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 fuel dependence will continue but renewables are also being deployed at a rapid pace: it remains uncertain whether the acceleration of renewables will be sufficient to meet the growth in energy demand and reduce dependence on coal and gas at the same time.

China’s emissions under current policies are projected to peak before 2025. In our conservative scenario (CPP max), we assume China's energy-related CO₂ emissions will plateau at their peak level for around five years, given the absence of emission reduction targets after peaking (this could potentially change with more ambitious new NDC targets scheduled for 2025).

CPP max suggests that China risks failing to meet its domestic target of reducing carbon intensity by 18% by 2025 from the 2020 level, as highlighted by other analyses (CREA and GEM, 2024b; Myllyvirta, 2024b). In our optimistic current policy scenario (CPP min) however, the pace of renewable integration ramps up even faster to add more than 300 GW annually. In this case, renewables will be able to meet growing energy demand and electrification while also substantially displacing coal and replacing the need for fossil gas in end-use sectors. China’s GHG emissions begin the first stages of structural decline as the country shifts from controlling energy to controlling carbon, although more action is needed to reach its carbon neutrality by 2060 target.

After updating our projections to incorporate the latest policy developments and analysis, we project GHG emissions levels to between 13.8 to 14.6 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. China is expected to implement additional policies with its own resources but will also need international support to implement policies in line with full decarbonisation.

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 13.8 to 14.6 GtCO₂e/yr in 2030 – roughly 29% higher than 2010 levels.

The 14th FYPs aims to cut energy intensity by 13.5% and emissions intensity by 18% by 2025 from 2020 levels (Xinhua News Agency, 2021). However, progress from 2020-23 was minimal, with only a 2% drop in energy intensity and a 4.6% drop in emission intensity (Myllyvirta, 2024b). To ensure the achievement of its 14th FYP targets, the State Council sets its 2024 targets to reduce the energy intensity and emission intensity by 2.5% and 3.9% respectively (The State Council of the People’s Republic of China, 2024).

China’s CO₂ emissions in the second quarter of 2024 dropped for the first time since the country reopened from its “zero-Covid” lockdowns in December 2022 (Myllyvirta, 2024a). This reduction was mainly driven by a surge in clean energy additions, reversing the growth of fossil fuel power. Despite cautious and conservative government reactions, it suggests that China’s CO₂ emissions may have already peaked in 2023. If not, they are likely to peak well before 2025, five years ahead of the 2030 target (Bloomberg News, 2024b).

China achieved its 1,200 GW wind and solar capacity target six years ahead of schedule, reaching 1,206 GW in July 2024, with forecasts predicting 1,310 GW by year-end. (Bloomberg News, 2024d; CEC, 2024)

China's reliance on fossil fuel consumption is a key factor driving global emissions. Despite having the world’s largest coal power pipeline, China reduced its coal plant permits by 83% in the first half of 2024, allowing only 9 GW, after permitting over 100 GW of coal power annually in 2022 and 2023 (CREA and GEM, 2024a; GEM et al., 2024). This drop in new coal approvals doesn’t necessarily indicate an early coal peaking, as addressing the coal power projects permitted during the 2022-23 surge remains a significant challenge for China if it wants to peak emissions and avoid a costly coal lock-in.

The government has introduced a "low carbon transformation" action plan. This plan aims to reduce emissions from existing coal plants through biomass co-firing, green ammonia co-firing, and CCUS technologies from 2025 to 2027 (NDRC and NEA, 2024a). While shifting away from coal is essential for achieving a 1.5-compatible power system, reducing emissions from coal plants that will remain in use for some time through technical improvements is still sensible. This approach will further raise the cost of coal-fired power, thus promoting renewable energy, especially as nearly half of China’s coal-fired power generators are operating at a loss even before accounting for costly new measures (Myllyvirta, 2024a).

The draft of the Energy Law of the People's Republic of China was opened for public consultation at the Standing Committee of the National People's Congress (NPC) meeting on April 26, 2024. This will be China's first comprehensive law with a fundamental and overarching role in the energy sector, integrating various stand-alone energy laws and regulations, such as the Electricity Law, the Coal Law, the Energy Conservation Law, and the Renewable Energy Law.

The Energy Law could be formally introduced within 2024 (Dai, 2024). Article 20 of Chapter 3 of the draft law explicitly supports the priority development of renewable energy, the rational development and clean, efficient use of fossil energy, and the orderly promotion of replacing fossil energy with non-fossil energy, as well as replacing high-carbon energy with low-carbon energy (NDRC and NEA, 2024b).

Launched in 2021, China’s Emissions Trading Scheme (ETS) covers over 2,000 companies in the power sector, 40% of China’s total carbon emissions, and recorded over 24.9 billion yuan (USD 3.4bn) in total transactions in 2023. The ETS has thus far had minimal impact on CO₂ emission reduction, primarily due to a generous supply of allowances and the absence of a stringent emissions cap.

New regulations on ETS management published in February 2024 significantly increased the punishment for non-compliance, data fraud and market manipulation behaviours (IKI, 2024). In July, China published new rules for public consultations, prohibiting participants in the Emissions Trading System (ETS) from borrowing allowances from future years and more strictly limiting the carrying over of unused permits from previous years (MEE, 2024). Beyond the power sector, China plans to expand its ETS to seven other high-emitting sectors covered by the European Union Carbon Border Adjustment Mechanism (CBAM) regulations. (Tan, 2022).

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; all the subsectors have aligned with the economy-wide carbon peaking timeline before 2030 (MIIT of China, NDRC and MEE, 2022). The Special Action Plan for Energy Conservation and Emission Reduction in the Iron and Steel Industry, issued in June 2024, aims to reduce comprehensive energy consumption per tonne of steel by over 2% by the end of 2025 compared to 2023 levels (NDRC et al., 2024).The national ETS has also announced to expand to include steel, cement, and aluminium by the end of 2024 (ChinaNews, 2024).

The government is also taking decisive action to control capacity and production in the steel and cement sectors to address overcapacity and reduce emissions. As of August 23, 2024, all new steel plant permits have been indefinitely suspended, following an earlier policy of granting permits only for electric-powered steelmaking plants (MIIT of China, 2024).

Carbon capture, utilisation and storage (CCUS) and the development of hydrogen solutions are on the radar of policymakers in China's harder-to-abate sectors for decarbonisation, although CCUS doesn’t lead to complete decarbonisation. The new "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, 2024a). As the world's largest producer of hydrogen, China published its national hydrogen strategy and is targeting modest production of 100,000–200,000 tonnes of renewable-based hydrogen by 2025, which could reach 100 million tonnes by 2060 (Yao, 2022).

To transition to a low-carbon transport sector, the government has spent decades prioritising new energy vehicles (NEVs) sales, including battery electric vehicles (BEVs), plug-in hybrid vehicles (PHEVs), and fuel cell electric vehicles (FCEVs). China dominates the global electric vehicle (EV) industry, having produced more than half of the EVs worldwide in 2023. This dominance is driving global EV development and intensifying pressure on European and North American companies to improve competence.

In response, the EU, the US, and Canada have imposed additional tariffs on Chinese-made EVs to counter China's market and price advantages (Song et al., 2024). China's domestic NEV market share reportedly exceeded 30% in 2023 (already exceeding the 20% target in 2025) despite ending NEV subsidies for producers in 2022; the government aims for a 40% market share by 2030 (Government of China, 2021; Xinhua News Agency, 2024).

China has also been prioritising improving accessibility and electrification of its public transport systems, with the expansion of national high-speed rail and local electric public transport systems prominent in its COVID economic stimulus packages and latest FYPs. The government aims to expand its massive high-speed rail network from the current 45,000 km to approximately 70,000 km by 2035. It has also launched a pilot program for cities to procure around two million electric public vehicles before 2035 (O. Wang, 2022; CGTN, 2023).

While China's real estate market is in a downturn, and investment in new construction projects is expected to slow down, the stock of projects under construction and the growing demand for higher living standards will still present challenges in terms of energy consumption and emissions in the building sector. To address this, the Chinese government has outlined targets in its 14th Five-Year Plan (FYP) for Building Energy Efficiency and Green Building and Implementation Plan for Carbon Peaking in Urban and Rural Construction (MoHURD of China, 2022; MoHURD of China and NDRC, 2022).

The plan sets energy consumption caps in building operations, increases the energy efficiency of new buildings, and sets indicators for renovating existing buildings with efficiency measures and constructing ultra-low or zero-energy consumption buildings. The plans also contain indicators for increasing solar and geothermal applications to new buildings, raising the proportion of energy from renewable electricity, and reducing emissions intensity and energy intensity in residential and commercial buildings.

China has increased efforts to expand its forestry and grasslands, in part due to their role in achieving the country’s carbon peaking and carbon neutrality targets. The government has implemented various domestic forest conservation and afforestation policies, and in the 14th FYP, it has set a target to plant 36,000 km2 of new forest annually until 2025 to increase the country’s forest coverage (NGFA of China, 2021). Internationally, China has increased its forestry pledge and signed the Glasgow Declaration on Forest and Land Use and separate joint agreements with the EU and the US on reducing deforestation.

China is engaged in domestic discussions to include methane in its 2035 NDC updates. 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 emission reduction targets or commitments.

China finally 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 (covering 75% of total HFC production) two years ahead of the freeze requirements of the Amendment (McKenna, 2022). According to our analysis, China would reduce emissions by a modest ~50 MtCO₂e/year by 2030 under the Kigali Amendment’s phase-out schedule, although reductions could increase to almost 300 MtCO₂e/year by 2045.

China’s immense energy consumption and its power sector, heavily dependent on fossil fuels (65%), is the largest contributor to global CO₂ emissions (NBS of China, 2024). Fossil fuel is continuing to serve as the foundation of the stable energy supply, as the build-up of coal reaches its highest levels at 1,109 GW, and the expansion of capacity runs opposite to global trends. Non-fossil energy sources, particularly wind and solar (but also hydro and nuclear), remain the primary objective for the energy system to prepare China for the post-coal era. Chinese energy policy continues to drive the growth of both clean and polluting sources as energy demand is expected to rise again in 2024 (and beyond): emissions in the short term continue to depend on extreme weather events (such as the sharp drop in hydropower generation due to the drought in southern China in the first half of 2023) and whether non-fossil fuel sources can keep up with energy demand.

Coal

China remains the world’s largest consumer of coal. In 2023, coal accounted for approximately 60% of China's power generation, despite representing only 40% of its capacity (CEC, 2024). 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).

Despite China’s intention to “strictly control coal consumption” before 2025 and to “phase down coal consumption” over the 15th FYP (2026–2030), since the country's power shortage in 2021, its short-term stance has moved heavily toward supporting fossil fuels, and particularly coal.

The government’s Work Report 2024 from the Two Sessions, China’s annual meeting of the top legislature and national political advisory bodies, re-emphasised coal’s crucial role in ensuring energy supply (State Council of China, 2024).

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.

Policymakers have continued the expansion of coal-fired power plants under these pretences. With the world's largest coal power pipeline at 95%, China significantly accelerated its coal power projects in 2022-23, permitting 106 GW in 2022 and 114 GW in 2023 (GEM, 2024; GEM et al., 2024; Stanway, 2024). As a result of the increase in coal use and investment in coal power, a joint report by Centre for Research on Energy and Clean Air (CREA) and the Global Energy Monitor (GEM) found that China risks missing several climate targets it set for 2025, unless drastic action is taken soon (Myllyvirta, 2023a; CREA and GEM, 2024b).

Followed the 2022-23 coal power surge, China only permitted 9 GW of coal power in the first half of 2024, an 83% year-on-year drop. However, 41 GW of coal projects began construction in the same period, nearly matching the total for all of 2022 and representing over 90% of global new coal construction (CREA and GEM, 2024a; GEM et al., 2024). To transition to a 1.5°C-compatible power system and peak emissions and coal power ahead of the scheduled 2030 timeline, China should maintain its low coal power permits, limit the construction of newly approved plants, and accelerate the retirement of existing ones.

In 2023, China's coal production increased by 3.4% (to 4.7 billion tonnes) after a year that had already seen a record high coal output (NBS of China, 2024). However, coal consumption growth in 2024 is expected to slow due to record solar deployment and the recovery of hydropower generation from the drought-impacted levels of 2023, which saw a 23% decline in hydropower and a 16% increase in thermal power (Global Times, 2023; Myllyvirta, 2023b; CEC, 2024). Early and intense rainfall since April 2024 is anticipated to replenish water resources and boost hydropower generation from May onward (Kemp, 2024).

To decarbonise the existing coal power plants, the government is pushing for a "low carbon transformation" of existing coal-fired power (NDRC and NEA, 2024a). 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. These reductions will be achieved using biomass co-firing, green ammonia co-firing, and CCUS technologies.

While shifting away from coal is essential for achieving a 1.5-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.

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.

The ETS now covers over 2,000 companies in the power sector (coal and gas plants), 40% of China’s carbon emissions, and recorded over 24.9 billion yuan (USD 3.4bn) in total transactions in 2023. However, the scheme has been inhibited by challenges in power market interactions, data quality and ETS design based on free allocations, limiting the ability of carbon prices to drive sector decarbonisation (Qin et al., 2022).

In February 2024, the State Council published a regulation for the national ETS, which significantly increased the punishment for non-compliance, data fraud and market manipulation behaviours (IKI, 2024). In July, China published new rules for public consultations, prohibiting participants in the Emissions Trading System (ETS) from borrowing allowances from future years and more strictly limiting the carrying over of unused permits from previous years (MEE, 2024).

Fossil gas and oil

Fossil gas and oil accounted for less than 4% of China’s power generation, yet their consumption has been growing steadily, recording respective year-on-year increase rates of 7.2% and 9.1% in 2023 (NBS of China, 2024). Despite Sinopec's estimates of peaking consumption of gas by 2040 and oil by 2027, the imperative of energy security has tempered endeavours to reduce reliance on these fossils (PR Newswire, 2024). The government’s Work Report 2024 from the Two Sessions reaffirmed its strategy to step up the exploration and development of gas and oil (State Council of China, 2024)

Energy companies in China have shifted its strategy towards securing more long-term gas contracts due to high and volatile spot prices and increasing demand, and hold the most LNG purchase agreements of any country (Corbeau and Yan, 2022; Bloomberg, 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%, (Chow and Singh, 2021). To be compatible with a 1.5°C pathway, China would need to decrease the share of fossil gas in electricity generation with a complete phase-out, ideally by 2040 (Climate Action Tracker, 2023).

Renewables

Renewables are playing a larger and more obvious role in national energy security, despite the continuing strong focus on fossil fuels. 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 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 1,206 GW in July 2024, with forecasts predicting 1,310 GW by year-end. (Bloomberg News, 2024d; CEC, 2024) In the first seven months of 2024, China added 160 GW of renewable energy, including hydro, accounting for 87% of new installations and bringing the total renewable capacity to 1,690 GW, which now represents 54.5% of the country's total power generation capacity (NEA, 2024).

To be compatible with a 1.5°C pathway, China would need to have shares of renewable electricity generation reach at least 79% in 2030; It stood at only 31% in 2023 (NBS of China, 2024). Globally, all countries will need to have 95–100% renewable electricity shares by 2050 to be 1.5°C-compatible (Climate Action Tracker, 2023).

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, 2024c).

To encourage the consumption of renewable electricity, China expanded the scope of its domestic renewable energy certificate scheme to include all types of renewable projects in 2023, whereas only solar and onshore wind projects were included previously (Yin, 2023).

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).

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, 2024).

Nuclear

Nuclear power is also poised to assume a pivotal role in China's pursuit of carbon neutrality, with an expected 10% share of power generation in 2035 and 18% in 2060 (with a capacity of 400 GW). 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).

While nuclear power is an important enabler for China’s energy transition as a source of low-carbon baseload power able to assuage energy security concerns, the economics and installation times for nuclear are still unfavourable (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 58–59% of the country’s final consumption in 2022 (IEA, 2023b). 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, 2023b).

Steel and cement output for real estate and infrastructure construction are the main drivers of industry emissions and the primary cause of China’s dip in emissions in 2022.Given the sector’s gargantuan energy consumption, decarbonisation of major industrial subsectors is critical—and central—to achieving national climate and energy targets. 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).

China has set its carbon peaking targets for steel, cement, and aluminium for the year 2030, despite prior discussions regarding the feasibility of reaching these peaks by 2025. The delayed emission peaking timelines are to allow the sectors breathing space amidst energy and supply chain security concerns and to consolidate a less ambitious target that could be reached by all companies in a bid to tackle other industry concerns such as overcapacity and pollution (Guoping and Zou, 2022; Lin, 2022).

China also set interim objectives for 2025, including reducing the energy intensity of steel production by 2% and recycling 320 million tonnes of scrap steel, as well as reducing the energy intensity of cement production by 3% (from 2020 levels) (Bloomberg, 2021; EEO, 2021; China Dialogue, 2022; MIIT of China, 2022; MoHURD of China and NDRC, 2022).

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 ironmaking prioritizing the use of electric arc furnaces (EAF) powered by clean energy (Climate Action Tracker, 2024). The Special Action Plan for Energy Conservation and Emission Reduction in the Iron and Steel Industry, issued in June 2024, aims to reduce energy consumption per unit of product by more than 1% for the BF-BOF and by more than 2% for EAF by 2025 compared to 2023 levels (NDRC et al., 2024).

The government is taking decisive steps to transition the steel sector to low-carbon production and address overcapacity by indefinitely suspending all new steel plant permits as of August 23, 2024. Earlier in the year, permits were only granted for EAF steelmaking plants (MIIT of China, 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, 2024).

Key emitting sectors, such as cement, steel, and aluminium are likely to be the first targeted in the scope expansion of the country’s ETS (Wang, 2021; Wulandari, 2022). While the inclusion of these sectors was already in the pipeline, the approval of Carbon Border Adjustment Mechanism (CBAM) regulations by Europe (to be officially launched in 2026) has added a sense of urgency.

To cover sectors eligible under the CBAM phase 1, cement, aluminium and iron and steel, China announced plans to expand its national ETS to include these industries by the end of 2024 (ChinaNews, 2024).. The MoU between the Chinese and German governments in June 2023 highlighted the focus on industrial emission reduction, especially in the cement, steel, chemical, and pulp and paper industries (German and Chinese Governments, 2023).

To fully decarbonise China’s harder-to-abate sectors, the development of CCUS and hydrogen solutions have become priority strategy areas. CCUS will be a critical technology to help China drastically reduce emissions towards carbon neutrality in the long-term and has received increasing national attention in the last two decades, with objectives now focusing mainly on large-scale project demonstrations.

As of 2021, CCUS was highlighted in the last three FYPs, the Ministry of Ecology and Environment (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, 2023a).

However, the efficacy of CCS 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 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 emissions by a modest ~50 MtCO₂e/year by 2030 under the Kigali Amendment’s phase-out schedule, although reductions could increase to almost 300 MtCO₂e/year by 2045.

China is rapidly becoming an EV, BEV and PHEV powerhouse, producing 52% of global sales, with its BYD company now overtaking Tesla as the world's best-selling company.

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, 2023b).

The government has signalled its continuing intent to accelerate the transition towards a low-carbon 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).

China’s uptake of new energy vehicles (NEVs), including battery electric vehicles (BEVs), plug-in hybrid vehicles (PHEVs), and fuel cell electric vehicles (FCEVs), started in the 1990s. The growth in NEV sales has been rapidly increasing due to subsidies dating back to 2009 and, more recently, investment boosts from pandemic recovery packages and strong national policy signals. In 2023, China's NEV production and sales grew by 35.8% and 37.9% year-on-year (Xinhua News Agency, 2024).

However, the government has been aiming to decouple the growth of NEVs with direct financial incentives due to accelerating market forces and the growing government costs of the subsidies. NEV subsidies for producers ended in 2022, although tax exemptions for consumers will continue until the end of 2027 (Xinhuanet, 2023). Research suggests the market is reaching maturity, with BEVs achieving price parity with conventional cars soon, even without accounting for fuel savings (Lutsey et al., 2021).

The NEV Industry Development Plan (2021-2035) targeted NEV sales to take 20% of the market share by 2025, but the market share of NEVs has already reached 31.6% in 2023, significantly exceeding the target (Xinhua News Agency, 2024). China further targets an NEV market share target of 40% by 2030 (raised to 50% in select regions with high air pollution) (Government of China, 2021). However, this still falls short of a 1.5°C-compatible transport sector, which requires China to achieve a 100% EV sales share and a 42% EV stock share by 2030.

The penetration of NEVs is finally showing a visible reduction in pollutants and emissions, as the transition towards NEVs has shaved approximately 3% off petrol demand growth, and according to Sinopec, would cause China’s petrol demand to peak in 2023 (Myllyvirta and Qin, 2023). Our previous analysis of NEV penetration scenarios in China shows limited domestic mitigation impact as even 100% BEV sales by 2035 would mean negligible GHG emission reductions if not accompanied by rapid decarbonisation of the power sector (Climate Action Tracker, 2021).

Even so, China’s rapid development of industrial infrastructure supporting its EV supply chain is critical to global electric mobility transitions: in 2023, Chinese carmakers produced 32% of global EVs, with BYD overtaking Tesla as the world’s best-selling company when accounting for PHEVs as well as BEVs (IEA, 2024)

To limit global temperature increase to 1.5°C, China will need to sell the last fossil fuel car by 2040 meaning a NEV market share of 100% (Climate Action Tracker, 2020a). 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 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 COVID 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).

China’s buildings accounted for about 22% of the country’s final energy consumption in 2022, with almost 40% of the energy consumed coming from electricity (IEA, 2023b).

China constructs the most buildings globally, having, on average, constructed around four billion square metres 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 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 zero-energy consumption 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).

China launched its Near Zero-emission Buildings Standard (NZEB) in 2019 to provide an appendage to the “Green Building Evaluation Standard” and the ongoing development of green buildings, defined as buildings that save energy, land, water, materials and are ecologically unharmful (MoHURD of China, 2019; Cao et al., 2022). More than 2.5 billion m2 of urban and commercial floor space has already been green-building certified since 2018, whereas almost 10 million m2 of NZEB projects have either been in construction or completed by 2020 (Zhang and Fu, 2021; Zhang et al., 2021).

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, 2020b).

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 carbon peaking in 2030 and carbon neutrality in 2060 targets. China’s LULUCF sector represented a carbon sink of approximately1.2 GtCO₂e/year according to the latest national inventory for 2018 (Government of China, 2023).

The government has implemented many domestic forest conservation and afforestation policies, guided by the National Forest Management Plan (2016-2050), with varying degrees of success (e.g., Bloomberg, 2020).

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).

To reach China’s carbon neutrality goal by 2060, carbon sequestration through afforestation or other means such as direct air capture, is assumed to play a critical role (He et al., 2021). 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).

In international fora, China updated its NDC forestry pledge to increase forest stock volume by six billion m3 by 2030 compared to 2005 levels (up from 4.5 billion m3). 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, accounting for 12.6% of total GHG emissions (excl. LULUCF) in 2018, according to China’s most recent national inventory. Our estimates indicate that methane emissions have surpassed 1.4 GtCO₂e per year since 2020. The primary sources of emissions are coal mine fugitives (~40%), agriculture, including livestock and rice cultivation (~42%), and waste and waste water (~10%) (Government of China, 2023; Patel, 2023).

Methane is not included in China's 2030 carbon peaking target (which only covers CO₂) but is included in the 2060 carbon neutral goal.

China’s updated NDC does not have explicit reduction targets for non-CO₂ gases, including methane, though Measure 13 outlines the goal to accelerate control of these gases and phase out HFC gases under the Kigali Amendment (see section on F-gases above).

The long-awaited Methane Action Plan was published in November 2023 (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 and, domestic waste recycling, and harmless disposal of sludge, it does not specify any quantitative emission reduction targets or commitments. A notable emphasis within the action plan is the prioritisation of establishing a methane measurement, reporting, and verification 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.