China Securities Co., Ltd: The 2030 carbon peak target is approaching, and the certainty of increased green electricity, hydrogen, ammonia, and alcohol.

China Securities Co., Ltd. Securities released a research report stating that with the gradual improvement of the top-level design accompanying the "dual carbon" assessment, local government carbon emission controls are expected to continue to tighten. Based on this, the demand for green fuels and green materials is expected to continue to grow, and the non-electric use market for green electricity will accelerate expansion. In terms of thermal power, under the current renewable energy output policy, the significant rise in thermal coal prices may be relatively small, and the increase in fuel costs for thermal power plants is controllable. At the same time, the annual long-term electricity price for thermal power in 2026 is expected to decrease year-on-year, with potential price increases in subsequent monthly transactions. In terms of new energy, with the increasing pressure on new energy consumption and the continuous growth of installed capacity, it is expected that the market potential for "non-electric consumption of new energy" and "algorithmic electricity synergy" will gradually be realized. The thermal power sector has outperformed the market, with the environmental protection industry seeing a higher increase. As of June 9, 2026, the thermal power sector has increased by 25.0%, outperforming the Shanghai and Shenzhen 300 Index by 21.3 percentage points; the hydropower sector has increased by 5.1%, outperforming the Shanghai and Shenzhen 300 Index by 1.4 percentage points; the gas sector has fallen by 5.2%, underperforming the Shanghai and Shenzhen 300 Index by 8.9 percentage points. As of June 9, 2026, the environmental protection index has increased by 4.5% year-to-date, ranking at the forefront compared to other Wind first-level industries, outperforming the market by 0.8 percentage points. The top-level design of dual carbon is gradually improving, and determinism in green electricity, hydrogen, and ammonia is strengthened. With the gradual improvement of the top-level design accompanying the "dual carbon" assessment, local government carbon emission controls are expected to continue to tighten. Based on this, China Securities Co., Ltd. believes that the demand for green fuels and green materials is expected to continue to grow, and the market for non-electric use of green electricity will accelerate expansion. In the background of the transformation of the new power system, the scale of new energy installed capacity will continue to grow, but the relatively slow pace of grid construction and the issue of spatial-temporal imbalances in power supply and demand may exist in the long term. The margin of growth of grid absorption pressure is increasing, making it more difficult to reduce emissions in the power industry. In this context, the expansion of non-electric consumption of new energy has the potential to improve grid absorption and promote emission reduction in non-electric sectors, and is expected to become an important way to optimize the industrial layout and ensure emission reduction goals during the "14th Five-Year Plan" period. Non-electric consumption of new energy is the transformation of the electrical energy produced by units into other forms of energy (thermal energy, cooling energy, hydrogen energy, etc.), which helps alleviate grid absorption pressure and promote emission reduction in downstream energy industries. Overall, under existing production conditions, the economic viability of green methanol depends on carbon emission controls. For global shipping companies or methanol consumption within the EU, considering only the carbon emission costs of fuels (without considering renewable fuel incentives), green methanol is already economical, and downstream market demand is expected to open up. In addition, with the tightening of EU carbon reduction policies, there is still room for improvement in the economic viability of green methanol. Electricity: Q1 thermal power generation increased year-on-year, new energy absorption marginally pressured In terms of thermal power, due to the overall downward trend in 2025 domestic thermal coal prices and a loose balance of power supply and demand, the overall annual long-term contract electricity prices for thermal power in 2026 are trending downward. Since 2026, national electricity prices have been trending downward, with market transaction prices fluctuating due to changes in supply and demand structures in some provinces. Overall, domestic raw coal production is relatively stable, and under renewable energy output policies, the significant rise in thermal coal prices may be relatively small, and the increase in fuel costs for thermal power plants is controllable. At the same time, current transaction electricity prices for thermal power are generally down year-on-year, and if thermal coal prices further increase, thermal power plants can partially offset cost fluctuations through price increases. In terms of hydropower, the first quarter saw abundant water supply, with hydropower generation increasing year-on-year. The subsequent situation of hydropower generation needs to monitor changes in water supply during the flood season. In terms of new energy, influenced by the growth in wind and solar installation capacities, since 2026, the overall pressure on new energy absorption has increased, and the utilization rate of absorption is marginally declining. In terms of electricity prices, with the implementation of Document 136, all new energy generation will enter the market, leading to a loose market supply-demand operation. There is downward pressure on the average grid-connected electricity price for new energy. Against the background of increased pressure on new energy absorption and the continuous growth in installed capacity, China Securities Co., Ltd. expects the market potential for "non-electric consumption of new energy" and "algorithmic electricity synergy" to gradually be realized. Global market affected by geopolitical conflicts, overall controllable cost for city gas companies Since the beginning of the year, due to frequent geopolitical conflicts globally, the international oil and gas markets have seen significant volatility. Taking into consideration changes in natural gas prices, as well as pricing under contracts with major oil companies, China Securities Co., Ltd. believes that the cost fluctuations for city gas companies are generally controllable. In terms of gas, China Securities Co., Ltd. emphasizes recommending companies with dual growth drivers and high stock dividends, highlighting investment value such as CHINA GAS HOLD with a comprehensive natural gas layout and ENN Natural Gas with diversified gas sources and LNG receiving station arrangements. In addition, in terms of environmental protection, with the advancement of recent government debt policies, some environmental protection companies are expected to improve their accounts receivable and cash flow turnover, with potential enhancement in profit quality.