Beatrice Lang
China is the largest emitter of greenhouse gases (GHG), with a 26% contribution to total global emissions in 2016. The energy industry has been the biggest contributor to GHG emissions, with waste treatment, industrial production, and transport also being significant sources. China's electricity sector is the second-largest emitter, with over 70% of electrical power generated in China in 2015 coming from coal-powered plants. However, China has been taking steps to mitigate GHG emissions in the electricity sector, including a rapid expansion of renewable energy sources, the implementation of a national carbon trading scheme, and investments in low-carbon technologies.
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What You'll Learn
- China's power sector aims for net-zero CO2 emissions by 2055
- The country's renewable energy capacity is rapidly expanding
- China's ETS scheme incentivises companies to cut emissions
- The government is encouraging the use of electric vehicles
- China is reducing coal use and increasing low-carbon electricity generation
China's power sector aims for net-zero CO2 emissions by 2055
China is the world's largest emitter of greenhouse gases (GHG), and its energy industry is the biggest contributor to these emissions. In 2016, China's GHG emissions accounted for 26% of total global emissions. The country's emissions have seen explosive growth over the last two decades, fuelled by an increase in electricity demand and usage.
China's power sector aims to achieve net-zero CO2 emissions by 2055. To achieve this, the country has been rapidly transitioning to renewable energy sources. China's wind and solar power capacity has been growing at a record pace, averaging 27% annually over the past five years. In 2024, China added 160 GW of renewable energy, including hydro, accounting for 87% of new installations. This brought the total renewable capacity to 1,690 GW, making up 54.5% of the country's total power generation capacity.
China is also investing heavily in low-carbon technologies, including solar, electric vehicles, and batteries. The country's output of solar cells is set to exceed 600 GW in 2023, up from 375 GW in 2022. This is enough to produce 500 GW of solar panels, outpacing the global installation of panels in the same year. China is also making efforts to reduce emissions from waste treatment, which accounts for 7.06% of its total GHG emissions. The government's policy of mandatory waste separation in 11 prefectural-level cities has led to a decrease in GHG emissions from waste disposal.
To achieve net-zero emissions in the power sector, China is exploring various strategies, including carbon capture utilization and storage (CCUS). A study by Nature Communications indicates that allowing up to 20% abated fossil fuel in China's power generation system could reduce the power shortage rate and increase system resilience. Additionally, China has implemented a national carbon trading scheme, creating a carbon market where emitters can buy and sell emission credits. This scheme will allow China to limit emissions while maintaining economic freedom for emitters.
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The country's renewable energy capacity is rapidly expanding
China's renewable energy capacity is rapidly expanding, driven by targets such as generating 3300 TWh of electricity from renewable sources and ensuring that renewables make up at least half of incremental power demand growth from 2021 to 2025. In the first seven months of 2024, China added 160 GW of renewable energy (including hydro), accounting for 87% of new installations. This brought the total renewable capacity to 1,690 GW, constituting 54.5% of the country's total power generation capacity. China's wind and solar power capacity has been growing at a record pace, averaging 27% annually over the past five years, and it surpassed its 1,200 GW target six years ahead of schedule.
China's output of solar cells is set to exceed 600 GW in 2023, up from 375 GW in 2022, and it has seen a boom in manufacturing, offsetting a contraction in demand for carbon-intensive steel and cement. The country's contributions to low-carbon technologies, particularly solar PV, are driven by the government's ambitious five-year plans, leading to cost reductions that have reshaped global perceptions of clean energy. China's power sector is projected to achieve net-zero CO2 emissions before 2055, with renewables-based generation, mainly wind and solar PV, increasing sevenfold between 2020 and 2060 and accounting for almost 80% of generation by then.
China's economic recovery from COVID-19 has been muted, without the usual rounds of major infrastructure expansion after economic shocks. Instead, there has been a surge of investment in manufacturing capacity for low-carbon technologies, including solar, electric vehicles, and batteries. This shift is creating an influential interest group that could significantly impact China's approach to domestic and international climate politics. Electrification is key to decarbonizing transport and buildings, and new investments in electric buses, high-speed rail, and electric vehicles are lowering the energy intensity of passenger trips.
To summarize, China's renewable energy capacity is expanding rapidly due to ambitious targets, government initiatives, and investments in low-carbon technologies. This expansion is crucial for mitigating GHG emissions from the power sector and transitioning towards a more sustainable energy landscape.
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$82.3
China's ETS scheme incentivises companies to cut emissions
China is the largest emitter of greenhouse gases (GHG), and its energy industry has been the biggest contributor to GHG emissions over the last decade. In 2016, China's GHG emissions accounted for 26% of total global emissions. China's ETS (Emissions Trading System) scheme, which started in 2021, is an intensity-based trading system for carbon dioxide emissions. It creates a carbon market where emitters can buy and sell emission credits. The scheme will allow carbon emitters to reduce emissions or purchase emission allowances from other emitters. Through this scheme, China will limit emissions while allowing economic freedom for emitters.
China's ETS scheme covers over 2,000 companies from the power sector with annual emissions of over 26,000 tCO2. Covered entities must surrender allowances for all their covered emissions. Allocation is based on intensity, with allowances freely allocated using benchmarks and based on actual production levels. The ETS scheme incentivises companies to cut emissions by putting a price on carbon. This encourages companies to look for ways to reduce emissions across their operations and eventually bring down the abatement cost for society.
China's ETS scheme has been described as a "mental shift" in the power sector, indicating that carbon pricing should incentivise transformation over the medium to long term. The scheme is a key pillar of China's climate policy, and its further optimisation and reform could make China's green transition more cost-effective. For example, partial auctioning of emissions permits and switching to a quantity-based ETS with a cap on total emissions have been proposed as ways to improve the scheme.
The coverage of the ETS scheme is expected to expand to other sectors over time, with the cement, steel, and aluminium smelter industries being considered for inclusion. This expansion will bring more companies into the scheme and increase its emissions coverage. China's ETS scheme is a crucial step in mitigating GHG emissions from the electricity sector, and its impact will likely be felt in the coming years.
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The government is encouraging the use of electric vehicles
China is the largest emitter of greenhouse gases (GHG), with the energy industry being the biggest contributor to GHG emissions. The country's economic recovery from Covid has been muted, with no major infrastructure expansion after economic shocks. However, there has been a surge of investment in manufacturing capacity, particularly for low-carbon technologies, including solar, electric vehicles, and batteries.
The Chinese government has played a significant role in encouraging the use of electric vehicles (EVs). Firstly, the government provided generous subsidies to support the development and purchase of EVs, making China a world leader in EV manufacturing and sales. In 2022, China sold 6.8 million EVs, making it the eighth consecutive year as the world's largest market for EVs. However, China is gradually reducing these direct EV subsidies for consumers, redirecting the savings towards subsidizing charging infrastructure.
The government also supported domestic EV companies in their early years by providing procurement contracts for public transportation systems, which provided a reliable revenue stream and valuable road test data. Additionally, the government implemented a range of non-monetary incentives, such as the New Energy Vehicle (NEV) mandate policy, which assigns credits to NEV models based on metrics like mileage per single charge and energy efficiency. Annual requirements for auto manufacturers are set for NEV credits, encouraging the production or import of NEVs.
Furthermore, the government has promoted the electrification of public transport vehicles, with cities setting targets and deadlines for the full electrification of taxis and online hailing cars. The "dual-credit system" regulatory change has also incentivized automakers to electrify their fleets and made it easier for consumers to obtain license plates for EVs compared to internal combustion engine vehicles. Localities like Shanghai, Shenzhen, and Beijing have also created rebate programs to encourage traditional vehicle owners to switch to EVs.
Overall, China's efforts to encourage the use of electric vehicles are contributing to the country's transition towards cleaner energy and reducing GHG emissions.
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China is reducing coal use and increasing low-carbon electricity generation
China is the largest emitter of greenhouse gases (GHG), with the energy industry being the biggest contributor. In 2016, China's GHG emissions accounted for 26% of total global emissions. However, China is taking steps to reduce coal use and increase low-carbon electricity generation.
China's dependency on fossil fuels and high emission levels are projected to continue in the near future. However, the country's energy transition is gaining momentum, with high rates of renewable installations, power sector reforms, and mitigation policies in end-use sectors. China's investments in non-fossil energy, storage, electric vehicles, and the circular economy remain significant, accounting for 38% of the global total in 2023.
China has set ambitious targets for renewable energy, aiming to generate 3300 TWh of electricity from renewable sources and have renewables account for at least half of incremental power demand growth between 2021 and 2025. In the first seven months of 2024, China added 160 GW of renewable energy, including hydro, bringing the total renewable capacity to 1,690 GW, or 54.5% of its total power generation capacity.
China's wind and solar power capacity has been growing at a rapid pace, averaging 27% annual growth over the past five years. The country surpassed its target of 1,200 GW of wind and solar capacity six years ahead of schedule, reaching 1,206 GW by the end of July 2024. China is also on track to meet its target of having 25% of its energy come from non-fossil fuel sources by 2030, with projections suggesting it could surpass 30%.
To reduce coal use, the Chinese government has implemented policies to hasten the transition to natural gas and electric heating in households. In 2017, subsidies were provided to install electric or gas heaters in 3 million homes, and the use of coal-fired stoves was banned. China is also cultivating public support for energy conservation and raising environmental awareness through events and education initiatives.
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Frequently asked questions
China's biggest source of greenhouse gas emissions is coal, which has been a key source of domestic energy consumption for decades. In 2015, over 72% of the electrical power generated in China came from coal-powered plants.
China has implemented a range of policies to mitigate its greenhouse gas emissions, including:
- A national emission trading scheme (ETS) that puts a "price" on CO2 emissions, incentivizing companies to reduce emissions.
- The National Plan For Tackling Climate Change, which includes prevention, adaptation, scientific study, and public awareness.
- Increasing the use of low-carbon electricity generation, particularly wind and solar.
- Reducing the use of coal in the power sector.
- Investing in electric vehicles and batteries.
China faces several challenges in mitigating its greenhouse gas emissions, including:
- A heavy dependence on coal, which accounted for roughly 75.5% of China's CO2 emissions between 2000 and 2018.
- High emissions from the industrial sector, particularly from the production of steel and cement.
- Rapid growth in emissions from the transport sector, with a fast-growing number of motor vehicles on the road.
