China, the world’s biggest car and electric vehicle (EV) market, has come out with a new stringent emission policy. This includes a credit-score program for production of EVs that will see automakers phase out fossil-fuelled vehicles in a phased manner starting 2019.

The new policy, according to Bloomberg, will see a cap-and-trade for automakers that will need to obtain a new-energy vehicle score linked to their production of environment or eco-friendly vehicles. The policy requires a minimum of at least 10 percent eco-friendly vehicles to be produced alongside other vehicles by each automaker from 2019; by 2020, the requirement will increase to 12 percent.

Under the policy, carmakers that manufacture or import more than 30,000 vehicles annually will need to comply or buy credits to avoid facing hefty fines. Commenting on the policy, Cao He, chairman, Quanlian Auto Investment Management, says, “Political considerations must have weighed in on the decision to delay the commencement date by a year. Local automakers will likely benefit from this as they will have more buffer time to get ready on the technology front.”

Before the announcement of the policy enactment in 2019, the world’s most populous country had proposed to start implementing the policy in 2018, one which was viewed by most automakers as being overambitious. China, which has to contend with a rising population and criticism globally for failing to address the issue of vehicular emissions, had promised to curtail its carbon emissions by 2030 and curb deteriorating air pollution.

China needs to use alternative energy to power around 200 million vehicles that exist in the country while reducing oil imports. “China is sending a clear signal to large automakers that had been dragging their feet on EVs that it’s time to get on board,” said Colin McKerracher, a London-based analyst at Bloomberg New Energy Finance.

The new target looks achievable for the industry as a whole, McKerracher added, considering the credit structure of 12 percent in 2020 would roughly translate to about 4-5 percent of actual vehicle sales.

Photograph courtesy: Valeo