Alibaba’s Energy Expert tool helps Chinese SMEs with aggregation and analysis of their carbon emissions data

In recent years, there has been a marked emphasis on the importance of countries and companies undergoing a green and low-carbon transition. In this vein, September 2020 saw Chinese leader Xi Jinping announce to the UN General Assembly China’s goals for combating climate change, namely striving to peak carbon dioxide emissions by 2030 and reach carbon neutrality by 2060.

Meeting these dual carbon goals will require broad systemic changes across many sectors of the Chinese economy, and the announcement kick-started a new era of low-carbon development. Businesses will of course play a major role in the low-carbon transformation, but for small- and medium-sized enterprises (SMEs), this will not be a simple task.

This case discusses the needs and challenges encountered by SMEs in the process of transitioning to a green and low-carbon environment, through the lens of the Energy Expert platform provided by Aliyun, Alibaba’s cloud services unit. It will also look at a series of energy saving, emission reduction and carbon management solutions that digital technology can provide to enterprises and social groups.

Enterprise environmental regulation

Enterprises around the world are increasingly required to disclose carbon emissions and participate in the carbon market. For example, the Hong Kong Stock Exchange (HKEX) now requires listed firms to disclose carbon emissions data and the US SEC has launched a draft of new carbon emisssions regulations, while China’s National ESG Evaluation Methodology emphasises ESG values with Chinese characteristics.

Within China, specific emission units are required to account for and report carbon emissions, and energy consumption standards often require involvement in carbon trading. At the same time, carbon tariffs proposed by the European Union and the US have presented new challenges to enterprises operating in those regions, including China’s export-oriented firms.

But carbon reduction is not just a response to regulatory pressure—there are other benefits to the process. Firstly, carbon reduction can help reduce costs and increase efficiency through reducing raw materials and transport costs, as well as energy usage. In addition, emission reduction facilitates the integration of enterprises into green supply chains, demonstrates a level of social responsibility—enhancing brand image—and improves listed corporate ratings, potentially reducing financing costs, among other things.

To date, it has mostly been large enterprises driving China’s green and low-carbon transition, but SMEs are also an important part of the country’s market, and despite coming to the table late, they have huge potential for energy saving and carbon reduction. But there are two key issues that stand in the way of the SME transition, the lack of awareness of green development, and no clear path for businesses to take when transitioning. Thus, enterprise awareness of the incremental and long-term business performance gains of a low-carbon transition needs to be improved, and a clear path set out for them to follow.

Energy Expert

In 2021, Alibaba released the Alibaba Carbon Neutral Action Report, defining its carbon reduction strategy and goals. It was the first such report issued by an internet company in China. The company spent two years exploring low-carbon options, including the implementation of digital energy-saving and emission reduction measures, the adoption of green electricity and the creation of a “Scope 3+” emissions concept to guide the carbon reduction actions of the platform’s enterprises.

That year, Aliyun launched Energy Expert, a Software-as-a-Service (SaaS) product designed to provide energy saving, emission reduction and carbon management services to the rest of the Group, its partners and customers. Over the past three years, Aliyun has provided services at the government, enterprise and community levels, providing solutions supported by low-carbon technology.

Energy Expert provides two main services for enterprises: carbon accounting and carbon reduction. The carbon accounting function helps calculate the carbon emissions of organizations and their products through a one-stop service, supplying tools such as carbon emission monitoring and certifications, among others. The use of digital technologies significantly shortens the time and reduces costs when compared to traditional carbon footprint accounting.

Additionally, Energy Expert also provides energy saving and carbon reduction guidance and optimization suggestions through real-time monitoring of energy use data, helping improve energy efficiency, reducing carbon emissions and helping with carbon emission management and reduction practices at both the organizational and product levels.

At the individual level, Energy Expert targets people in communities, campuses and other social organizations, encouraging them to participate in low-carbon behavior and helping cultivate a green mindset. For example, individuals are able to record and upload behaviors such as green travel, recycling and reducing food waste, etc. on the platform to accumulate points, which can be exchanged for rewards.

As of October 2023, Energy Expert manages 30,000 pieces of equipment in over 3,000 enterprises across 14 industries, which boast an average energy saving of 12%. The carbon visualization tool Carbon Vision has also been deployed in over 20 regions both in China and abroad.

Carbon accounting and reduction…

…For products

The goal of Energy Expert is to provide an online product carbon footprinting service designed to help companies address carbon tariffs, fulfil ESG disclosure obligations and participate in supply chain management assessments. By utilizing both Chinese and international carbon emission databases and tools such as cloud computing and big data, the software improves the efficiency and accuracy of carbon footprinting while reducing costs.

But Energy Expert is not limited to carbon footprinting, also including guidance on carbon reduction through the use of algorithms to identify opportunities and providing advice and resources on how to design low- or zero-carbon products or access green energy sources. This is particularly beneficial to SMEs, which often find it difficult to access similar resources on their own. In addition, the platform’s green certifications can help companies with marketing and public awareness.

There are a number of successful examples related to low- or zero-carbon product creation, one of which was the mascot for the 2022 Hangzhou Asian Games. Energy Expert was used to track the carbon footprint of the mascot throughout its lifecycle, covering emissions from raw material acquisition and transport to production and packaging. Using this calculation, the mascot manufacturer implemented a series of emission reduction measures, including adopting environmentally friendly digital printing processes, reducing packaging material usage and building a photovoltaic power plant to provide green electricity.

Emissions were reduced by 0.15kg from a starting point of 1.63kg per unit, the remaining 1.48kg were then offset through the UN-run Clean Development Mechanism (CDM) emission reduction credits. Additionally, each mascot came with a label that can be scanned to learn more about its zero-carbon journey, providing a new avenue for Aliyun’s green marketing and to help raise public awareness.

The company also uses blockchain technology to promote multi-organizational schemes where businesses can work together to help generate a circular economy and reduce emissions. In 2022, Energy Expert successfully partnered with instant noodle producer Master Kang, utility firm Veolia and Tmall supermarket to produce rPET eco-friendly storage boxes. The boxes were made using Master Kong’s waste PET bottles, Veolia’s recycling technology and were sold through Tmall. The process included carbon accounting at all stages from recycling, reprocessing, manufacturing and sales, ensuring data traceability along the entire chain.

Energy Expert can also provide carbon footprint calculation services for digital products, especially cloud service products, including calculating the carbon footprint caused by the comprehensive usage of cloud resources, the power consumption of cloud hardware and while also generating corresponding ESG reports.

Energy Expert has supported customers, including Vanke, to account for the carbon footprint of their cloud resources on many cloud service platforms (e.g., AliCloud, Microsoft Azure, Huawei Cloud, etc.).

…For organizations

Energy Expert focuses on carbon management and reduction services at the organizational level, providing planning, monitoring and optimization solutions to support companies.

For carbon accounting, Energy Expert adopts the industry-standard monitoring, reporting and verification (MRV) model to optimize the collection of comprehensive, timely and standardized emissions data. At the same time, the system supports international standards for carbon emission accounting and simplifies the processes of emissions checking and online certification.

For carbon reduction, Energy Expert helps enterprises reduce costs and undergo the low-carbon transformation through energy consumption management, providing time-phased electricity consumption monitoring, analysis and energy-saving suggestions, and guiding enterprises to fine tune their energy use management.

Services also include energy self-generation management, photovoltaic system construction support and optimization of power consumption for large-scale equipment. Energy Expert also provides carbon reduction programs for communities and schools as well as hosting low-carbon events, expanding its target audience.

Hangzhou Huaju Composites is a typical case in the manufacturing industry. After connecting to the Energy Expert platform, Huaju obtained energy use optimization suggestions through online data analysis, such as adjusting equipment pre-heating time to reduce energy consumption. The platform also helped Huaju understand its electricity consumption and carbon emission levels and made recommendations based on new energy sources and load forecasts.

With these measures in place, in 2022, Huaju saved 170,000kWh of electricity, equivalent to more than 120 tonnes of carbon reduction, managed 2MW of new energy, generated 2.21 million kWh of green electricity and reduced carbon by over 1,500 tonnes. This was a 16% reduction in carbon emissions per unit area of Huaju’s products.

There are also options for Energy Expert to help SMEs develop carbon assets. XinKeDi is a leading biomass power generation company that uses the Energy Expert cloud technology for online power generation management, reducing its operation and maintenance burden. The carbon asset development and audit process was also moved online, establishing a carbon account for XinKeDI and developing its biomass power generation into a carbon asset recongized by the VCS and GCC, helping the company participate in the international carbon trading market.

When it comes to helping communities reduce carbon, one example is the China Academy of Art campus project that calls on students to participate in low-carbon actions, such as reducing food waste, recycling old books and clothing, paperless learning and green travel. The award-winning scheme rewards the actions through the award of vouchers and cultural and creative gifts.

Energy Expert also undertook a low-carbon construction project for the Asian Games Village at the Hangzhou Asian Games, promoting energy saving and emission reduction trhough energy consumption optimization, as well as promoting technologies through the Asian Games Village App. Residents of the village could accumulate points through participation in green behavior, which in turn could be exchanged for rewards. During the campaign period, there were more than 15,000 new users, with over 640,000 participants and a total carbon reduction of more than 15 tonnes.

Future planning

With the promotion of the dual-carbon strategy, the demand for green and low-carbon transformation of enterprises has increased. The Aliyun team provides carbon management, energy saving and emission reduction services for enterprises and wider parts of society based on data and with the help of digital technology.

In the future, Energy Expert will establish a broader and more inclusive low-carbon energy integrated service cloud platform, enrich the supply of digital technology services, enhance the supply capacity of digital energy-saving and carbon-reducing products and lead the low-carbon transformation of enterprises.

As well as Energy Expert, the realization of the dual-carbon goals needs to be led by the government, business leadership and include active participation by the public. Transformation of business can be aided by the cultivation of a low-carbon consumer market. Consumers are willing to pay a premium for green and low-carbon products, and through platforms such as the Asian Games Village app, Energy Expert hopes to influence consumers and motivate individuals and enterprises to contribute to green development.

As part of AliCloud, Energy Expert aims to accelerate the development of digitalization and bridge the digital divide between businesses of different sizes. On one hand, it will help with the digital transformation of SMEs and provide energy-saving and carbon-reducing digital solutions that are low-cost, fast-acting and highly-applicable. On the other, it will strengthen the foundation of digital services for SMEs, integrating the capabilities of eco-partners, improve the efficiency of enterprises and reduce implementation costs.