China

China's suite of sectoral 14th FYPs set out a range of mitigation measures to prepare the country for a post-coal transition and the country is on track to meet its energy sector targets. Fossil fuels continue to dominate China’s energy mix, but renewable energy deployment sets new global records each year.

We find that record-high renewable deployment will likely be sufficient to meet growing electricity demand, curb coal power generation, and reduce China’s total CO₂ emissions by 1% year-on-year in the first half of 2025. If China can sustain this trend—where CO₂ emissions reductions in the power and industry sectors offset the slight increase or stabilisation of non-CO₂ emissions—2025 could mark the peak year for the country’s total GHG emissions.

In our optimistic scenario (CPP min), China’s absolute GHG emissions are projected to peak at 15.1 Gt in 2025, followed by a sustained decline driven by an accelerated clean energy transition. Over 400 GW of wind and solar capacity would be added annually, allowing renewables to meet rising energy demand, support deeper electrification, and significantly displace coal while limiting the need for fossil gas in end-use sectors.

In the conservative scenario (CPP max), emissions plateau at a higher peak of 15.2 Gt in 2025 and remain flat through 2030, reflecting the absence of a clear early-peaking signal and ambition enhancement for the 2025–2030 period in China’s NDC 3.0. Renewable energy capacity continues to grow at a steady, though more moderate, pace—averaging 300 GW annually—while coal reduction progresses much more slowly than under the CPP min scenario.

Both scenarios suggest that China risks falling short of its domestic target of reducing carbon intensity by 18% by 2025 from the 2020 level, as also highlighted by other analyses ​(CREA and GEM, 2024; Myllyvirta, 2024b)​.

After updating our projections to incorporate the latest policy developments and analysis, we project China’s GHG emissions to reach 14.6–15.3 GtCO₂e in 2030. China’s current policies scenario projections are rated as “Insufficient” when compared to their fair-share contribution to climate change mitigation. The “Insufficient” rating indicates that China’s climate policies and action in 2030 need substantial improvements to be consistent with limiting warming to 1.5°C. If all countries were to follow China’s approach, warming would reach over 2°C and up to 3°C.

Further information on how the CAT rates countries (against modelled domestic pathways and fair share) can be found here.

China’s current policies scenario projections have been updated to reach GHG emission levels (excl. LULUCF) of 14.6–15.3 GtCO₂e in 2030, roughly 35% higher than 2010 levels.

If China maintains the pace of CO₂ reduction seen in the first half of 2025, when emissions declined by 1% year-on-year, the country may already have reached its CO₂ emissions peak ​(Myllyvirta, 2025b)​. This reduction was largely driven by the power sector, supported by declines in the building materials, steel, and heating industries.

In the first half of 2025, growth in solar power alone met the increase in electricity demand, leading to a 3.4% decline in coal use in the power sector. Despite a 6% year-on-year rise in fossil gas consumption, CO₂ emissions from the power sector, China’s largest emitter, fell by 3% overall. Whether China’s total GHG emissions have peaked remains uncertain. This depends largely on the future trajectory of coal use in sectors, such as chemicals and heating, as well as trends in non-CO₂ emissions.

China’s rapid renewables rollout is the main driver for China’s decarbonisation. By the end of June 2025, total renewable capacity, including hydropower, reached 2,159 GW, representing nearly 60% of the country’s total power generation capacity. Renewables supplied almost 40% of power generation in H1 2025, with solar growth outpacing electricity demand, leading to a decline in power sector emissions. The CAT estimates 3,294–4,231 GW of wind and solar by 2030, supplying over half the power mix.

The National Development and Reform Commission’s (NDRC) new draft implementation measures mark a major shift in China’s energy transition policy from supply-side incentives to demand-side obligations. The draft introduces a mandatory minimum proportion target of renewable energy consumption that will strengthen demand for wind and solar power and drive industrial decarbonisation in energy-intensive sectors ​(NDRC, 2025a)​.

At the same time, the large-scale expansion of coal power is creating a conflicting dynamic. Coal power capacity could increase by 80–100 GW in 2025, potentially setting a new annual record, even as overall coal-fired electricity generation declines ​(Myllyvirta, 2025b)​. While the additional capacity does not necessarily raise coal consumption, it is likely to reduce plant utilisation and profitability. At the same time, the oversupply of coal power could suppress demand for contracts with solar and wind producers, potentially slowing the growth of clean energy. Current policies project China’s coal power capacity to increase from today’s 1,210 GW to 1,332–1,600 GW by 2030, supplying 42–46% of total energy use ​(CEC, 2025)​.

China remained a global leader in energy transition investment in 2024, accounting for 39% of the global total and two-thirds of the global increase ​(BloombergNEF, 2025)​. Investment and sales in clean energy technologies contributed over 10% of China’s GDP for the first time, totalling USD 1.9tn ​(Myllyvirta et al., 2025)​. Meanwhile, China is the powerhouse of the global energy transition supply chain, manufacturing over 80% of solar panels, 60% of wind turbines, and 75% of electric vehicles and their batteries worldwide ​(IEA, 2022a, 2025b; Andrew Hayley, 2024; Lombardo et al., 2025)​.

After two decades in the making, China issued its first Energy Law in November 2024, aiming to promote the development and use of renewable energy and raise the share of non-fossil energy consumption. As China’s first comprehensive framework law for the energy sector, it establishes a foundational role in guiding energy policy. The law clearly prioritises renewable energy over fossil fuels, while still endorsing the “rational development and clean, efficient use” of fossil energy ​(Liu, 2024; The National People’s Congress of the People’s Republic of China, 2024)​.

In 2024, China’s national Emissions Trading Scheme (ETS) reached a record annual trading volume of 189 MtCO₂e and a total turnover of USD 2.5bn, the highest since its launch in 2021. In March 2025, the market expanded to include steel, cement, and aluminium smelting industries, adding over 1,300 key emission entities and increasing the share of CO₂ emissions covered to more than 60% of the national total ​(MEE of China, 2025a)​.

In August 2025, China further clarified its roadmap for strengthening the ETS, aiming to expand the coverage to include all major emission-intensive industries by 2027 and to introduce an emission cap-and-trade system with both free and paid allowances by 2030 ​(Xinhua News Agency, 2025b)​. China’s new NDC additionally requires the national ETS to cover all major high-emission sectors by 2035 ​(Xinhua News Agency, 2025d)​. Further reforms to improve allowance allocation and implement the emissions cap will be essential for establishing an effective carbon price and achieving significant emissions reductions.

China's industry sector is targeting electrification and efficiency improvements to meet demand and reduce reliance on fossil fuels. Steel, cement, and aluminium are the main drivers of emissions in the industry sector. Although all subsectors are aligned with the economy-wide carbon peaking target before 2030, emissions in the steel and cement sectors have already peaked and begun to decline, mainly due to reduced demand and production ​(MIIT of China, NDRC and MEE, 2022; CREA, 2024b)​. However, the growing coal-to-chemicals industry, driven by higher profits amid falling coal prices, is significantly adding to the emissions and threatening China’s climate targets ​(CREA, 2024a)​. In H1 2025, coal consumption in the chemicals sector increased by a dramatic 20% year-on-year, on top of a 10% increase in 2024 ​(Myllyvirta, 2025b)​.

China dominates the global EV industry, producing 70% of the EVs worldwide ​(IEA, 2025b)​. In response, the EU, US, and Canada have imposed tariffs or import bans on Chinese EVs, while the EU and China are recently exploring minimum price agreements as an alternative ​(Song et al., 2024; Reuters, 2025)​. Domestically, EVs remain central to China’s transport electrification: in 2024, over 12 million new energy vehicles (NEVs) were sold, capturing a 41% market share—above the national target of 40% by 2030—and surged to 51% in March 2025 ​(Liang, 2025; Xinhua News Agency, 2025a)​.

Despite China’s real estate downturn and slowing investment in new construction, ongoing projects and rising demand for better living standards will continue to challenge buildings sector energy use and emissions. To address this, the Chinese government has outlined targets in its 14th FYP for Building Energy Efficiency and Green Building and the Implementation Plan for Carbon Peaking in Urban and Rural Construction ​(MoHURD of China, 2022; MoHURD of China and NDRC, 2022)​.

By the end of 2024, China’s forest coverage exceeded 25%, driven by initiatives like the Three-North Shelterbelt Program, which added over 300,000 km² of forest, and a 3,000 km green belt around the Taklamakan Desert. These efforts helped reduce the share of desertified land from 27.2% a decade ago to 26.8%. Its forests and grasslands now absorb over 1.2bn tonnes of CO₂ annually according to a Chinese official of the National Forestry and Grassland Administration ​(Reuters, 2024a; Xinhua, 2024; CGTN, 2025).​ China overachieved its 2030 NDC target on increasing forest stock volume by 6bn m3 from 2005 levels.

China’s 2035 NDC covers all GHGs, including methane. The long-awaited Methane Action Plan was published in November 2023 ​(State Council of China, 2023a)​, setting basic directions to control methane emissions across sectors as well as emphasising the establishment of a methane MRV system. However, the action plan does not specify any quantitative emissions reductions targets or commitments.

China ratified and started enforcing the Kigali Amendment in 2022 ​(Rudd, 2021)​. China reported that it halted new production capacity of five of the 11 HFCs it produces two years ahead of the freeze requirements of the Amendment ​(McKenna, 2022)​.  According to our analysis, China would reduce emissions by a modest ~45 MtCO₂e/year by 2030 under the Kigali Amendment’s phase-out schedule, although reductions could increase to almost 290 MtCO₂e/year by 2045.

China's electricity demand neared 10,000 TWh in 2024, accounting for over one-third of global consumption since 2023 ​(IEA, 2025a)​. Despite signs of a slowing economy, demand remains strong, with per capita electricity use reaching around 80% of the OECD average in 2022 ​(IEA, 2023a)​. Continued growth in power consumption is expected as the country advances its industrial development and electrification goals.

China's power supply is characterised by two seemingly conflicting trends. On one hand, the country leads the world in renewable energy deployment—surpassing its 2030 wind and solar capacity targets six years ahead of schedule. The rapid growth in renewables has been sufficient to meet rising electricity demand.

On the other hand, coal remains the dominant source of power, accounting for over 60% of electricity generation, with new coal power plants still being built at the largest scale globally. Whether China can peak its emissions ahead of 2030 and achieve significant reductions largely depends on whether renewable energy can truly replace coal as the dominant source of power. The rapid expansion of renewables had not translated into a decline in coal power until recently: in the first half of 2025, growth in solar power alone met the increase in electricity demand, leading to a 3.4% decline in coal use and a 3% reduction in CO₂ emissions in the power sector ​(Myllyvirta, 2025b)​.

Coal

China remains the world’s largest producer, importer, and consumer of coal. In 2024, China's coal consumption increased by 1.7%, slower than the 3.4% increase in 2023 which marks the economic rebound from zero-COVID ​(NBS of China, 2025)​. Strong clean energy growth may enable China’s coal consumption to peak in 2025, as more than half of experts surveyed by the Centre for Research on Energy and Clean Air (CREA) believe, while only 20% expect it to peak after 2025 ​(CREA, 2024b)​.

Coal accounted for 60% of China power generation despite representing only 40% of its total capacity, due to its higher capacity factor compared to renewables ​(CEC, 2024; Ember, 2025)​. To align with a 1.5°C pathway, China would need to rapidly reduce the share of unabated coal in power generation to 7-9% by 2030 and achieve a complete phase-out before 2040 ​(Climate Action Tracker, 2023)​. Our current policy projections suggest coal’s share in power generation falling to 28–40% by 2030.

China has signalled its intention to “phase down coal consumption” during the 15th Five-Year Plan period (2026–2030). While “in principle” the country no longer builds any more coal-fired power projects (whose sole purpose is to generate electricity), planners continue to build coal-fired power plants under two exceptions: to provide secured power supply and to support flexible peaking services under further development of renewable energy ​(NEA, 2022)​.

But this build-up occurs despite coal plants becoming more expensive to operate as cheaper renewables are added to the grid. High power generation costs, coupled with government-regulated electricity prices set at lower levels, have led to financial losses and generation inefficiencies for coal companies. Increasingly squeezed by renewables, many coal plants risk becoming stranded assets, unable to recover their investments over their expected lifetimes.

Despite stated restrictions, coal plants continue to be approved under broad and loosely defined exceptions. Coal-power capacity addition in 2025 is expected to be 80–100 GW, potentially setting a new annual record, even as overall coal-fired electricity generation declines ​(Myllyvirta, 2025b)​. While the additional capacity does not necessarily raise coal consumption, it is likely to reduce plant utilisation and profitability.

To transition to a 1.5°C-compatible power system and peak emissions and coal power ahead of the scheduled 2030 timeline, China must urgently and significantly cut coal power permits, restrict the construction of newly approved plants, and accelerate the retirement of existing plants.

At the same time, decommissioning and shutdown rates for older coal-fired power plants remain low, with the annual shutdown of installed capacity dropping sharply from around 13 GW in 2020 to 2.5 GW in 2024 ​(Patel, 2025)​. Instead, the government is pushing for a "low carbon transformation" to decarbonise the existing coal power plants ​(NDRC and NEA, 2024)​.

From 2025, a set of "low carbon" retrofitting projects for several coal power plants will be launched, aiming to reduce carbon emissions per kWh by an average of 20% compared to similar plants in 2023. Another set of projects will begin in 2027, targeting an average of a 50% reduction from 2023 levels. Reductions will depend on biomass co-firing, green ammonia co-firing, and CCUS technologies, all of which remain costly and technically unproven at scale, posing significant risks to widespread deployment.

While shifting away from coal is essential for achieving a 1.5oC-compatible power system, reducing emissions from coal plants that will remain in use for some time through technical improvements is still sensible. This strategy raises the cost of coal-fired power, encouraging a further shift to renewable energy when much of China’s coal-fired generation is already unprofitable even before incurring the costs of new measures ​(Myllyvirta, 2024a)​. It is, however, crucial to ensure that these low-carbon retrofits do not become an excuse for new coal projects or delaying the phase-down of existing coal plants.

With clean power generation now outpacing both current and long-term average growth in electricity demand, coal is gradually being squeezed out of China’s power system: emissions from the power sector declined in the first quarter of 2025 for the first time, even as electricity demand continued to grow strongly ​(Myllyvirta, 2025a)​.

The China National Coal Association forecasts a gradual shift towards oversupply in the coal market, with coal consumption expected to decline between 2035 and 2040 ​(CNCA, 2025)​. Meanwhile, China is accelerating a transition in coal use from a single energy source to a dual role as both fuel and feedstock, with the emergence of the coal chemicals industry. Technological breakthroughs and expanding capacity in coal-to-liquid fuels, coal-to-gas, and coal-to-ethylene glycol are driving this shift ​(CNCA, 2025)​.

China’s Emissions Trading Scheme (ETS) was initially launched in 2021 (after a decade of pilot projects) to bring down the emissions intensity of coal plants and encourage earlier retirement for a young coal-fired power plant fleet. In 2024, the ETS reached a record annual trading volume of 189 MtCO₂e and a total turnover of USD 2.5bn, the highest since its launch in 2021. Building on the power sector, the market expanded in March 2025 to include steel, cement, and aluminium smelting industries, adding over 1,300 key emission entities and increasing the share of CO₂ emissions covered to more than 60% of the national total ​(MEE of China, 2025b)​.

In August 2025, China further clarified its roadmap for strengthening the ETS, aiming to expand the coverage to include all major emission-intensive industries by 2027 and to introduce an emission cap-and-trade system with both free and paid allowances by 2030 ​(Xinhua News Agency, 2025b)​. China’s new NDC additionally requires the national ETS to cover all major high-emission sectors by 2035 ​(Xinhua News Agency, 2025d)​.

Fossil gas and oil

Fossil gas accounts for just 3% of China’s power generation, yet its consumption has been steadily increasing, with a year-on-year growth rate of 7.3% in 2024 ​(NBS of China, 2025)​. Despite Sinopec's projection of gas consumption peaking by 2040, concerns over energy security have moderated efforts to reduce reliance on gas ​(PR Newswire, 2024)​.

China, the world’s largest gas importer, sourced 42% of its total natural gas supply in 2023 through imports, up from 15% in 2010, with gas mainly imported as liquefied natural gas (LNG) ​(EIA, 2024)​. Due to high and volatile spot prices and increasing demand, Energy companies in China have shifted its strategy towards securing more long-term gas contracts ​(Corbeau and Yan, 2022; Bloomberg News, 2023)​. China has existing plans to extend its gas pipeline infrastructure by 40%, which would double its LNG import capacity. These developments could potentially lead to stranded assets in the order of an estimated USD 89bn ​(Rozansky and Shearer, 2021; Aitken et al., 2022; Caixin, 2022)​.

According to China National Petroleum Corp (CNPC), the use of fossil gas in the primary energy mix is expected to reach 12% in 2030, up from its current 8.5%, ​(Chow and Singh, 2021)​. This planned expansion undermines a 1.5°C trajectory, which requires China to reduce fossil gas use in electricity generation, aiming for a complete phase-out—ideally by 2040 ​(Climate Action Tracker, 2023)​.

Crude oil consumption in China dropped by 1.2% in 2024 ​(NBS of China, 2025)​. China relies on imports for 73% of its oil consumption, with crude oil imports in 2024 declining from the record highs reached in 2023, marking the first decrease in two decade excluding the COVID-19 period ​(Chen, 2025; EIA, 2025)​.

China's oil demand for fuels, including gasoline, jet fuel, and diesel, has plateaued, mainly due to the growing adoption of EVs in the transport sector, according to IEA experts ​(Healy et al., 2025)​. This indicates that the EV-driven decarbonisation of the transport sector, along with the overall economic shift from manufacturing to services-based growth, has substantially impacted China’s energy demand landscape ​(Tachev, 2025)​. Meanwhile, demand continues to rise for petrochemical feedstocks, which are used to produce plastics and fibres instead of being burned as fuels, with petrochemical demand increasing by nearly 5% in 2024 as new plants came online ​(Healy, 2023)​.

Renewables

Renewables are playing a larger and more obvious role in national energy security. In China’s NDC, non-fossil and renewable energy targets are set to the share of non-fossil fuels in primary energy consumption to “around 25%” and installed capacity of wind and solar power to 1,200 GW by 2030 ​(Government of China, 2022)​.

The 14th FYPs on energy and renewables also targets a 39% non-fossil share in generation (33% from renewables; 18% excluding hydro), a 20% non-fossil share in primary energy consumption, a 30% share of electricity in final energy consumption, and at least half of incremental power demand growth be met by non-fossil sources by 2025 ​(NDRC, 2022; NDRC and NEA, 2022)​.

Renewables should also make up half of the country’s total installed capacity by 2025, expected to reach roughly 3000 GW, as well as half of the incremental growth in power demand ​(SASAC, 2021)​. To ensure the achievement of its 14th FYP targets, the State Council has sets targets to increase the share of non-fossil energy consumption to 18.9% in 2024 and 20% in 2025 ​(The State Council of the People’s Republic of China, 2024)​.

China achieved its 1,200 GW wind and solar capacity target six years ahead of schedule, reaching 1,407 GW in 2024 ​(NEA, 2025c)​. Wind and solar capacity reached 1,674 GW and total renewable capacity hit 2,159 GW by the end of June. Renewables supplied almost 40% of power generation in H1 2025, with solar growth outpacing electricity demand ​(NEA, 2025a)​. The CAT CPPs estimate 3,294–4,231 GW of wind and solar by 2030, supplying over half the power mix.

To align with a 1.5°C pathway, global electricity generation must be 95-100% renewable by 2050, with China achieving at least a 79% share of renewable electricity by 2030 ​(Climate Action Tracker, 2023)​. Current policy projections show renewables reaching 52-68% of the power mix by 2030. To align with a 1.5°C pathway, more policy measures are needed to accelerate renewable deployment and improve grid integration.

The unprecedented surge in renewable energy has significantly strained the electricity network, with solar power plants frequently unplugging to prevent system overloads ​(Bloomberg News, 2024a)​. To enhance the grid's robustness, China aims to improve infrastructure by increasing transmission and energy storage capacity: it has set a goal to complete 37 major power lines and begin construction on another 33 by the end of 2024. It has also raised the target for battery storage capacity to 40 GW by 2025 ​(Bloomberg News, 2024b)​.

To enhance the integration of renewable energy into the grid and reduce curtailment rates of wind and solar power, the government introduced a new implementation plan in January 2025. It aims to integrate over 200 GW of new wind and solar into the grid annually from 2025 to 2027, with a national renewable energy utilisation rate of at least 90% ​(NEA, 2025b)​.

China also introduced the Electricity Demand Side Management Measures in 2023, requiring each province to reach a power demand response capacity equivalent to 3%-5% of its maximum electricity load, with a heightened threshold of 5% set for provinces with an annual peak valley difference rate exceeding 40% ​(State Council of China, 2023b)​.

Building on this, the new draft for comment released by the NDRC on minimum proportion target of renewable energy consumption and the renewable energy electricity consumption responsibility weight system marks a major shift in China’s energy transition policy—from supply-side incentives to demand-side mandatory obligations ​(NDRC, 2025a). The draft introduces consumption requirements for both electricity and non-electricity renewable energy, while clarifying implementation procedures, compliance mechanisms, and penalties. Beyond creating stable demand for rapidly expanding wind and solar power, the policy could also substantially enhance renewable energy consumption among major energy users, particularly in energy-intensive sectors such as steel, aluminium, and petrochemicals, thereby accelerating industrial decarbonisation.

China's efforts to establish a national electricity spot market by 2030 will provide additional solutions for maintaining energy security, while realising a high penetration of renewable energy through increased interprovincial interconnectivity and real-time discovery of electricity prices.

The NDRC has launched inter-provincial spot power trading in 2023 in preparation for a national market, building on the spot power trading that has been implemented in a handful of provinces since 2019 ​(Howe, 2023)​. As part of the updates toward a national spot market, in May 2024, the NDRC revised its rules on electricity market operations, enhancing the definitions of electric energy and auxiliary service trading, and refining the requirements for risk prevention and control ​(Reuters, 2024b)​.

Nuclear

Nuclear power is also poised to assume a pivotal role in China's pursuit of carbon neutrality. In 2024, it accounted for 4.7% of total power generation, with its share projected to rise to 10% share of power generation in 2035 and 18% in 2060 (with a capacity of 400 GW) ​(NNSA of China, 2025; Zheng, 2025)​. To achieve this target, the China Nuclear Energy Association (CNEA) anticipates approving six to eight new nuclear power units annually in the foreseeable future ​(Reuters, 2023)​.

In 2024, China added around 3 GW of capacity across two new plants, bringing total nuclear capacity to 60 GW across 57 reactors ​(NNSA of China, 2025)​. An additional 55 GW is either approved or under construction, following a record wave of project approvals in 2023 and 2024—suggesting that, on average, more than 10 GW of new capacity will be added annually over the next five years ​(Myllyvirta, 2025c)​.

China supports nuclear power as a low-carbon baseload source, believing it reliefs energy security concerns. However, nuclear remains less economical and slow to install, even in China, compared to wind and solar. We have not integrated these projections of nuclear buildout in our current policies projections pending further developments.

Industry is the largest energy-consuming sector in China, accounting for almost 60% of the country’s total final consumption ​(IEA, 2023c)​. Half of the direct energy consumed in the sector currently comes from coal and fossil gas, although combined shares of the fossil fuels are expected to plateau in the next decade as China targets increasing electrification and efficiency to meet expected demand ​(IEA, 2023c)​.

The government’s new industry peaking implementation plan has aligned the entire sector’s CO₂ emissions peaking timeline with China’s 2030 NDC target, while the 14th FYP for Green Industry Development has matched the economy-wide energy and emission intensity reduction targets ​(MIIT of China, 2021; MIIT of China, NDRC and MEE, 2022)​. However, the effectiveness of these plans depends on greater coherence across overlapping policy instruments—particularly aligning ETS expansion with industrial energy efficiency targets and capacity control measures.

The chemicals industry was the biggest driver of energy consumption and emissions growth in the first half of 2024, with coal use rising by 18% year-on-year and adding around 54 Mt CO₂ ​(CREA, 2024a)​. As coal prices continue to fall and coal demand in the power sector declines in early 2025, major coal producers are turning more towards high-margin coal-based chemical production, where profits can be 8 to 12 times higher. Without intervention, emissions from the chemicals sector could increase to 1.3 times above 2019 levels by 2030, putting China’s climate goals at risk ​(CREA, 2024a)​.

China’s two largest industrial sources of emissions—steel and cement—are both experiencing demand saturation and production peaks, driven largely by the slowdown in real estate and infrastructure construction, their primary end uses. A latest expert survey found that over 68% of climate and energy experts believe the steel industry has already peaked or will peak before 2025, with more than 70% expressing the same view for the cement industry ​(CREA, 2024b)​. Steel production peaked in 2020 at 1,065 Gt and declined to 1,005 Gt in 2024 ​(Clyde Russell, 2025)​. Cement production reached a 15-year low in 2024, while overcapacity and shrinking demand led to industry profits in 2022 and 2023 falling by over 80% compared to 2019 ​(Zhu, 2024)​.

Emissions reductions in China’s steel and cement sectors are currently driven more by structural declines in demand than by deliberate decarbonisation efforts, raising concerns about their long-term sustainability.

Technological improvements, particularly electrification and energy efficiency, are essential for deeper, lasting reductions in these high-emitting industries. Lowering emission intensity is also key to improving the global competitiveness of Chinese products, especially as carbon border adjustment mechanisms like the EU’s take effect. China has set 2025 targets, including a 2% reduction in steel energy intensity, recycling 320 Mt of scrap steel, and a 3% reduction in cement energy intensity relative to 2020 levels ​(Bloomberg News, 2021; EEO, 2021; China Dialogue, 2022; MIIT of China, 2022; MoHURD of China and NDRC, 2022)​.

In March 2025, the MEE officially approved the expansion of the national ETS to include the cement, steel, and aluminium sectors. Covering 2024 emissions, the first compliance deadline is set for end-2025 ​(ICAP, 2025)​. The expansion added over 1,300 key emission entities and increased the share of CO₂ emissions covered to more than 60% of the national total ​(MEE of China, 2025b)​. In August 2025, China further clarified its roadmap for strengthening the ETS, aiming to expand the coverage to include all major emission-intensive industries by 2027 and to introduce an emission cap-and-trade system with both free and paid allowances by 2030 ​(Xinhua News Agency, 2025b)​.

Steel is China’s second-largest emitting sector, following the power sector. To achieve a 1.5°C-compatible steel industry, China must retire its emissions-intensive blast furnace-basic oxygen furnace (BF-BOF) route and cease building new coal-based steel plants. The resulting capacity gap should be filled through increased scrap recycling and green hydrogen-based direct iron reduction (DRI), with steelmaking prioritising the use of electric arc furnaces (EAF) powered by clean energy ​(Climate Action Tracker, 2024)​.

By cutting steel output and increasing scrap-based steel production through EAFs, China could reduce CO₂ emissions from the steel industry by 200 Mt by 2025—equivalent to the EU's annual emissions from steelmaking ​(CREA, 2024c)​. China has set EAF capacity share targets of 15% by 2025 and 20% by 2030, but as of 2023, the share remains below 10%, raising concerns about progress ​(CREA, 2024b; Transition Asia, 2024)​.

In 2024, China suspended its decade-long steel capacity replacement policy, which required firms to retire existing capacity when building or expanding new facilities. Originally intended to curb overcapacity by replacing outdated production with more advanced, cleaner technologies, the policy inadvertently led to increased output due to higher efficiency of new installations—exacerbating oversupply and narrowing profit margins. While the suspension may temporarily restrain capacity expansion, it also risks slowing key low-carbon transition measures, such as EAF-scrap recycling ​(Ling, 2024)​.

Decarbonisation of China’s steel and cement sectors will also depend on managing local employment transitions and provincial-level resistance, particularly in regions with high industrial dependency.

To fully decarbonise China’s harder-to-abate sectors, the development of CCUS and hydrogen solutions have become priority strategy areas. The National Development and Reform Commission approved 148 national demonstration projects in 2024 and 2025, covering areas such as green hydrogen, CCUS, and zero-carbon steelmaking ​(NDRC, 2024, 2025b)​. The 2024 "low carbon transformation" action plan for coal power plants highlights CCUS technologies as a key method for reducing emissions from existing coal plants from 2025 to 2027 ​(NDRC and NEA, 2024)​.

As of 2021, CCUS was highlighted in the last three FYPs, the MEE has encouraged provinces to pilot and demonstrate CCUS projects, and 29 provinces have already issued policies and plans related to the technology. China has commissioned three projects in 2023 and now has a project pipeline with the potential to capture around 10 MtCO₂/year ​(IEA, 2023b)​. However, the efficacy of CCUS has yet to be fully realised in any CCUS project anywhere in the world, with budget blowouts and failure to reach announced sequestration rates ​(IEEFA, 2022)​.

China published its national hydrogen strategy (2021–2035) in 2022, confirming the technology’s key role in China’s future energy system and mitigation efforts. While hydrogen is mainly produced from coal and gas, the plan targets a modest production of 100,000–200,000 tonnes of renewable-based hydrogen with renewable sources by 2025: this would constitute less than 1% of its production ​(Yao, 2022)​. The China Hydrogen Alliance estimates this could reach 100 Mt by 2060, accounting for 20 percent of the country’s final energy consumption ​(Nakano, 2022)​.

The application of hydrogen in steelmaking decarbonisation has commenced, though it remains largely in the R&D phase. An Italian firm specialising in sustainable metal production has partnered with China's leading steel manufacturers, Hesteel Group and Sinosteel, to establish DRI plants powered by hydrogen-enriched fossil gas, with a combined production capacity of 1.6 Mtpa ​(Tenova, 2020, 2022, 2024)​.

F-gases

China is a major emitter of fluorinated greenhouse gases (F-gases), with emissions reaching 462 MtCO₂e in 2021 (GWP100, AR5), according to its latest national inventory ​(UNFCCC, 2025a)​. China ratified and started enforcing the Kigali Amendment in 2022 ​(Rudd, 2021)​. China reported that it halted the new production capacity of five of the 11 HFCs it produces (covering 75% of total HFC production) two years ahead of the freeze requirements ​(McKenna, 2022)​. According to our analysis, China would reduce HFCs emissions by a modest ~45 MtCO₂e/year by 2030 under the Kigali Amendment’s phase-out schedule, although reductions could increase to almost 290 MtCO₂e/year by 2045.

China’s transport sector is a vast consumer of energy with the sector accounting for 14% of final energy consumption and 43% of oil consumption nationally, with petrol cars the largest consumer and source of emissions ​(IEA, 2023c)​.

The government has signalled its continuing intent to accelerate the transition towards a low-carbon transport fleet, with sector action critical to meeting economy-wide targets of a 30% share of electricity in final energy consumption in 2025 and peak oil consumption during the 15th FYP period (2026 to 2030) ​(Government of China, 2021; NDRC and NEA, 2022)​. However, the decarbonisation of the power grid is equally important: with coal still dominating the electricity mix, a large EV market share does not automatically translate into lower transport emissions.

China’s uptake of new energy vehicles (NEVs), including BEVs, PHEVs, and fuel cell electric vehicles (FCEVs), started in the 1990s. The rapid growth in NEV sales was initially driven by central purchase subsidies introduced in 2009, which ended in late 2022. Current support mainly includes purchase tax exemptions, trade-in programmes, and regional incentives ​(Xinhuanet, 2023; Zhang, 2025)​. For instance, Shanghai offers free licence plates for BEVs, while traditional fuel vehicles must obtain plates through a costly auction process, with prices often exceeding USD 12,000 ​(Zhang, 2024)​.

China’s EV industry has evolved from relying heavily on subsidies to becoming a key driver of economic growth, with NEVs gaining strong domestic competitiveness over traditional fossil fuel-powered vehicles. In 2024, activities in the EV and battery sectors, including investment and sales, were valued at USD 736bn, contributing nearly 4% to China’s GDP ​(Myllyvirta et al., 2025)​.

The government set targets for NEVs to reach 20% of new vehicle sales by 2025 and 40% by 2030, with the market share of NEVs having already reached 40.9% in 2024 ​(Government of China, 2021; Xinhua News Agency, 2025a)​. The NEV market share surged to a record high of 51.1% in March 2025, driven by trade-in programmes and the continued tax exemptions on NEV purchases ​(Liang, 2025)​. NEVs now make up nearly 9% of all vehicles on the road in China ​(Andrews, 2025)​.

To align with a 1.5°C pathway, China would need to reach 100% NEV sales by 2040—effectively phasing out sales of fossil fuel cars ​(Climate Action Tracker, 2020b)​. Projections (from 2021) show China only reaching 70% by then, although this is the most rapid trajectory of any of the world’s largest emitters.

The growing penetration of NEVs is now visibly reducing emissions and pollutants. In 2024, NEVs displaced 3.5% of new fuel demand, while compressed and liquefied natural gas used in road freight offset an additional 2%. As a result, China's oil demand for fuels has plateaued ​(Healy et al., 2025)​. Our previous analysis of NEV penetration scenarios in China shows limited domestic mitigation impact, given that even 100% BEV sales by 2035 would mean negligible GHG emissions reductions if not coupled with rapid decarbonisation of the power sector ​(Climate Action Tracker, 2021)​.

Meanwhile, highly competitive Chinese automakers are gaining ground in international markets. In response to China’s dominance in the global EV market, the EU, US, and Canada have introduced additional tariffs or import bans on Chinese-made EVs to counteract China's market and price advantages ​(Song et al., 2024)​. As a recent development in April 2025, the EU and China agreed to explore setting minimum prices for Chinese-made EVs as a potential alternative to EU-imposed tariffs ​(Reuters, 2025)​.

The government has also been prioritising service and electrification of its public transport systems with the expansion of national high-speed rail and local electric public transport systems highly prominent in its economic stimulus packages and latest FYPs.

The 14th FYP for Green Transportation Development contains numerical targets to increase the growth of NEVs in urban public transport (including taxis, buses, delivery trucks, and more), while the government recently launched a pilot programme for cities to procure 80% of new public vehicles as electric from 2023-2035 (around two million vehicles) ​(MoT of China, 2021; Xue, 2023)​. Shenzhen, a city home to two pilot programmes for NEVs since 2009, became the first city in the world with an entirely electric public transport system in 2017 (including 16,000 buses and 20,000 taxis) ​(CGTN, 2023)​.

For intercity transport, the government has looked to expand its massive high-speed rail network. The network consisted of about 38,000 km in 2020 (all built since 2008) and is planning to extend this by another 120,000 km by 2035 ​(Jones, 2022; O. Wang, 2022)​. By 2025, the government aims to have the network cover more than 95% of cities with a population greater than half a million ​(State Council of China, 2022)​. 

In 2022, building operations accounted for 22.0% of China’s final energy consumption and 21.7% of energy-related CO₂ emissions, with electricity making up over 60% of the energy used and emissions. Building construction consumed an additional 22.7% of final energy and contributed 26.6% of emissions ​(CABEE, 2025)​.

Rising cooling demand driven by more frequent and intense heatwaves is placing additional stress on electricity systems and increasing fossil fuel use during peak periods. In 2024, record-breaking summer temperatures further intensified power demand in China’s densely populated regions, underscoring the urgent need for low-carbon cooling solutions and energy efficient buildings ​(Rangelova et al., 2025)​.

China constructs the greatest number of buildings globally: the country constructed an average of 4bn m2 of new floor space annually over the last decade, despite a slowdown since 2020 ​(National Bureau of Statistics, 2021)​. China’s continuing urbanisation trend is expected to come with a large increase in energy consumption and embodied emissions from the construction sector: the efficiency with which new floor space is built will impact China’s ability to meet headline energy intensity reduction goals in the economy (-13.5% from 2021 to 2025), while the production processes for carbon-intensive construction materials, such as steel and cement, are vital to China’s carbon peaking goals.

The Ministry of Housing and Urban-Rural Development (MoHURD) developed the “Green Building Evaluation Standard”, which includes a set of indicators such as safety and durability, health and comfort, user convenience, environmental responsibility, and resource efficiency, including energy conservation ​(MoHURD of China, 2019a; Q. Wang, 2022)​. By the end of 2023, China had built approximately 11.85bn m2 of green buildings in urban areas, with over 27,000 projects receiving green building certification. In 2023 alone, newly constructed green buildings in urban areas accounted for 94% of all new urban construction ​(Photovoltaic Discovery, 2024)​.

To further guide building energy efficiency and decarbonisation, the Ministry published the Technical Standards for Nearly Zero Energy Buildings in 2019. Although the document does not set quantified benchmarks, it introduces China-specific definitions for related concepts—ultra-low energy buildings, nearly zero energy buildings, and zero energy buildings. In this framework, ultra-low energy buildings are seen as a preliminary stage of nearly zero energy buildings with slightly lower performance, while zero energy buildings, which aim to balance energy demand and supply, represent a more advanced form ​(MoHURD of China, 2019b)​.

By 2024, more than 2.5bn m2 of urban and commercial floor space has already been green-building certified since 2018, whereas over 23.89 million m2 of nearly zero energy buildings projects have implemented ​(Zhang and Fu, 2021; Zhang et al., 2021; Yu et al., 2024)​.

The 14th FYP for Building Energy Efficiency and Green Building and Implementation Plan for Carbon Peaking in Urban and Rural Construction outlines the government’s main targets for 2025, including setting energy consumption caps in building operations and increasing energy efficiency of new public and residential buildings by 20% and 30% ​(MoHURD of China, 2022; MoHURD of China and NDRC, 2022)​.

The 14th FYP and implementation plan also contain indicators for increasing solar and geothermal applications to new buildings by 2025, aims to have 55% of the energy consumed in urban buildings from electricity (fossil fuel sources supplied a third of energy consumption in buildings and half of all space heating in 2021), and raises the proportion of energy from renewable electricity to 8% (from 6% in the 13th FYP).

The document further sets indicators for renovating 350 million m2 of existing buildings with efficiency measures and constructing 50 million m2 of ultra-low or nearly zero energy buildings. Retrofits of buildings are paramount in China’s bid for energy efficiency in the sector, as the average age of the building stock is young at 15 years, meaning almost half of the existing floor space could still exist by 2050 ​(IEA, 2021a)​.

In March 2024, China's State Council approved an action plan to strengthen energy conservation and carbon reduction in the building sector, setting additional targets for 2025 beyond those outlined in the 14th FYP. By 2025, all new urban buildings must comply with green building standards.

The total floor area of newly constructed nearly zero energy buildings is to increase by over 20 million m² compared to 2023, and energy retrofits for existing buildings are to expand by more than 200 million m². By 2027, the plan aims to scale up ultra-low energy buildings, further advance retrofitting of existing stock, and optimise the sector’s energy mix, with a focus on delivering high-quality, green, and low-carbon buildings ​(State Council of China, 2024)​

For compatibility with the Paris Agreement temperature goals, China’s emissions intensity in residential and commercial buildings needs to be reduced by at least 65% in 2030, 90% in 2040, and 95–100% in 2050 below 2015 levels, while energy intensity needs to be reduced by at least 20% in 2030, 35–40% in 2040, and 45–50% in 2050 compared to 2015 levels. China will also need to achieve renovation rates of 2.5% per year until 2030 and 3.5% until 2040 to achieve a Paris-compatible buildings sector by 2050 ​(Climate Action Tracker, 2020a)​.

China’s LULUCF sector represented a carbon sink of approximately 1.3 GtCO₂e in 2021 according to China’s first Biennial Transparency Report (BTR) ​(UNFCCC, 2025a)​. China’s government and the National Forestry and Grassland Administration (NFGA) have increased efforts on expanding the country’s forestry and grasslands, in part due to its slated role (as carbon sinks) in achieving China’s target of carbon neutrality before 2060.

The government has implemented many domestic forest conservation and afforestation policies, guided by the National Forest Management Plan (2016-2050) ​(NFGA, 2016)​. In 2021, the government has issued plans to plant 36,000 km2 of new forest annually to 2025 in a bid to increase the country’s forest coverage to 24.1% as part of its overall 14th FYP goals ​(Stanway, 2021)​.

This target increased from 23% in the 13th FYP, which was achieved in 2020 ​(SCIO of China, 2020)​. In the 14th FYP for Protection and Development of Forestry and Grassland (2021-2025), the NFGA details additional specific protection, restoration and afforestation goals in several priority ecological zones (Tibetan Plateau, Yellow River, Yangtze River, Northeast forest zone, Northeast desertification zone, Southern hilly zone) ​(NGFA of China, 2021)​.

By the end of 2024, China’s forest coverage exceeded 25%, driven by large-scale afforestation efforts such as the Three-North Shelterbelt Forest Program, which has added over 300,000 km2 of forest ​(CGTN, 2025)​. In the same year, the completion of a 3,000-kilometre green belt around the Taklamakan Desert marked a major milestone in desertification control, helping reduce desertified land to 26.8% of the national territory ​(Reuters, 2024a)​.

To reach China’s carbon neutrality goal by 2060, carbon sequestration through afforestation is assumed to play a critical role, though the climate benefits depend heavily on the quality, composition, and long-term sustainability of the forests ​(He et al., 2021)​.

According to government officials, China’s forests and grasslands currently absorb over 1.2bn tonnes of CO₂ equivalents annually, making it the world’s largest carbon sink. This capacity is projected to offset more than half of the country’s unavoidable carbon emissions by 2060, playing a crucial role in achieving China’s carbon neutrality goals ​(Xinhua, 2024)​.

However, assessments of the carbon sequestration potential of China’s forests contain uncertainties in science and accounting, leading to diverging estimations ​(e.g., Qiu et al., 2020; Yu et al., 2022)​. Thus, for Paris Agreement compatibility, sinks from the forestry sector cannot be used as an excuse to delay emissions reductions in other sectors ​(Climate Action Tracker, 2016)​.

China updated its NDC forestry pledge to increase forest stock volume by 6bn m3 by 2030 compared to 2005 levels (at around 18.5bn m3). In 2024, China has already achieved its 2030 NDC target, achieving a 20bn m3 forest stock volume ​(Xinhua News Agency, 2025c)​.

In 2021, China signed the Glasgow Declaration on Forest and Land Use (which commits to “halt and reverse” forest loss and land degradation by 2030) at COP26 and issued separate joint agreements with both the EU and the US on enhancing cooperation on reducing deforestation around the same period ​(DG for Climate Action, 2021; U.S. Department of State, 2021)​.

The government appears serious in respecting those objectives with action. In 2020, China revised its Forest Law for the first time in 20 years, with the most significant policy change being the implementation of a ban (in effect as of July 2020) on Chinese companies purchasing, processing, or transporting illegal logs ​(Client Earth, 2020; Mukpo, 2020)​. As China is the world’s largest importer of legal and illegal logs, with a large portion of its tropical timber imports (in 2018) coming from countries with weak governance, the revised law could have a large impact on curbing global deforestation ​(Global Witness, 2019; Interpol, 2019)​.

China chaired the UN Biodiversity Conference in Montreal in December 2022 (originally to be hosted in Kunming but rescheduled after years of delay due to COVID) which resulted in the adoption of the Kunming-Montreal Global Biodiversity Framework. The landmark agreement contains 23 targets to achieve by 2030, including covering 30% of Earth’s land, coastal areas, and ocean under protected areas ​(UNEP, 2022)​.

Methane is a major contributor to emissions in China, with the country emitting 60 Mt (1.7 Gt CO₂e, IPCC AR5) in 2021, accounting for 11.7% of its total absolute GHG emissions ​(UNFCCC, 2025a)​. The primary sources of methane emissions in China are coal mine fugitives (~40%), agriculture, including livestock and rice cultivation (~42%), and waste and waste water (~10%) ​(Government of China, 2023; Patel, 2023)​. Coal mine methane emissions are particularly difficult to detect and accurately account due to their diffuse nature, suggesting that China’s actual emissions may be significantly higher than officially reported figures ​(Patel, 2023)​.

Methane reduction has been a key focus of US-China climate cooperation, highlighted as a priority in both the joint statement issued at COP26 in Glasgow and the 2023 Sunnylands statement ​(U.S. Department of State, 2021, 2023)​. In November 2023, the long-awaited Methane Action Plan was published ​(State Council of China, 2023a)​.

While the plan sets basic directions to control methane emissions across sectors as well as setting short-term targets on such measures as the utilisation of manure in livestock, domestic waste recycling, and harmless disposal of sludge, it does not specify any quantitative emissions reductions targets or commitments. A notable emphasis within the action plan is the prioritisation of establishing a methane measurement, reporting, and verification (MRV) system, despite the absence of a firm commitment or a defined timeline.

China has not adopted the Global Methane Pledge (launched at COP26), in which signatories agreed to cut emissions in all sectors by 30% globally over the next decade. Methane is not included in China's 2030 NDC targets which only covers CO₂.

China’s 2035 NDC covers all GHGs including methane. While this marks an important step, a standalone quantitative target—either for methane specifically or for non-CO₂ gases more broadly—would be more effective to ensure substantial mitigation.