly prominent, especially in high-emission traditional industries such as cement, steel and chemicals. These sectors are hampered by insufficient supply of key inputs such as green hydrogen, low technological maturity, poor economic viability, and incomplete supporting policy systems and market mechanisms.
What’s next?
According to national plans, there will be 100 national zero-carbon industrial parks developed during the 15th Five-Year Plan period (2026-2030). The first batch of 52 pilots will be expected to demonstrate pathways for the subsequent scaling up of the pilot program.
Our analysis points to three areas of work that deserve special attention. First, the existing, industry-led group standards should be gradually upgraded to sectoral and national standards. A tiered and categorised carbon emission accounting and certification system would enhance the standardisation, comparability and implementation for parks in the system.
System integration is another priority. Overall operational efficiency and emission reductions could best be realised by strengthening the parks’ links between energy, industrial production, transportation, buildings and resource recycling. This will require breaking down administrative and departmental barriers.
Third, to strengthen the foundations for carbon trading, the parks should accelerate the development of diversified trading mechanisms covering carbon emission rights, green power certificates, and voluntary emission reductions. This will facilitate the introduction of carbon financial products and services, allowing market-based incentive mechanisms to drive decarbonisation.
Further down the line, it will be interesting to see whether China’s ministries coordinate to export lessons learned in its pilot program to its overseas industrial parks.
Ultimately, industrial parks will have to develop against policy mandates, assess the low-carbon demands of their consumer markets, and make the most of their local advantages.
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