Coal indeed supplied the country’s more than 1.4 billion people with 54 per cent of their energy needs in 2024, leading China to emit nearly 15 billion tonnes of carbon dioxide that year – an all-time high – akin to the emissions from 3.24 billion petrol-powered cars.
While China’s carbon pollution growth troubles climate watchers, some argue that its emissions could peak this year as the nation focuses its efforts on rolling out renewables.
By mid-2024, the country had already surpassed its target of 1,200 gigawatts (GW) of combined wind and solar capacity – six years ahead of its original 2030 target – with renewables now making up around 44 per cent of China’s total power generation mix.
The country’s position as a clean energy front runner may be further cemented with United States president Donald Trump officially withdrawing from the Paris Agreement for the second time on 20 January 2025.
The US, by comparison, is the world’s second-largest carbon polluter and produced almost 5 billion metric tonnes of carbon emissions in 2023, or about 13 per cent of the global total. India, currently in third place, released 2.9 billion metric tonnes of heat-trapping gases that year.
Power policies in play
There is evidence that China aims to cap its emissions through regulation. On 1 January 2025, China’s new Energy Law came into effect, consolidating decades of fragmented energy policies into one strategy.
The law – the first of its kind – mandates the introduction of a minimum share of renewable energy sources such as hydropower, wind, solar, biomass, and hydrogen in power consumption alongside fossil fuels. It also establishes a legal structure for energy planning and management, including managing both total carbon emissions and carbon intensity.
“This is the first time the country pulled everything together in one go. The ‘components’ of the new Energy Law had existed for some time, but they had been situated in different pockets within the legal system,” said Alan Law, senior director, head of business development (China) for power firm CLP, exemplifying with China’s Renewable Portfolio Standards (RPS), which were established in 2019 as one example of the nation taking a proactive stance in pushing energy market players to include clean energy in their portfolio.
Experts will also be closely tracking how China’s recently announced plans to work towards a unified national power market – which aims to integrate renewables into the grid for energy to better flow across the nation’s provinces – will perform. The country aims to establish a preliminary structure by this year and the unified power market by 2029, a year before its carbon neutrality target date.
“It is like having 30-some countries trying to march towards one unified goal. This will require [much] coordination and will take some time to play out. We want to see how it will be implemented, as it’s a very challenging task,” said Chan.
Chan was referring to the efforts needed for China’s 34 provinces to work together, and the challenges that stem from how integrating and balancing the use of renewable and coal-fired energy in their grids, for instance, due to grid infrastructure differences between each province.
The Energy Law will indeed see China expand utility-scale installations, which are large-scale renewable energy projects designed to pump energy into the grid, which may help to green energy consumption and help the country meet its short- and long-term goals, notes Agnes Tai, director at family investment holding company Great Glory Investment Corporation.
“This law also focuses on consumption. China is also focusing on utility-scale capacity installations for storage, grids, and all related technologies. It won’t just be pockets of renewable energy,” she said.
A large array of solar panels in China’s Gansu province. China surpassed its target of 1,200 GW of combined wind and solar capacity in 2024, six years ahead of its original date. Image: Darmau / Unsplash
The Energy Law also follows China’s “1+N” policy framework, which was launched in October 2021 to guide the country towards its 2030 and 2060 goals. The framework’s “1” refers to a long-term approach to achieving carbon neutrality and the “N” refers to specific plans to peak carbon dioxide emissions by 2030.
The new law is a big deal for a nation that held a largely “defensive” stance against climate policies in the 1990s and early 2000s. The country only announced its first voluntary efforts to reduce carbon intensity, albeit non-binding international commitments, at the turn of the decade.
China only formalised its commitment to reducing emissions in its 12th Five-Year Plan in 2011, where it pledged to reduce 17 per cent of carbon emissions per unit of gross domestic product (GDP).
The nation then submitted its Intended Nationally Determined Contribution (INDC) ahead of the Paris Agreement in 2015, pledging to peak carbon emissions around 2030 and to lower carbon intensity significantly by that date. NDCs are mandated by the Paris Agreement, which requires countries to outline their climate goals and strategies for the next decade.
The nation will be submitting its new NDCs by 10 February 2025, which will contain an absolute target related to carbon emissions for the first time and could help China align domestic climate action with international commitments.
Fossil fuels to remain
While China’s new Energy Law signals some progress, the law also emphasises the “rational development and clean and efficient use” of fossil fuels. This will see the country continue to rely on coal in the short term despite the increased focus on clean energy.
There are over 1,100 coal plants in China, representing the largest fleet of coal plants globally and more than half of the planet’s total coal power capacity. Nearly 400 GW of coal-fired power capacity is also in the nation’s pipeline.
This, some experts note, will see coal playing an active role in China’s energy mix in the decades to come, despite the accelerated rollout of renewables. Coal-powered electricity is indeed expected to rise 4.5 per cent in 2025.
“Coal represents an important aspect of energy security for China even though it is going great guns to deploy renewable energy. The key challenge is when China will start to seriously ramp down coal use,” said Christine Loh, chief development strategist, The Hong Kong University of Science and Technology.
Another incentive in place is fixed capacity payments for coal plants, which are fees paid to power plants to ensure they generate electricity when needed, suggesting that China intends to keep coal in the energy mix, says Chan.
“Coal will continue to be important. The introduction of capacity charges for coal-based plants last year [sent] a big signal to indicate that coal will continue providing the support to the system all while renewable continues to ramp up,” Chan says.
Because China has exceeded its renewable energy targets, one expert notes that investments may continue in the year ahead, albeit at a tempered pace.
“We have seen some moderation in renewable energy investments growth in 2024 because of excess capacity problems,” said Michelle Lam, greater China economist at French multinational bank Société Générale.
“This is a trend that may continue in 2025, even though China should have no problem meeting some renewable energy targets such as boosting the share of non-fossil fuel in energy consumption to 20 per cent by 2025, given tremendous efforts in recent years.”
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Coal represents an important aspect of energy security for China even though it is going great guns to deploy renewable energy. The key challenge is when China will start to seriously ramp down coal use.
Christine Loh, chief development strategist, The Hong Kong University of Science and Technology
A year of uncertainty
In addition to reducing fossil fuel-led carbon emissions, China’s focus on clean energy may also be part of the nation’s bid to drive its post-pandemic economic recovery.
The country’s clean energy industry – largely led by solar power manufacturing, electric vehicles and batteries – contributed roughly US$1.6 trillion to the nation’s economy in 2023. The sector accounted for all growth in investment and a larger share of economic growth (40 per cent) than any other sector in 2023, according to an analysis by Carbon Brief.
China’s GDP grew by around 5 per cent in 2024. The nation saw a similar growth rate in 2023, when the country opened up to the rest of the world in December 2022 after three years of pandemic-led policies and lower-than-usual economic growth. China’s GDP grew by only 2.3 per cent in 2020, then by 8.4 per cent in 2021 – due to the low base effect from the previous year’s pandemic-induced slowdown – and just 3 per cent in 2022.
The nation’s economic growth, however, may experience headwinds this year in light of Trump’s second term. Trump, for one, has indicated plans to impose 10 per cent tariffs on Chinese imports by 1 February amid national security concerns.
“There may be further measures to curb technological advancements comprising of trade controls and investment restrictions, and these may be broadened from semiconductors to other sectors,” noted Lam.
With exports increasing by 7 per cent in 2024 compared to the previous year, Lam adds that rising geopolitical tensions mean that China won’t always be able to count on export-led growth with the country facing reduced return on domestic investments.
“All eyes [will] focus on how Trump handles delicate cross-strait tensions,” she said.
Enhanced disclosures
As China approaches its 2030 carbon neutrality deadline, experts will also be closely watching how listed companies in China issue their sustainability reports following new guidelines, which were issued by the country’s three major stock exchanges (Shanghai, Shenzhen and Beijing) on 1 May 2024.
The new guidelines are significant in that they apply to all listed companies; are aligned with international reporting standards such as those by the International Sustainability Standards Board; and are now mandatory, with the first set of reports due by 30 April 2026, covering the calendar year 2025.
The disclosure rules will now apply to China’s 457 listed companies, which were responsible for two-thirds of the country’s emissions in 2023.
The Shanghai Stock Exchange (pictured above) is China’s largest stock exchange. New sustainability reporting requirements issued by China’s three major stock exchanges will see the nation’s 457 listed entities – which are responsible for two-thirds of the country’s emissions – required to make sustainability disclosures. Image: 钉钉 / Wikimedia Commons
“All three stock exchanges in China will be pushing for double materiality, with requirements to be effective this year,” noted Tai, meaning that listed companies will be required to disclose not only the financial implications of sustainability issues but also how their operations affect the environment and society.
The guidelines include 21 categories for China-listed companies to disclose, such as climate response; pollutant discharge; waste disposal; ecosystem and biodiversity protection; social contributions; and corporate governance structure, to name a few.
Previously, reporting was largely voluntary and inconsistent, leading to limited disclosures from companies.
“Listed issuers must finally report and disclose their climate obligations; their climate commitments; and their performance. This is happening right now,” Tai added.
While the new sustainability guidelines signal progress, China-listed issuers are still only mandated to disclose their Scope 1 and 2 emissions and merely encouraged and not mandated to disclose their Scope 3 emissions.
This may see more than three-quarters of emissions unaccounted for, especially in the chemicals sector, which is responsible for 13 per cent of China’s total emissions.
The road ahead
As China continues to ramp up renewables in a bid to measurably peak emissions by 2030, coal will continue to remain a bone of contention, says Loh. “The issue with coal will continue to be fought over by policymakers. Hopefully, it will feel energy secure enough to start ramping down coal usage before 2030,” she said.
Chan agrees, noting that coal will remain firmly part of China’s energy mix for some time due to its accessibility compared to other alternatives – at least for the time being – and that whether China will achieve net zero by 2060 will come down to balancing interests.
“Nuclear [power] won’t be able to cannot solve the problem either because it is very site-specific [and will require] the construction of significant high voltage lines across China, which will also take time,” he concludes.
“The country still has to strike a balance between decarbonisation and energy security. It’s clear that coal reliance will continue to go down, but whether China can be totally coal-free? That’s hard to project.”
