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China Aims for Carbon Neutrality

Hundreds of millions of people have been lifted out of poverty by China's remarkable economic growth over the past four decades, transforming the country into a leader in many industries while also becoming the world's largest emitter of carbon dioxide (CO2) and accounting for one-third of global carbon dioxide (CO2) emissions.

Hundreds of millions of people have been lifted out of poverty by China’s remarkable economic growth over the past four decades, transforming the country into a leader in many industries while also becoming the world’s largest emitter of carbon dioxide (CO2) and accounting for one-third of global carbon dioxide (CO2) emissions. In terms of greenhouse gas emissions (GHGs), China is the world’s largest emitter, accounting for over a quarter of total worldwide emissions. In 2020, its emissions totalled approximately 10.67 Gt, which is 45% greater than the rest of the globe. This is due to China’s emissions-intensive energy mix and a large heavy industry sector, which both contribute to the country’s high CO2 emissions. 

As a result of decades of rapid population and economic growth, as well as a massive manufacturing industry and mass migration into street-lit, centrally heated cities, China has become a power-hungry nation. China is the world’s most populous country and the world’s most prosperous economy. As a result of this hunger, as well as the dangers associated with a long-term reliance on fossil fuels, the Chinese government has devised strategies to meet the country’s energy requirements. 


Despite significant progress in renewable energy since the year 2000, China remains significantly reliant on fossil fuels, which will account for approximately 56.8%  of the country’s total primary energy demands in 2020. China is by far the world’s greatest coal consumer, with the 3 billion tonnes of coal equivalent it is expected to burn in 2020 accounting for more than half of the global market.

China’s coal consumption has historically expanded in tandem with the country’s industrialization, with the most significant increase occurring between 2002 and 2013, when coal accounted for 77% of the country’s overall increase in primary energy demand. From 2013 to 2018, coal use was relatively stable as a result of efficiency gains and governmental restrictions on coal use expansion. However, coal consumption grew again in 2019 and 2020 and again in early 2021. Coal is primarily utilized for electricity and heat generation, with electricity and heat accounting for 60% of total coal use—industry uses 33%, buildings 3% and agriculture and non-energy use 4%. 

Natural Gas

During the past decade, natural gas has been the fastest-growing primary fuel in China, with demand quadrupling. The development of China’s natural gas industry is essential to the country’s aspirations to lessen its dependency on coal. According to the International Energy Agency (IEA), China is the world’s sixth-largest natural gas producer, third-largest consumer, and second-largest importer of natural gas. The Energy Information Administration (EIA) of the United States predicts that China will consume roughly three times as much natural gas in 2050 as it did in 2018, which was 280.30 billion cubic meters. During the year 2019, China’s natural gas usage accounted for 8.3% of the country’s entire energy mix. China expects to increase the share of natural gas in overall energy consumption to 14% by 2030.

Natural gas is imported either through pipelines or in the form of liquefied natural gas (LNG) transported by ships. Although China does not rely substantially on the United States as a supplier of LNG, the country has consistently been placed among the top four users of U.S. LNG since the country began exporting the fuel in 2016. According to Reuters, the top four LNG suppliers to China in 2019 were Australia, Qatar, Malaysia, and Indonesia. Australia, Qatar, Malaysia, and Indonesia were the top four suppliers in 2018. 

Renewable Energy

China’s President Xi Jinping declared in September 2020 that the country will “seek to reach carbon neutrality by 2060 and reach a peak in CO2 emissions by 2030.” This new vision for China’s future was announced 40 years after the country began its remarkable journey towards economic modernisation. It comes at a time when major economies around the world are increasingly united in their belief that the world must achieve net zero emissions by the middle of the century. The Chinese commitment, on the other hand, is particularly significant given that China is the world’s greatest energy consumer and carbon producer, accounting for one-third of global CO2 emissions. The rate at which China’s emissions are reduced over the next several decades will be critical in determining whether the world is successful in keeping global warming below 1.5 degrees celsius in the future.

China has emerged as the world’s single greatest investor in the clean energy transition, as part of the country’s attempts to shift to cleaner energy. In 2021, China invested $266 billion in energy transition initiatives, accounting for more than a third of the total world investment ($755 billion). The United States invested $114 billion, followed by Germany ($47 billion), the United Kingdom ($31 billion), and France ($27 billion). As a result of large-scale expenditures on large-scale infrastructural projects, hydroelectric power has risen to become China’s primary source of renewable energy production.The controversial three Gorges Dam, which was finished in 2012 at a cost of more than $37 billion and has a generation capacity of 22,500 megawatts, is the world’s largest hydroelectric dam and the world’s most expensive. When compared to the second-largest hydropower dam in the world, the Itaipu Dam in Brazil and Paraguay, the dam generates 60% more electricity. With the construction of the three Gorges Dams, China has built four of the world’s ten largest energy-producing hydroelectric dams, according to the International Energy Agency. Over the period from 2000 to 2019, China’s hydroelectric power generation increased by about sixfold, from 222.4 terawatt-hours (TWh) to 1,304.4 TWh. The three Gorges Dam and other projects made China the world’s top hydropower producer in 2014, overtaking the United States. As of 2019, China made up 30.1% of the world’s hydroelectricity production.

Over the past decade, China has risen to become a global leader in renewable energy sources such as wind and solar photovoltaic (PV) energy. According to the International Energy Agency, in 2012, wind power generated only 2.1 percent of China’s total electricity consumption, compared to 3.7% in the United States and 9.4% in Germany. By 2019, however, China’s wind-energy generation had risen to 406 TWh, placing it far ahead of the United States in terms of output (298 TWh). China is the world’s biggest provider and consumer of solar photovoltaic (PV) technology. The rapid decline in the cost of solar energy, active regulatory incentives, and low-interest loans from local governments have resulted in China being home to two-thirds of the world’s solar-energy production capacity.

China’s renewable energy capacity continued into the second quarter of 2021, as the government works towards its goal of becoming carbon neutral by the year 2060. The National Energy Administration (NEA), the country’s energy authority, recently revealed data showing that the country’s renewable energy capacity is increasing at an alarming rate. In the first half of 2021, the country’s renewable energy-fired power generation capacity increased by 4% compared to the end of 2020, to 971 gigatonnes, an increase from the end of 2020. All together 281GW of onshore wind power, 11.13GW of offshore wind power, 268GW of solar power, 378GW of hydropower, and 32.1GW of biopower are all included in this figure. The National Energy Administration (NEA) said that China’s renewable energy generation surpassed 1.06 trillion kilowatt hours in the first half of 2021, without providing a comparable figure. 

Wind turbines generated 344.18 billion Kwhs, representing a 44.6% increase over the previous year; solar generated 157.6 billion Kwhs, representing a 23.4% increase over the previous year; bioenergy units produced 77.95 billion Kwhs, representing a 26.6% increase over the previous year; and hydroelectricity generated 482.7 billion Kwhs, representing a 44.6% increase over the previous year. The National Energy Administration did not provide information on the status of the country’s gas-fired power generation, but according to China’s Electricity Council, the country owned and operated 98.02GW of gas-fired power generation by the end of last year, accounting for approximately 5% of the country’s total power generation capacity. Last year, these turbines generated 248.5 billion kilowatt-hours (Kwh) of power, accounting for around 3% of the total electricity generated in the United States.

According to Ding Zhimin, former deputy director of the National Energy Administration’s Policy and Law Department, coal, which currently accounts for 58% of China’s power generation, will be phased out, with renewable energy, led by wind and solar, eventually accounting for more than 85% of China’s total energy mix by 2060, up from the 15% predicted last year. China’s national plan calls for the country’s total installed capacity of wind and solar energy to be increased even further, to more than 1200 GW, by 2030.

Efforts like this are part of the government’s overall strategy to reach a plateau in carbon emissions by 2030 and carbon neutrality by 2060. For China to attain its longer-term goal of carbon neutrality, the timing and level of the peak in emissions, as well as the rate at which emissions are reduced once the peak has been reached, are critical factors to consider. China possesses the technical ability, economic resources, and policy experience necessary to complete a cleaner energy transition more quickly than the APS by 2030. For example, its recently introduced carbon trading plans and improvements to the electricity sector are both excellent examples. As policy advances in ATS(Automation Tooling System), coal use in electricity and industry declines at a quicker rate, the deployment of existing low-carbon technology increases, and efficiency gains become more rapid. In the ATS, CO2 emissions from the energy sector are expected to be more than 2 Gt, or roughly 20%, lower in 2030 than they are at the moment. The ATS does not have significant investment requirements; cumulative investments in the ATS are comparable to those in the APS.

Feel free to contact the Energy Transition Centre today with questions. 

·  Julius Moerder, Head of Energy Transition Centre

·  Oneyka Ojogbo, Head of Energy Transition Centre, Nigeria & West Africa

·  Leon van Der Merwe, Head of Energy Transition Centre, South Africa