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The News

China will strive to reduce carbon dioxide emissions by 3.9% for every unit of GDP over the next year, according to the State Council’s 2024-25 carbon reduction emission plan, accounting for a total of about 260 million tons of carbon dioxide over the next two years.

To achieve this, the State Council called for expanded renewable energy sources and infrastructure to account for 18.9% of energy use in 2024, increasing to 20% in 2025. In addition to reducing coal use by 50 million tons, Beijing also floated a ban on over-excessive steel manufacturing — crucial for China’s green tech boom but notoriously polluting.

The plan is a step on the road to China’s ultimate goal to peak emissions by 2030 and reach carbon neutrality by 2060. There are signs China is on track to hit those targets, but the diverging ambitions of China’s green tech firms and the government may yet complicate these efforts.

SIGNALS

Emissions might have already peaked, but there’s room for improvement

China’s carbon emissions may have peaaked in 2023, well ahead of its 2030 target, according to a report by the Asia Society Policy Institute for Carbon Brief. Expanding renewable energy is necessary to keep the downward trend, but plans for new solar and wind farms “diverge widely” between private firms and the government, the report noted. China’s largest solar panel trade group proposed a “conservative” increase in energy capacity of 225 gigawatts per year until 2030, but the National Energy Administration has suggested about 100 gigawatts per year, partly because the government is worried about potential ecological damage.

The electricity grid is not built for renewables

The National Energy Administration is also wary of rapid expansion because the country’s power grid is just not built for fluctuating renewable energy sources. China’s grid lacks the infrastructure to store excess renewable energy, and its pricing system has no mechanisms to incentivize customers to use renewable energy during peak production periods, as Semafor previously reported. Beijing needs top-down reforms if it wants to accelerate decarbonization efforts and ensure “energy supply and demand max out at the same time,” Dave Jones of the Ember Climate think tank told Semafor.

And yet, China is building more coal plants

The State Council calls for “eliminating” coal-powered facilities by 2025, but China has, paradoxically, been one of the few places where coal expanded in the last year, increasing its capacity by 50 gigawatts, according to Global Energy Monitor. These plants are a “major impediment to reducing global carbon emissions,” yet they might not see much use, according to Hannah Ritchie who writes the Sustainability by the Numbers Substack. China only uses coal power periodically as “peaker plants” when demand outweighs renewable energy supply. Ultimately, the new construction may be a means to boost local economies, Ritchie argued.