China's Emissions May Have Peaked as Renewable Power Begins Displacing Coal

Clean Power Changes the Emissions Equation

China's carbon dioxide emissions fell by 1.6% in the year leading up to May 2025, according to the Centre for Research on Energy and Clean Air (CREA), as a surge in renewable electricity began reducing the country's dependence on fossil fuels. For the world's largest carbon emitter, the change points to a possible turning point: emissions falling while the economy and demand for electricity continue to grow.

China installed 90 gigawatts of solar capacity in May alone, a pace equivalent to about 100 solar panels every second. During 2024 and 2025, it added more solar and wind capacity than the rest of the world combined. Its combined wind and solar capacity now exceeds all its thermal power capacity, which includes plants burning coal, gas and oil.

China accounts for about 30% of global carbon emissions, making even a small percentage decline consequential far beyond its borders. Earlier falls in its emissions accompanied economic distress, including the global financial crisis and the COVID-19 pandemic. This time, the main driver is the expansion of clean energy.

The decline continued in subsequent months, strengthening the possibility that emissions have reached their highest point. Yet China remains only about 1% below its most recent emissions peak. A rise in energy demand or slower construction of renewable projects could still push the total to a new high.

As of July 27, 2025, the central question is whether China can turn this early decline into sustained reductions. Its next climate commitments, electricity pricing changes and plans for coal will help determine the answer.

How Renewables Are Reducing Coal Use

Clean electricity generation is growing faster than electricity demand for the first time. Additional demand can therefore be met by clean sources while less electricity needs to come from fossil fuels. That is the mechanism behind the recent fall in emissions, even as businesses and households use more power.

In the first quarter of 2025, emissions from the power sector fell by 5.8% compared with the same period a year earlier. Total emissions dropped by 1.6%, despite a 2.5% increase in demand for electricity. The larger reduction in power sector emissions shows how strongly changes in electricity generation are contributing to the national trend.

Belinda Schäpe, a policy expert at CREA, described the connection between renewable construction and lower emissions:

This is a historic result due to a rapid increase in renewables build-out in China, leading to more power generation from clean sources and reducing the coal share in the power mix, thus bringing down emissions.

Installed capacity describes how much power equipment can produce, while generation describes the electricity it actually supplies. China has crossed an important threshold in capacity, with wind and solar exceeding thermal power, but coal still supplies just over half its electricity. Both measurements matter when assessing how quickly the energy system is changing.

Renewables accounted for 24% of electricity generation in the first half of 2025. In June, solar and wind supplied 89% of the increase in electricity demand. Those figures show clean energy meeting much of the new demand while coal continues to serve a large share of existing consumption.

A Peak or a Period of Stabilisation?

China's emissions may have peaked, but a permanent peak can only become clear as the trend continues. The narrow gap of about 1% between current emissions and the recent high leaves little room for a reversal in electricity demand or clean energy growth.

Li Shuo, director of the China Climate Hub at the Asia Society Policy Institute, described a period in which emissions could level off as renewable energy becomes a larger part of the system:

After decades of rapid economic and emissions growth, China has likely reached or is very close to its emissions peak. We are entering a phase of stabilization and large-scale integration of renewable energy, which could lead to further reductions.

Economic growth, energy demand, the pace of renewable installations and decisions in upcoming Five-Year Plans will shape what happens next. Global trade conditions, especially relations between the United States and China, also matter for industries producing and selling clean energy equipment.

The United Nations Intergovernmental Panel on Climate Change warns that emissions must peak and then decline rapidly to keep global warming below 1.5 degrees Celsius. A period of stable emissions would halt further annual increases, but limiting warming requires deeper reductions.

David Fishman, a senior manager at energy consultancy the Lantau Group, explained why passing the peak would be an early stage of a much longer transition:

China has made remarkable achievements in renewable energy. But achieving carbon neutrality will require many more structural changes in China's energy sector and economy as a whole, and those changes need to start soon after peak.

Coal Plants Keep Expanding as Their Share Falls

China approved an average of two new projects for power plants burning coal per week in 2022 and 2023. Power shortages and concerns about energy security drove much of that construction. Many of those plants are now coming into operation, even as renewable energy reduces coal's share of electricity generation.

The new plants are using less coal than previous generations, while coal's share of the power mix has fallen to just over 50%, its lowest level since 2016. Coal imports fell by 25% in June 2025 compared with a year earlier. The combination illustrates how additional coal infrastructure can coexist with declining reliance on the fuel.

President Xi Jinping has pledged to phase down coal consumption between 2026 and 2030. Carrying out that promise will be complicated by coal's economic importance in several provinces, where mines, power plants and related businesses support employment and local activity.

Weather adds another difficulty. Record heatwaves and droughts have disrupted hydropower, forcing authorities to rely on coal to meet electricity needs. Hydropower depends on water availability, so disruptions can increase pressure on other generators just when electricity supplies are needed.

China therefore faces two tasks at once: replacing more coal generation with clean electricity and maintaining reliable supplies during difficult conditions. Continued construction of coal plants, together with the absence of an absolute emissions cap, remains a source of doubt about whether its climate commitments will deliver reductions quickly enough.

Climate Targets Show Uneven Progress

China has committed to peak carbon emissions before 2030 and achieve carbon neutrality by 2060. Carbon neutrality means balancing emissions with the removal of carbon from the atmosphere. The country has already passed its 2030 target for wind and solar capacity, reaching more than 1,400 gigawatts in 2024, six years ahead of schedule.

China is also on track to reach its target for non-fossil energy to account for 25% of energy use by 2030. Progress on carbon intensity, however, has been slower. Carbon intensity measures emissions per unit of gross domestic product, rather than the total amount released into the atmosphere.

In 2024, carbon intensity fell by 3.4%, short of the planned 3.9% reduction, a gap of 0.5 percentage points. China is also behind on its goal of reducing carbon intensity by 18% between 2020 and 2025. Rapid economic growth and rising energy demand have made the required improvements in energy efficiency harder to achieve.

An economy can produce more goods with fewer emissions for each unit of output while still releasing a large total amount of carbon dioxide. An absolute emissions cap would instead set a limit on the total. This helps explain calls for China to adopt an ambitious cap covering the entire economy and accelerate the removal of coal from its energy system.

The Climate Action Tracker rates China's current policies and targets as "Highly insufficient" for the Paris Agreement's 1.5 degrees Celsius limit. Its assessment points to uneven progress: China is expected to exceed its energy targets while risking failure to meet its carbon intensity goals.

Policy Decisions That Will Shape the Next Five Years

Government support and strategic investment have helped drive China's energy transition. Xi Jinping Thought, the president's governing ideology, includes the goal of an "ecological civilization". China also launched the world's largest Emissions Trading Scheme in 2021, allowing companies to trade carbon allowances and creating financial incentives to reduce emissions.

Carbon allowances give firms permission to release specified amounts of emissions. Trading them allows companies to buy or sell those permissions, making the cost of pollution part of business decisions. The scheme is one part of a policy system that also includes renewable energy targets and investment.

Several dates show how China's commitments and construction programme fit together:

• 2021: China launched its Emissions Trading Scheme.
• 2022 and 2023: Authorities approved an average of two new coal power projects each week.
• 2024: Wind and solar capacity exceeded 1,400 gigawatts, passing the 2030 target six years early.
• May 2025: China installed 90 gigawatts of solar capacity in a single month.
• 2026 to 2030: Xi has pledged a reduction in coal consumption during this period.
• Before 2030 and by 2060: China's stated deadlines are to peak carbon emissions and achieve carbon neutrality, respectively.

Climate targets for 2026 to 2030, to be released alongside the next Five-Year Plan, will guide decisions by public bodies and private businesses. China is also introducing a renewable electricity pricing policy that has prompted developers to rush installations before it takes effect.

The pricing change is expected to lower prices for new wind and solar projects, while creating uncertainty about the pace of future expansion. China is due to announce new climate targets under the Paris Agreement later in 2025; no precise announcement date was given.

Clean Energy Becomes an Economic Force

Clean energy technologies, especially electric vehicles, batteries and solar power, now drive more than 10% of China's GDP. Investment and sales reached nearly $2 trillion in 2024. The scale makes clean energy a major economic interest as well as a means of reducing pollution.

China produces more than 80% of the world's solar panels, 60% of wind turbines and 70% of electric vehicles. It leads the global electric vehicle market, producing 70% of all EVs sold worldwide. Exports of renewable products grew by 35% in 2023.

China is also shifting its Belt and Road Initiative towards clean energy infrastructure in developing nations. Its role in manufacturing and exporting renewable technologies means its energy choices affect both domestic emissions and the equipment available to other countries.

Research published in Frontiers in Environmental Science found that economic and financial development have historically increased emissions, while renewable energy adoption and investment in green technologies can help separate economic growth from pollution. Human capital and sustainable agriculture also contribute to reducing emissions.

The United States and China tariff dispute complicates this trade environment, alongside changing American climate policy. The United States has recently shifted from green energy subsidies towards coal subsidies, while China appears committed to its green agenda for its own economic and environmental interests. Xi has said China will not slow its climate actions.

Coal Exporters and Communities Face the Consequences

China's declining coal demand reaches beyond its own mining regions. The country is a major buyer in international coal markets, so changes in its electricity system affect exporters, including Australia. Greater domestic coal supply can also reduce the amount China needs to buy overseas.

Jorrit Gosens, a climate policy fellow at the Australian National University, described the exposure of Australian exporters:

China imports about 30% of Australian thermal coal exports. As China shifts to renewables and increases domestic coal supply, demand for Australian coal will fall. Other Asian markets are expected to follow as they decarbonize.

Thermal coal is coal burned to produce energy, including electricity. A reduction in demand from a customer taking about 30% of Australian thermal coal exports has direct consequences for mining businesses and the communities around them. The closure of BHP's Mt Arthur coal mine in Australia illustrates the pressures associated with shrinking demand.

Communities dependent on coal need support to move towards other industries. Without it, resistance to change and economic hardship could slow the transition. Similar concerns complicate decisions in Chinese provinces where coal remains an important source of jobs and economic activity.

Why China's Next Reductions Matter Worldwide

China produces more than a third of global manufactured goods and emits more than a third of global CO2. Its position as the world's factory makes the way it generates electricity central to the global effort to limit warming. Decisions about coal plants, renewable installations and industrial energy use reach far beyond China's borders.

The recent emissions decline offers a concrete example of clean electricity expanding fast enough to meet growing demand and reduce fossil fuel use. Continued growth in energy demand, coal's political and economic importance, and disruptions to hydropower all complicate the effort to maintain that trend.

The current pace of change may still be too slow to limit global warming to 1.5 or even 2 degrees Celsius. China's success in manufacturing and installing renewable technology has brought a possible emissions peak closer, while its missed carbon intensity target shows that progress in one area can coexist with slower change elsewhere.

The next few years will determine whether the recent decline becomes lasting. The 2026 to 2030 policy programme, the promised reduction in coal consumption and the next Paris Agreement targets will set the direction. China's renewable energy leadership offers grounds for hope, but reaching carbon neutrality requires sustained changes across its energy system and economy.

Key Points

• China's carbon emissions fell by 1.6% in the year leading up to May 2025, with clean energy driving the decline rather than an economic downturn.
• China installed 90 gigawatts of solar capacity in May 2025 and passed its 2030 wind and solar capacity target six years early.
• Emissions remain only about 1% below the recent peak, leaving room for a return to growth.
• Coal still supplies just over half of electricity, although its share and imports have fallen.
• China missed its 2024 carbon intensity target and is behind on its goal for 2020 to 2025.
• Clean energy drives more than 10% of GDP, while reduced coal demand creates pressure on mining communities and exporters.
• New Paris Agreement targets are expected later in 2025, and the next Five-Year Plan will guide policy for 2026 to 2030.
• China's commitments remain to peak emissions before 2030 and achieve carbon neutrality by 2060.