Baofeng Energy: The 4 million-ton olefin project in Inner Mongolia is in line with policies; a \"carbon reduction\" plan has been submitted

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Baofeng Energy: The 4 million-ton olefin project in Inner Mongolia is in line with policy requirements; a plan for carbon emission reduction has been submitted. On August 2, investors asked Baofeng Energy about the document issued in February 2021 in Inner Mongolia, titled \"Several Guarantee Measures to Ensure the Achievement of the Energy Consumption Control Targets during the 14th Five-Year Plan Period (Draft for Comments)\”. This document stated that, with the exception of modern coal chemical projects that are part of the planned development strategy and those aimed at extending or complementing existing industrial chains in the autonomous region, no new modern coal chemical projects should be approved during the 14th Five-Year Plan period. May I ask: Will the company’s 4 million-ton polyolefin project be affected as a result? The company replied: Our 4 million tons per year olefin production project in Inner Mongolia is part of the modern coal chemical industry projects that are part of the regional development plans and efforts to enhance the industrial chain in the autonomous region. It constitutes a key project among the four modern coal chemical industry demonstration zones outlined in the \"Plan for the Innovative Development of the Modern Coal Chemical Industry\" issued by the National Development and Reform Commission and the Ministry of Industry and Information Technology during the 13th Five-Year Plan period. Previously, Baofeng Energy stated that relevant ministries and departments are adjusting industry policies in line with the goals of **\"carbon peak\" and \"carbon neutrality\". In line with the new requirements set by the Ministry of Ecology and Environment, the company has added a dedicated section on carbon emission reduction to the environmental impact assessment report for its olefin project in Inner Mongolia, and this report has been submitted for review. The company’s environmental report has been expanded to include content required by the new regulations, and it takes some time to submit it according to the established procedures. However, **the relevant departments have not halted the review process; instead, they are providing guidance to help the company add sections related to carbon emission reduction as required, and they are also working to strengthen coordination among various ministries in order to accelerate the approval process for major projects. Therefore, the progress of the project’s environmental assessment has not been hindered, and it is still proceeding smoothly in accordance with policy requirements. ——Baofeng Energy’s hydrogen production via water electrolysis project came online. In April 2021, Baofeng Energy’s \"**-level comprehensive demonstration project for hydrogen production through solar water electrolysis\" was put into operation, making it the first industrial enterprise in China to achieve true \"carbon neutrality\" by replacing fossil fuels with renewable energy sources. According to Wang Jirong, the person in charge of Baofeng Energy’s hydrogen project, the project incorporates electrolyzers with a capacity of 1,000 standard cubic meters per hour, as well as systems for gasification and separation and hydrogen purification; its sophistication has reached an advanced level in China. Once fully operational, the project will enable a reduction of 254,000 tons in coal consumption each year, as well as a decrease in carbon dioxide emissions by around 445,000 tons, resulting in significant social benefits. Meanwhile, the company will actively collaborate with research institutions to further study the application of solar and wind energy, as well as the production, storage, and transportation of hydrogen, as well as its market-based use in various fields and scenarios. Baofeng Energy is making forward-looking plans to accelerate the transformation and upgrading of the company, and has launched a development strategy aimed at replacing fossil fuels with new energy sources. By focusing on source control, the company has implemented **-level solar water electrolysis hydrogen production projects. Solar energy is used to generate green electricity, which in turn is employed to produce \"green hydrogen\" and \"green oxygen\" through water electrolysis. Green hydrogen replaces coal as a raw material, while green oxygen replaces coal as a fuel, both of which are used directly in chemical manufacturing processes to produce hundreds of high-end chemical products such as polyethylene and polypropylene. This marks Baofeng Energy’s commitment to pursuing carbon neutrality across all its operations. According to officials from Baofeng Energy, the projects put into operation this time include a 200,000-kilowatt photovoltaic power generation facility and an electrolytic water hydrogen production plant with a production capacity of 20,000 standard cubic meters per hour. In terms of both the scale of each facility and its individual production capacity, they rank among the best in the world, with the overall cost able to be controlled at 1.34 yuan per standard cubic meter. Baofeng Energy began to develop its hydrogen energy business in 2019, gradually increasing its investment in research and development while strengthening the integration of this new business with the company’s existing industrial chain. To continuously foster momentum for green and innovative development, Baofeng Energy established the Beijing Baofeng Carbon Neutrality Research Institute on that day. “Next, by leveraging technological innovation to improve conversion rates and reduce production costs, Baofeng Energy will use all its depreciation funds as well as part of its profit funds to bring the cost of solar power generation down to 0.068 yuan per kilowatt-hour, and the cost of green hydrogen production to 0.7 yuan per cubic meter. ”The aforementioned official said. It is understood that Baofeng Energy is a leading enterprise in China’s high-end coal-based new materials sector. It has currently established a nationally leading circular economy industrial cluster that integrates methanol, olefins, polyethylene, fine chemicals, and new energy sources. According to data released by the company recently, in the first quarter of 2021, Baofeng Energy achieved operating revenue of 5 billion yuan, a year-on-year increase of 38% ； The net profit attributable to the shareholders of the listed company reached 1.7 billion yuan, a year-on-year increase of 110%.