China’s carbon dioxide (CO2) emissions saw a notable 1% decrease in the second quarter of 2024, marking the first quarterly decline since the country emerged from its strict “zero-Covid” lockdowns in December 2022. According to a new analysis by Carbon Brief, which draws on official figures and commercial data, this reduction suggests that China may be on track for a decrease in annual emissions this year.

However, this positive outlook is contingent upon a slowdown in electricity demand growth in the latter half of the year. The China Electricity Council, a key industry group, expects this to happen. But if current trends in energy demand and supply persist—especially if demand growth continues to surpass pre-Covid levels—China’s emissions could remain flat throughout 2024.

Key Insights from the Analysis:

Moderate Energy Demand Growth: China’s energy demand grew by 4.2% year-on-year in Q2 of 2024. While this is slower than the growth witnessed in 2023 and the first quarter of 2024, it is still significantly higher than pre-Covid levels.

CO2 Emissions Dip: CO2 emissions from energy use and cement production fell by 1% during this period. Despite a sharp 6.5% increase in emissions in January and February and a decline in March, the overall rise in CO2 emissions for the first half of 2024 was 1.3% compared to the same period in 2023.

Renewable Energy Gains: Wind and solar power generation increased by 171 terawatt hours (TWh) in the first half of 2024. To put this in perspective, that’s more than the total electricity generated in the UK during the same period in 2023.

Challenges in Carbon Intensity: China’s carbon intensity—CO2 emissions per unit of GDP—improved by only 5.5%. This falls short of the 7% annual improvement needed to meet the country’s 2025 targets, even with a temporary boost from the hydropower sector, which rebounded from last year’s drought.

Impact of Electric Vehicles (EVs): The increasing number of EVs on China’s roads reduced the country’s demand for transport fuels by approximately 4% compared to the previous year.

Manufacturing and Emissions: The production of solar panels, EVs, and batteries accounted for just 1.6% of China’s electricity consumption and 2.9% of its emissions in the first half of 2024, underscoring the relatively small footprint of these green technologies.

Policy Developments and the Road Ahead

Recent policy shifts suggest that Beijing is renewing its focus on energy and climate targets. However, significant uncertainties remain. The timing and magnitude of China’s CO2 emissions peak, along with the speed of subsequent reductions, are still unclear—factors that are critical for global climate efforts.

As the world watches China, the largest emitter of greenhouse gases, these developments will be pivotal in shaping the global response to climate change. How China balances its economic growth with its climate commitments in the coming months will be crucial not just for the country but for the entire planet.

The reduction in CO2 emissions was driven by the surge in clean energy additions, which is driving fossil fuel power into reverse.

However, rapid energy demand growth in sectors such as coal-to-chemicals diluted the impact of changes in the electricity sector.

The additions of new clean power capacity in China have continued to boom this year.

China added 102 gigawatts (GW) of new solar and 26GW of wind in the first half of 2024, as shown in the figure below. Solar additions were up 31 per cent and wind additions up 12 per cent compared with the first half of last year, so China is on track to beat last year’s record installations.

As a result of the strong capacity growth – and despite poor wind conditions – solar and wind covered 52 per cent of electricity demand growth in the first half of 2024 and 71 per cent since March. (The fall in wind speeds can be seen from NASA MERRA-2 data averaged for all of China.)

Indeed, the increase in power generation from solar and wind reported by the National Energy Administration in the first half of the year, at 171 terawatt hours (TWh), exceeded the UK’s total electricity supply of 160TWh in the first half of 2023.

Rapid demand growth in January–February, at 11 percent, had outpaced even the clean energy additions. But combined with a rebound in hydropower generation, the increase in non-fossil electricity supply exceeded power demand growth in the March to June period.

These shifts are shown in the figure below, illustrating how clean power expansion started to exceed electricity demand growth in recent months, pushing coal and gas power into reverse.

China’s CO2 Emissions See First Post-Covid Decline: A Closer Look at Renewable Energy Gains

In a significant shift, China’s carbon dioxide (CO2) emissions dropped by 1% in the second quarter of 2024. This marks the first quarterly decline since the country reopened following its strict zero-Covid lockdowns, signaling potential progress toward the nation’s climate goals.

Breaking down the overall reduction, the power sector led the way with a 3% decrease in emissions, while cement production and oil consumption fell by 7% and 3%, respectively.

Renewables on the Rise: New Data Revealed

In a notable development, the National Energy Administration (NEA) resumed the release of power generation data by technology in July, after halting the publication of capacity utilization figures in May. The latest data reveals that renewable energy sources—solar, wind, hydro, and biomass—met 35% of China’s electricity demand in the first half of 2024, reflecting a 22% year-on-year increase in renewable power generation.

These figures surpass earlier data from the National Bureau of Statistics, which tended to underreport wind and especially solar power output. The NEA’s numbers, however, closely match estimates previously put forth by Carbon Brief, highlighting the growing significance of renewables in China’s energy mix.

Surge in Clean Energy Technologies

China’s commitment to clean energy is further underscored by the continued growth in the production of electric vehicles (EVs), batteries, and solar cells—collectively known as the “new-three” due to their rising economic importance. In the first half of 2024, production of these technologies surged by 34%, 18%, and 37%, respectively, driven by strong demand both domestically and internationally.

However, the rapid expansion in solar cell production came to a halt in June, indicating potential challenges ahead in maintaining this growth trajectory.

China’s Rapid Energy Demand Growth: A Double-Edged Sword for Climate Goals

While China continues to make strides in clean energy technologies, its overall energy consumption is surging at a pace that outstrips GDP growth, raising concerns about the sustainability of its energy-intensive economic model. The country’s current growth pattern, which became more pronounced during the zero-Covid era, remains heavily reliant on energy-intensive industries, complicating efforts to reduce carbon emissions.

In the second quarter of 2024, China’s total energy consumption rose by 4.2%, slightly lagging behind the GDP growth rate of 4.7%. This resulted in an energy intensity gain of just 0.5%, a figure well below the pre-Covid trend and far short of China’s target of a 2.9% annual improvement. This underlines a continuing dependency on energy-intensive manufacturing to fuel economic growth.

Structural Drivers of Energy Consumption

Several key industries are driving this rapid increase in energy consumption. The coal-to-chemicals industry, which produces petrochemicals from coal rather than oil, has seen a significant uptick in activity. This sector, while supporting China’s energy security by reducing oil dependence, has a high carbon footprint, posing challenges to the country’s climate goals. As coal prices have dropped relative to oil, production in this sector surged by 21% in the first half of 2024.

Similarly, industrial and residential gas consumption grew by 8.7% during the same period, driven by strong industrial demand and an unusually cold winter. However, gas use for power generation fell, highlighting a shift in energy use patterns. Conversely, oil demand continued to decline, dropping 3% in the second quarter, a trend accelerated by the growing adoption of electric vehicles (EVs) and a slowdown in construction activity.

CO2 Emissions and the Challenge of Meeting Climate Targets

Despite these shifts in energy consumption, China’s CO2 emissions declined by only 1% in the second quarter of 2024. While this is a step in the right direction, it falls short of the level needed to meet the country’s 2025 carbon intensity targets. China aims to reduce emissions relative to GDP by 18% from 2020 to 2025, but progress so far has been insufficient. With GDP growth slowing and the easier gains from hydropower rebound diminishing, the challenge of reducing carbon intensity will only grow in the coming years.

Policy Developments and Future Projections

China’s government has recognized the gap in meeting its climate targets and has taken steps to address it. In May 2024, the State Council issued an action plan focused on energy conservation and CO2 emission reductions for the period of 2024–25. The plan underscores the importance of meeting the 2025 targets, but stops short of setting specific goals for 2024, indicating a cautious approach.

Further policy initiatives include a July plan to accelerate the creation of a “dual control system” for managing both total CO2 emissions and emissions intensity. This marks a significant shift, as China has historically focused only on limiting emissions intensity rather than absolute emissions. The upcoming 15th five-year plan (2026–30) is expected to set binding targets for both carbon intensity and absolute emissions, with a supplementary target for 2030.

The government is also looking at ways to reconcile the recent boom in coal-fired power plant construction with its CO2 reduction goals. A new policy on “low-carbon transformation” aims to retrofit coal plants with technologies to reduce emissions, such as biomass co-firing and carbon capture. However, without clear targets and incentives, the impact of this policy remains uncertain.

China’s 2023 Emissions Peak: A Turning Point for Global Climate Goals?

China’s CO2 emissions experienced a year-on-year decline in March and again in the second quarter of 2023, aligning with projections made in last year’s Carbon Brief analysis. However, the reductions were smaller than anticipated due to faster-than-expected growth in coal demand for the chemical industry and increased industrial demand for power and gas.

Despite these challenges, China is still likely on track for a structural decline in emissions beginning in 2024, positioning 2023 as the peak year for CO2 emissions.

Conditions for a Sustained Emissions Decline

For this forecast to come to fruition, several key conditions must be met. First, the growth in clean energy must continue at its current pace. Second, the expected slowdown in energy demand growth during the second half of 2024 needs to materialize. Finally, the recent policy shift towards energy savings and carbon reduction must prove enduring and effective.

However, certain factors could disrupt this positive trajectory. Chief among them is China’s economic policy, which remains heavily focused on manufacturing. Additionally, the expansion of the coal-to-chemicals industry—a sector with a high carbon footprint—poses a significant risk to sustained emissions reductions.

Looking Ahead: The Importance of Updated Climate Targets

China has committed to updating its climate targets for 2030 and setting new goals for 2035, with announcements expected early next year. These targets will be crucial in solidifying the emissions peak and determining the rate of emissions reductions post-peak. The outcome will have significant implications not only for China but also for global efforts to stabilize temperatures and combat climate change.

In conclusion, while 2023 may mark a critical turning point for China’s emissions, the real test will be in the years that follow. The effectiveness of policy measures, the pace of clean energy growth, and the ability to manage energy demand will all play pivotal roles in shaping the future trajectory of China’s—and the world’s—emissions.