Welcome to Carbon Brief’s China Briefing.
China Briefing handpicks and explains the most important climate and energy stories from China over the past fortnight. Subscribe for free here.
Key developments
China submits WTO complaint against US over EV tax credit
US-CHINA SUBSIDY CONFLICT: On 26 March, China filed a complaint with the World Trade Organisation (WTO) against the US’s “discriminatory” requirements for electric vehicles (EV) subsidies, which, it argues, makes EV containing components made in China, Russia, North Korea and Iran ineligible for tax credits worth $3,750 to $7,500, said the Associated Press. A day later, the US treasury secretary Janet Yellen raised the issue of “overcapacity” of “green technologies” from China, including solar, EV and lithium-ion batteries, during her visit to a solar cell factory in the US, reported the New York Times. The outlet quoted Yellen saying “China’s overcapacity distorts global prices and production patterns and hurts American firms and workers, as well as firms and workers around the world”.
PRESIDENTIAL CONVERSATION: Earlier this week, Chinese president Xi Jinping and US president Joe Biden held a phone conversation. The read-out of the conversation released by the US embassy in China said: “President Biden also raised continued concerns about the PRC’s unfair trade policies and non-market economic practices, which harm American workers and families.” But it said the two leaders “reviewed and encouraged progress on key issues discussed at the Woodside summit…and continuing efforts on climate change.” The briefing from the Chinese Ministry of Foreign Affairs said: “The two sides agreed to stay in communication…carrying out dialogue and cooperation in such areas as counternarcotics, artificial intelligence and climate response.”
CLIMATE DIPLOMACY: Meanwhile, Rick Duke, the deputy US special envoy on climate change, told Reuters that the cooperation between the US and China on methane emissions is “advancing”. He added: “We are, indeed, in the process of propelling that work together.” According to Politico, EU climate envoy Tony Agotha and top climate diplomats from Germany, France, Denmark and the Netherlands will join a trip to Beijing on 8 April to build a “multinational diplomatic track to engage China on climate change”. Separately, the US embassy and Chinese foreign ministry confirmed upcoming visits to China by Yellen on 4-9 April and US secretary of state Antony Blinken “in the coming weeks”.
EV EXPANSION: According to a report in the Hong-Kong based South China Morning Post, anti-subsidy probe and trade restrictions “reduced” the export volume of Chinese EVs to the EU and US by 20% and 42%, respectively, in the first two months of this year, prompting Beijing to look towards other markets. Chinese EV sales in Central Asia have increased 2.3 times during the same period. Meanwhile, an analysis by Transport & Environment showed Chinese EV sales are “on track” to reach 25% of electric car sales in the EU by the end of 2024. The outlet added that the bloc should not aim to shield its carmakers from “meaningful competition”, which would limit affordability of EVs for Europeans.
EU probes Chinese solar firms
SOLAR INVESTIGATION: The Financial Times reported that the EU has opened investigations into the subsidiaries of two Chinese solar manufacturers which may have “been granted foreign subsidies that distort the [EU’s] internal market”. The outlet adds that “the probes reflect a hardening stance in Europe towards cheap Chinese imports, which the EU’s solar industry has blamed for the heavy losses and plant closures of several European solar panel manufacturers”.
SECOND INQUIRY: The South China Morning Post said that this marks the second use of the EU’s foreign subsidies regulation to investigate Chinese firms, which “demonstrates Brussels’ willingness to use the commercial weaponry at its disposal to counter what it sees as unfair competition from Beijing”. In February, the EU investigated a Chinese rail firm, which later withdrew its bid to enter the Bulgarian market, it added.
Renewable installations push coal capacity share down
COAL SHRINKING?: The China Electricity Council, a government-affiliated research thinktank, announced that coal’s share of installed capacity has fallen to 39% of the total mix, as of February 2024, according to industry news outlet BJX News. This was driven by the rapid installation of renewables, the outlet added. China Energy Net reported that, in January and February this year, China installed 36.7 gigawatts (GW) of solar, which is 80% more than last year. Total installed solar capacity stood at 650GW at the end of February, a 56.9% increase, while wind capacity grew 21.3% to 450GW. However, it added, utilisation of both solar and wind shrank slightly in the first two months of the year compared to a year ago.
GRID OVERLOAD: According to Bloomberg, following “record” solar and wind power installations last year, “several regions in China have shown strains handling the new surges of electricity”. Meanwhile, London Stock Exchange Group analyst Chen Xuewan shared on Twitter that the southern provinces of Guangdong, Yunnan and Guizhou may face “power gaps” this year unless power system flexibility is improved.
2024 TARGETS: The National Energy Administration (NEA) released its guidelines for the department’s energy work in 2024, which pledges both to “focus on improving energy security capacity” and to “focus on promoting green and low-carbon energy transformation”. It aims to have non-fossil energy comprise 55% of the energy mix and 18.9% of power consumption. More specifically, wind and solar power will account for more than 17% of power generation by the end of the year. Meanwhile, coal production will be “stabilised and increased”, while oil production will be “stabilised at more than 200m tonnes” and natural gas will “maintain its rapid pace of production”.
China’s climate envoy reinforces role of fossil fuels at Boao
‘CLEAN’ FOSSIL FUELS : At this year’s “Boao forum for Asia” in Hainan – Asia’s version of Davos – China’s climate envoy Liu Zhenmin said that “[China] will still keep our fair share of fossil fuels, but they must be used purely”, adding that this was a “critical” point, Bloomberg reported. Liu also said that the world needs to “massively scale up deployments of solar, wind and hydropower”, but that US trade restrictions increase the cost of clean energy overseas and slow the energy transition, added the outlet. State news agency Xinhua quoted Liu saying at the same event that “humanity’s response to climate change depends on the development of technology” and that developed nations must help meet the financing needs of developing nations.
‘GREEN’ ECONOMY: Zhao Leji, chairman of the standing committee of the National People’s Congress, China’s legislative body, also spoke at Boao. He stated that “[China is] speeding up efforts to promote green and low-carbon economic and social development” and will “strive” to meet its dual carbon goals, according to the Associated Press. CGTN published the full text of Zhao’s speech, in which he also said the country will “cultivate large-scale new growth drivers in green infrastructure, green energy, green transportation and green lifestyle, which is expected to generate investment and consumption markets with a size of 10tn yuan ($1.4tn) every year”. Other notable speakers, the South China Morning Post said, included former central bank governor Zhou Xiaochuan and former deputy trade minister Long Yongtu, who both argued that overcapacity in the “clean-energy sector” will be temporary, as long as global demand for energy transition technologies remains robust.
Spotlight
How climate change could reduce China’s GDP growth
A new study by a group of Chinese scientists, published in Nature, finds that China could significantly constrain future economic growth, due to the impact of climate change on global supply chains.
Carbon Brief invites the paper’s lead authors Prof Guan Dabo and doctoral candidate Sun Yida from Tsinghua University to outline their main findings of the potential impacts of global warming on China’s manufacturing capabilities and economic growth.
In recent years, global supply chains have faced a global pandemic, commercial ships under attack in the Red Sea and a container ship getting wedged in the Suez Canal for six days. The impact of each of these events has rippled across the global economy.
In our new research, published in Nature, we show that climate change poses a similar threat to supply chains around the world, bringing economic losses that will increase exponentially relative to the rise in global temperatures.
Focusing on heat extremes, our research team constructed a “disaster footprint” model to assess the health risks and economic losses associated with heatwaves.
To estimate the impact of extreme heat on global GDP, our model combines projections of future climate, simulations of future population dynamics in response to warming and estimates of heat-induced labour loss on the global economy and supply chains.
Our study is the first to chart “indirect economic losses” from climate change on global supply chains, underscoring the risk to regions that will likely be less affected by warming directly.
The results suggest that, by 2060, China could suffer soaring economic losses amounting to 1.5-4.8% of GDP growth by 2060. Some of its industries, including construction and manufacturing, could lose around 4.6-6.4% of their value.
How could indirect disruptions affect economic growth?
While the direct mortality and productivity loss resulting from heat stress have been extensively studied, previous analysis has yet to account for indirect economic loss.
Indirect economic loss is the reduction in economic output or welfare due to disruptions caused by feedback loops after a shock to the economic system, rather than by a direct impact from a shock. These losses could be due to changes in production, consumption or employment.
For example, crop failures, labour slowdowns and other economic disruptions in one part of the world can affect the supply of raw materials flowing elsewhere. This can cause production stagnation where trading partners cannot access the supplies they need.
These indirect disruptions could cause a projected net economic loss of $3.75-$24.7tn globally by 2060, depending on how quickly climate change is tackled.
We estimate expected economic losses across three scenarios, called “shared socioeconomic pathways” (SSPs), broadly covering futures under very low, intermediate and very high emissions.
The charts below illustrate the potential economic losses as a percentage of GDP China may face under the SSP1-1.9, SSP2-4.5 and SSP5-8.5 scenarios, which project an average global temperature rise of around 1.5C, 2C and 2.5C by mid-century, respectively. Economic losses are split into indirect losses (dark blue), labour losses (blue) and health losses (light blue).
What is the impact on China?
As the global economy has grown more interconnected, disruptions in one part of the world have knock-on effects elsewhere in the world.
For example, as a manufacturing-heavy country, China faces indirect economic losses of up to 2.7% of total GDP in 2060.
Overall, indirect losses were the most significant component of China’s economic losses, accounting for just over half of total losses.
By 2060 China’s heat-induced economic losses could total about 1.5% of total GDP under 1.5C of global warming, 3% under 2C of warming and 4.9% under 2.5C of warming.
Sectors such as the extractive industries, construction and non-metallic manufacturing – which are some of China’s “key industrial sectors” – could see the highest losses.
These industries are not only located in regions with significant warming, but also import large quantities of upstream primary products from south-east Asia, Africa and South America – regions which are expected to face heightened exposure to production volatility caused by high temperatures.
They are projected to lose about 4.6-6.4% of their “value-added” under the compounded impacts of direct production reductions and indirect spillover shocks.
In addition, under the lowest emissions scenario, 2060 could see an additional 590,000 heatwave deaths annually across the globe, rising to 1.12m additional annual heatwave deaths under the highest scenario. This human toll entails economic costs as well, such as increased healthcare costs and production losses stemming from lost labour.
What next?
This research is an important reminder that preventing every additional degree of climate change is critical.
It should be noted that China’s recent investments in south-east Asia, the Middle East and Africa have shifted towards renewable energy and low-emission mining technology, rather than coal projects and large-scale infrastructure. This will contribute to building climate resilience and creating more stable global supply chains.
In addition, understanding which nations and industries are most vulnerable is crucial for devising effective and targeted adaptation strategies, including establishment and targeted use of the “loss-and-damage funds” agreed at COP27 in 2022.
Watch, read, listen
HUMAN COST: Environmental activist Wang Xiaojun gave a TED talk on his experience growing up in China’s top coal-producing province and the impact that environmental degradation had on his village and family.
SECURITY DILEMMA: The state broadcaster CCTV “exposed” a case of the illegal use of reserved farmland being converted into a solar power plant in Hubei.
FEATURE OR BUG?: An article in World Politics Review argues that excess capacity is a “tolerated feature” of China’s industrial system because it allows China to meet high-level targets, while “local governments clean up the mess [of] bankrupt firms or laid-off workers”.
LITHIUM’S FUTURE: A podcast by the Oxford Institute for Energy Studies discussed the possible path of the lithium market as it matures and grapples with China’s dominance of lithium processing.
575
In gigawatts, the estimated heat pump capacity for buildings (residential and commercial) in China by 2030 under the stated policies scenario (STEPS), according to a report by the International Energy Agency on the future of heat pumps in China.
New science
End-year China wind power installation rush reduces electric system reliability
Energy Economics
Research identified “significant adverse effects” of the rapid installation of wind power on electricity reliability. It found that a faster rate of installation led to lower reliability rates and more power outages. The authors raised the importance of “improvements in grid infrastructure and management in the transition to a low-carbon world”.
Managing fragmented croplands for environmental and economic benefits in China
Nature Food
A new study found that improving the management of croplands could “achieve synergies between food security, economic benefits and environmental protection” without needing to use more land. It revealed that “10% of Chinese croplands have no potential to be consolidated for large-scale farming” and, if the land was instead used to grow animal feed, nitrogen and greenhouse gas emissions could drop by 10% and 101%, respectively.
China Briefing is compiled by Wanyuan Song and Anika Patel. It is edited by Wanyuan Song and Dr Simon Evans. Please send tips and feedback to china@carbonbrief.org
The post China Briefing 4 April: Heat-driven impact on economy; Coal capacity ‘pushed down’; China’s WTO complaint appeared first on Carbon Brief.
The launch of the Africa Energy Bank (AEB) has been put back yet again, raising doubts about the institution’s future ability to finance fossil fuel projects – its main objective – as global lenders retreat from such investments over climate concerns, experts told Climate Home News.
The bank, which had been billed to launch in September after a series of delays, is now scheduled to begin operations in November, according to the head of the African Energy Chamber, an advocacy body for the continent’s oil and gas sector.
Even as the world aims to transition away from fossil fuels, many African leaders have made clear they want to continue exploring and extracting the continent’s large oil and gas deposits – estimated at around 125 billion barrels of crude and over 600 trillion cubic feet of gas – to boost economic development.
As a group, Africa sided with a number of powerful oil-and-gas producing nations in blocking progress on negotiations to craft a global roadmap to transition away from fossil fuels at last year’s UN COP30 climate talks, although some countries did individually support the proposal.
-
Campaigners oppose Dangote’s planned Kenya refinery over climate and ecological risks
Plans to build Africa’s second largest oil refinery in ecologically sensitive region criticised as “environmental recklessness” -
Tanzania pushed African nations to oppose fossil fuel transition at COP30
While chairing the African group at the summit, the gas-dependent nation advised the continent’s ministers to block language on transitioning away from fossil fuels
Meanwhile, major projects under development across the continent – including the 1,443-km East African Crude Oil Pipeline (EACOP) and Dangote’s 700,000-barrel-per-day Kenyan refinery – show that African governments see oil and gas as playing a significant role in meeting their energy and economic needs for many years to come.
In 2022, at a gathering of the African Petroleum Producers’ Organization (APPO) in oil-rich Angola, ministers from its member states adopted a resolution to create the Africa Energy Bank to finance projects for the production, use and trade of oil, gas and broader energy sources.
African control over energy resources
An article on the APPO website explains that the bank was conceived as a way to overcome “disenchantment” with fossil fuels among “the international community” which it said had crystallised around the “energy transition” concept.
“If Western countries, after having long taken advantage of the energy sources they now revile to develop, can afford the luxury of abandoning them, this is not the case in Africa,” it adds, noting that many of the continent’s economies are still largely dependent on oil and gas revenues.
A separate web page about the bank, also hosted on APPO’s website, says its objectives include financing the exploration, production and refining of oil and gas, as well as supporting member states in transitioning from fossil fuels to cleaner energy sources “while ensuring energy security”.
Said Addi, a former executive with Shell and energy commodities trading house Gunvor, said the new bank was judged necessary because financing for hydrocarbons from many traditional international lenders has become constrained.
In trying to fill this financing gap, Africa is not simply setting up another fund to support oil and gas, he added. “It is also an attempt to give African countries greater control over how their energy resources and infrastructure are financed,” he explained.
Nigeria to host the AEB
The energy bank – a joint initiative of APPO and the African Export–Import Bank (Afreximbank) – has so far suffered several delays and is almost two years behind schedule. The initial plan was to start operations in January 2025, with Nigeria as the host country, but the bank’s opening was delayed to June of that year to allow Nigeria time to finalise the construction of the bank’s headquarters in Abuja.
After the government announced the completion of the offices in late November 2025, a new launch date was set for January 2026, which was moved back to April, June and then September. Now it has shifted again to November, raising concerns that the institution may be losing momentum.
Former Shell executive Addi said that if the capital is eventually paid in, the bank becomes operational and its first projects are commercially credible, then the delays will be regarded as normal teething troubles in setting up a multilateral institution. But, he added, scepticism will be justified if it continues to stall.
Uganda may see lower oil revenues than expected as costs rise and demand falls
Baron Lamarré, an oil and gas expert and former Petronas oil trader, said that missing “three deadlines in a row is not normal”, and warned that if the timeline slips again, “the story flips from ‘ambitious institution finding its footing’ to ‘good idea that lost momentum before it found any’.”
The Nigerian government, APPO and Afreximbank did not respond to requests for comment by the time of publication.
The funding challenge
The Africa Energy Bank is targeting base capital of $5 billion, with plans to scale up to $120 billion within five years by mobilising private-sector funds. However, it is expected to start operations with initial seed capital of $500 million.
The funding plan is to have the 18 member countries of the APPO contribute $83 million each to the bank as equity for a combined $1.5 billion. Afreximbank, other non-APPO African countries and investors outside the continent are expected to provide the remaining $3.5 billion.
But even the initial $500 million has not been easy to mobilise. In May, APPO Secretary-General Farid Ghezali called on members to deliver on their pledges towards the startup goal before the end of June. But the delays suggest this may not have been met, with experts saying Africa may be finding it difficult to self-fund its oil and gas projects in the absence of international capital.
Lamarré said every extension of the deadline points to the fact that “raising fossil fuel capital in Africa without the majors and their financing networks is brutally hard”.
Why the global electrification agenda misses the point on Africa’s energy crisis
Since 2020, Western lenders, export credit agencies and insurers have been in steady retreat from African hydrocarbons, he said, while oil majors are divesting their African assets, handing over fields to smaller local operators whose credit ratings are not high enough to borrow cheaply.
Even capital from China and the Gulf, which has partially filled the gap, cannot match the volume, tenor or pricing that Western investors once offered, Lamarré argued.
“If mobilising the first $500 million of seed capital [for the AEB] has taken this long, that’s the clearest signal yet of how steep the climb to $120 billion looks,” he said, noting that the continent’s energy financing gap is as large as $30 billion-$45 billion per year.
Africa’s investment landscape, meanwhile, has been shifting. While foreign direct investment dropped from a 2024 peak, inflows remained roughly one-third above the continent’s long-term average in 2025, according to the 2026 World Investment Report from UN Trade and Development (UNCTAD). They are concentrated in a few sectors including critical minerals needed for renewable energy technologies, battery manufacturing and advanced industrial production.
At the same time, data on global energy investment from the International Energy Agency (IEA) shows that fossil fuel investment in Africa has declined over the last decade.
“Trojan horse” for fossil fuels
While the Africa Energy Bank struggles to get off the ground, climate campaigners have criticised its primary aim of financing oil and gas on the continent at a time when the world is starting to move away from high-carbon fuels to cleaner alternatives.
Bhekumuzi Dean Bhebhe, founder of Africa Change Lab, described the bank as a “Trojan horse”, arguing that its focus on fossil fuel financing runs counter to the global energy transition and the African Union’s Agenda 2063 goals of sustainable development and inclusive growth.
The energy bank, he warned, “risks locking Africa into a new cycle of debt, dependency and fossil fuel entrenchment”, adding that its financing blueprint does not pave the way for a climate-resilient future. “In truth, it is to deepen the same extractive, carbon-heavy pathways that the continent should be moving away from,” he added.
Ugandan farmers use British court to try to stop East Africa oil pipeline
Kenya-based climate and energy expert Joab Okanda said the AEB’s plan to finance oil and gas is “a misplaced priority” and it should instead back clean energy in line with the policies of some of Africa’s major export markets like Europe.
In addition, the new bank could struggle to mobilise enough resources to advance large-scale oil and gas projects, he added, noting that its proposed $5-billion initial capital is equivalent to the cost of the East African Crude Oil Pipeline alone.
The AEB’s aim of backing more fossil fuels should be flipped “to support countries that are oil-dependent to start working on their transition plans”, Okanda said.
The post Launch of Africa Energy Bank delayed again in blow to oil and gas hopes appeared first on Climate Home News.
Launch of Africa Energy Bank delayed again in blow to oil and gas hopes