China’s central government listed “boosting consumption…and stimulating domestic demand” as its first “major task” for 2025, at the recently closed “two sessions”.
As part of this focus – and amid slowing economic growth – the State Council made specific mention of China’s “two new” (两新) policy.
The policy was first announced in 2023, but was heavily promoted last year. President Xi Jinping reportedly “stressed the importance” of a national recycling company as part of the policy in 2024, because it “facilitates green, low-carbon and circular development”.
Carbon Brief explains what the policy is, how it works and what its impact will be. An abridged version of the article appeared in China Briefing on 20 March.
What is ‘two new’?
The “two new” policy is short for “large-scale equipment upgrades and trade-in of consumer goods”. It is designed to boost domestic demand to prop up growth, at the same time as improving the efficiency of equipment so as to lower emissions.
According to the Communist party’s leading magazine on ideology Qiushi, the idea was first raised in 2023 at an economic conference held by the State Council for “improving technology, energy consumption, emissions and other standards”.
It became well-known after Xi reiterated the idea in early 2024. In March 2024, the policy then became an “action plan – a document illustrating specific methods for executing a political goal.
Prof Bai Quan, director of energy transition at the Academy of Macroeconomic Research – a research institution under the direct supervision of the State Council – told Carbon Brief in 2024 that there are four aspects of “two new”:
- Updates to equipment such as large boilers, turbines, heat pumps and lighting used for manufacturing;
- Trade-in of consumer goods, including fridges and air conditioners;
- Recycling of old or high-emission items;
- Improving standards for product efficiency and emissions, as well as for recycling, “to prevent people from re-purchasing outdated equipment with low energy efficiency”.
He added that the first three aspects directly “promote carbon reduction” and the last one “indirectly serves energy saving and carbon reduction goals”.
Under the policy, government subsidies are provided for manufacturers and consumers to trade-in old inefficient goods and purchase new ones. Other financial and tax support is given to recyclers to increase recycling.
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In 2025, the State Council updated the “two new” policy and increased the funds available to consumers and businesses.
It also expanded the range of trade-in products, adding more and older petrol cars for instance, as well as pledging to release a more detailed trade-in standard covering 294 items by the end of the year.
Li Gang, an official from the Ministry of Commerce, is quoted by the state news agency Xinhua saying at the press conference on the expansion that it would “help stimulate consumer spending and boost domestic demand. All enterprises, domestic or foreign-funded, private or state-owned, are welcome to participate in the scheme.”
How does equipment upgrade work?
A fundamental mechanism of “two new” is providing funding that enables consumers and businesses to trade-in and upgrade goods, as well as recycling the old equipment.
For example, under the policy, a consumer can trade in an old, inefficient petrol car and receive subsidies to upgrade to a new electric vehicle (EV) instead.
The government “work report” delivered by premier Li Qiang at the “two sessions” says that “ultra-long special treasury bonds totaling 300bn yuan ($41bn) will be issued to support consumer goods trade-in programmes” in 2025.
Meanwhile, another 700bn yuan ($96bn) will be allocated for a sister programme, known as “two major [projects]” (两重), which supports infrastructure construction, including roads and railways.
In a more detailed “two new” paper, the State Council says it will provide about 90% of the funds and the rest shall be covered by local governments.
A sum of cash will be given when old “high-emission” goods, such as ships, trucks, tractors and buses, are sent for recycling, depending on the age and emission levels. Some discounts will also be given when purchasing new lower-emission replacements.
Separately, companies can apply for a low-interest loan for large-scale equipment upgrades.
The State Council paper also eases the rules around low-interest loans for equipment upgrades, making it easier for small and medium-sized enterprises to access them.
According to the paper, projects that can apply funds from the cash pool include “equipment renewal in the field, as well as energy conservation, carbon reduction and safety transformation in key industries”, such as transports and agriculture.
The policy also allocates around 7.5bn yuan ($1bn) for the “recycling and treatment of waste electrical and electronic products”. This extends beyond the list of trade-in items.
How does ‘two new’ support recycling?
As the world’s largest renewable energy producer, China has so far built some 1,408 gigawatts (GW) of wind and solar capacity. About 35m tonnes of waste from decommissioned wind and solar equipment will need to be recycled in China by 2030.
A research paper in the journal Waste Management suggests building up sufficient capacity to recycle this waste could generate “significant economic benefits”.
However, Shanghai-based outlet the Paper reports that only a limited number of recyclers are on the market, due to the high costs and long payback periods.
Despite Beijing issuing policies in 2023 and 2024 to encourage businesses, a stronger recycling market is needed for “advancing” the “two new”, according to prof Du Huanzheng, director of the Circular Economy Research Institute of Tongji University.
In 2024, a state-owned recycling company, China Resources Recycling Group, was established to handle scrap steel, EV batteries and decommissioned renewable energy equipment.
But “challenge[s]” remain for private recyclers, Bai told Carbon Brief. One obstacle is missing a “first receipt”, which is the purchase receipt from manufacturers that enables recyclers to claim value-added tax deductions, he said.
A supporting policy for the “two new” from 2024 allows qualified recyclers to use their purchasing invoice in place of “first receipt” for tax claims.
Bai said this policy “solved the problem” and “is a very important incentive to meet the 2027 goals” of the “two new” policy.
The 2027 goals, written by the State Council, include a 25% increase in new equipment investment across key sectors and a doubling in the share of cars being recycled:
“By 2027, the scale of equipment investment in industries such as industry, agriculture, construction, transportation…will increase by more than 25% compared with 2023; the energy efficiency of major energy-consuming equipment in key industries will basically reach the energy-saving level, and the proportion of production capacity with environmental protection performance reaching Class A will be greatly increased…The amount of scrapped cars recycled will increase by about one-fold compared with 2023.”
How does trade-in work under ‘two new’?
Li Shuo, director of China Climate Hub at the Asia Society Policy Institute (ASPI), tells Carbon Brief that this is not the first time China used subsidies and “similar initiatives” to “stimulate consumption, address product oversupply and enhance energy efficiency”.
In 2025, the categories of eligible trade-in goods under “two new” is expanding from eight to 12, including mobile phones and fridges that are closely related to daily usage. Up to 500 yuan ($70) subsidies apiece can be applied when purchasing new digital products from 2025.
Electric vehicles (EVs), which can greatly decarbonise road transport, remain on the list. In addition, scrappage subsidies have been extended to more and newer types of petrol cars – including cars registered from 2012-14 rather than 2011-2013.
Li adds that the latest expansion of the policy “highlights the rapid pace of industrial upgrades in China and the mutually reinforcing dynamics of industrial productivity, a favorable regulatory framework, and the sheer scale of the Chinese market”.
Bloomberg says that “the cash-for-clunkers program gave a big boost to sales – especially of EVs and hybrids – after its introduction last year” and “manufacturers and investors had been eagerly waiting to see whether the subsidy” would be renewed in 2025.
The buyer rebates for vehicles, including EVs and more efficient petrol cars, remain at the same level as in the second half of 2024, after a rise last August.
Buyers can receive up to 20,000 yuan ($2,730) for EVs and plug-in hybrids or 15,000 yuan ($2,073) for petrol cars with an engine smaller than two litres.
(The Chinese EV industry receives a complicated range of subsidies, read more in Carbon Brief’s Q&A on the sector.)
What is the impact?
Xinhua says that the trade-in scheme boosted sales of cars in 2024, with new energy vehicles (NEVs, mainly EVs and plug-in hybrids) accounting for more than 60% of the new vehicles bought under the initiative in 2024.
Meanwhile, products certified with the “highest energy-efficiency level” made up more than 90% of sales by revenue under the home appliance trade-in scheme, adds the report.
An analysis by Goldman Sachs says the trade-in subsidies have “accelerated” the rising share of NEVs in Chinese car sales. It says the policy will help raise the NEV share from 48% in 2024 to about 60% in 2025.
Subsidies for NEVs under “two new” have amounted to 90bn yuan ($12bn), accounting for about 60% of the total “trade-in money”, according to Goldman Sachs.
In his 2024 analysis for Carbon Brief, Lauri Myllyvirta, lead analyst at the Centre lead analyst at the Centre for Research on Energy and Clean Air (CREA), wrote that the trade-in subsidy scheme would “free up household cash for other types of spending, but it also directs household spending in the most energy-intensive direction”.
He tells Carbon Brief that the policy, after the 2025 expansion, is still a “much more limited measure than the kinds of income transfers that would be needed to substantially boost the role of household consumption in driving economic growth”. He adds:
“[It] targets the most energy-intensive part of household spending, purchases of energy-intensive manufactured goods, while leaving out spending on services and other less energy intensive sectors.”
Lynn Song, chief economist for Greater China from market research firm ING, tells Carbon Brief that it is “hard to quantify [the impact of ‘two new’] until we have more specifics rolled out such as what level of subsidies will be applied”. He says:
“The 300bn budget for the programme sounds a little small at first thought – under 1% of total retail sales last year – but it will boost sales beyond the 300bn [yuan] spent, so it should result in a fairly significant bump in my view.
“Looking at last year’s performance once the policies started ramping up in the second half of the year, we saw autos and home appliances easily outperform the headline retail sales growth.”
Song adds that the trade-in subsidies under “two new” can “lead to improved demand for these categories this year”.
In his 2024 interview with Carbon Brief, Bai called the “two new” a “sign” of the government using policy support to stimulate lower-carbon consumption. He added:
“Another vital policy is the ‘guidelines to ramp up green transition of economic, social development’… It is a blueprint of China’s transition in industry, building [construction], transportation, energy and many other areas. Together with the ‘two new’, which is an implementation document for this top-level design, we now have both a direction and a manual for the energy transition.”
The guideline aims to “achieve ‘remarkable results’ in the green transition” by 2030 and establish a “green, low-carbon and circular development economic system” by 2035.
(Read more about the guideline in China Briefing.)
An official release says that the “two new” policy “saved about 28m tonnes of standard coal and reduced carbon dioxide [CO2] emissions by about 73m tonnes” in 2024. It says the “effect” of supporting the low-carbon transition was “obvious”.
The post Q&A: How China’s ‘two new’ policy aims to help cut emissions appeared first on Carbon Brief.
Q&A: How China’s ‘two new’ policy aims to help cut emissions
Drought and heatwaves occurring together – known as “compound” events – have “surged” across the world since the early 2000s, a new study shows.
Compound drought and heat events (CDHEs) can have devastating effects, creating the ideal conditions for intense wildfires, such as Australia’s “Black Summer” of 2019-20 where bushfires burned 24m hectares and killed 33 people.
The research, published in Science Advances, finds that the increase in CDHEs is predominantly being driven by events that start with a heatwave.
The global area affected by such “heatwave-led” compound events has more than doubled between 1980-2001 and 2002-23, the study says.
The rapid increase in these events over the last 23 years cannot be explained solely by global warming, the authors note.
Since the late 1990s, feedbacks between the land and the atmosphere have become stronger, making heatwaves more likely to trigger drought conditions, they explain.
One of the study authors tells Carbon Brief that societies must pay greater attention to compound events, which can “cause severe impacts on ecosystems, agriculture and society”.
Compound events
CDHEs are extreme weather events where drought and heatwave conditions occur simultaneously – or shortly after each other – in the same region.
These events are often triggered by large-scale weather patterns, such as “blocking” highs, which can produce “prolonged” hot and dry conditions, according to the study.
Prof Sang-Wook Yeh is one of the study authors and a professor at the Ewha Womans University in South Korea. He tells Carbon Brief:
“When heatwaves and droughts occur together, the two hazards reinforce each other through land-atmosphere interactions. This amplifies surface heating and soil moisture deficits, making compound events more intense and damaging than single hazards.”
CDHEs can begin with either a heatwave or a drought.
The sequence of these extremes is important, the study says, as they have different drivers and impacts.
For example, in a CDHE where the heatwave was the precursor, increased direct sunshine causes more moisture loss from soils and plants, leading to a drought.
Conversely, in an event where the drought was the precursor, the lack of soil moisture means that less of the sun’s energy goes into evaporation and more goes into warming the Earth’s surface. This produces favourable conditions for heatwaves.
The study shows that the majority of CDHEs globally start out as a drought.
In recent years, there has been increasing focus on these events due to the devastating impact they have on agriculture, ecosystems and public health.
In Russia in the summer of 2010, a compound drought-heatwave event – and the associated wildfires – caused the death of nearly 55,000 people, the study notes.
The record-breaking Pacific north-west “heat dome” in 2021 triggered extreme drought conditions that caused “significant declines” in wheat yields, as well as in barley, canola and fruit production in British Columbia and Alberta, Canada, says the study.
Increasing events
To assess how CDHEs are changing, the researchers use daily reanalysis data to identify droughts and heatwaves events. (Reanalysis data combines past observations with climate models to create a historical climate record.) Then, using an algorithm, they analyse how these events overlap in both time and space.
The study covers the period from 1980 to 2023 and the world’s land surface, excluding polar regions where CDHEs are rare.
The research finds that the area of land affected by CDHEs has “increased substantially” since the early 2000s.
Heatwave-led events have been the main contributor to this increase, the study says, with their spatial extent rising 110% between 1980-2001 and 2002-23, compared to a 59% increase for drought-led events.
The map below shows the global distribution of CDHEs over 1980-2023. The charts show the percentage of the land surface affected by a heatwave-led CDHE (red) or a drought-led CDHE (yellow) in a given year (left) and relative increase in each CDHE type (right).
The study finds that CDHEs have occurred most frequently in northern South America, the southern US, eastern Europe, central Africa and south Asia.
Threshold passed
The authors explain that the increase in heatwave-led CDHEs is related to rising global temperatures, but that this does not tell the whole story.
In the earlier 22-year period of 1980-2001, the study finds that the spatial extent of heatwave-led CDHEs rises by 1.6% per 1C of global temperature rise. For the more-recent period of 2022-23, this increases “nearly eightfold” to 13.1%.
The change suggests that the rapid increase in the heatwave-led CDHEs occurred after the global average temperature “surpasse[d] a certain temperature threshold”, the paper says.
This threshold is an absolute global average temperature of 14.3C, the authors estimate (based on an 11-year average), which the world passed around the year 2000.
Investigating the recent surge in heatwave-leading CDHEs further, the researchers find a “regime shift” in land-atmosphere dynamics “toward a persistently intensified state after the late 1990s”.
In other words, the way that drier soils drive higher surface temperatures, and vice versa, is becoming stronger, resulting in more heatwave-led compound events.
Daily data
The research has some advantages over other previous studies, Yeh says. For instance, the new work uses daily estimations of CDHEs, compared to monthly data used in past research. This is “important for capturing the detailed occurrence” of these events, says Yeh.
He adds that another advantage of their study is that it distinguishes the sequence of droughts and heatwaves, which allows them to “better understand the differences” in the characteristics of CDHEs.
Dr Meryem Tanarhte is a climate scientist at the University Hassan II in Morocco, and Dr Ruth Cerezo Mota is a climatologist and a researcher at the National Autonomous University of Mexico. Both scientists, who were not involved in the study, agree that the daily estimations give a clearer picture of how CDHEs are changing.
Cerezo-Mota adds that another major contribution of the study is its global focus. She tells Carbon Brief that in some regions, such as Mexico and Africa, there is a lack of studies on CDHEs:
“Not because the events do not occur, but perhaps because [these regions] do not have all the data or the expertise to do so.”
However, she notes that the reanalysis data used by the study does have limitations with how it represents rainfall in some parts of the world.
Compound impacts
The study notes that if CDHEs continue to intensify – particularly events where heatwaves are the precursors – they could drive declining crop productivity, increased wildfire frequency and severe public health crises.
These impacts could be “much more rapid and severe as global warming continues”, Yeh tells Carbon Brief.
Tanarhte notes that these events can be forecasted up to 10 days ahead in many regions. Furthermore, she says, the strongest impacts can be prevented “through preparedness and adaptation”, including through “water management for agriculture, heatwave mitigation measures and wildfire mitigation”.
The study recommends reassessing current risk management strategies for these compound events. It also suggests incorporating the sequences of drought and heatwaves into compound event analysis frameworks “to enhance climate risk management”.
Cerezo-Mota says that it is clear that the world needs to be prepared for the increased occurrence of these events. She tells Carbon Brief:
“These [risk assessments and strategies] need to be carried out at the local level to understand the complexities of each region.”
The post Heatwaves driving recent ‘surge’ in compound drought and heat extremes appeared first on Carbon Brief.
Heatwaves driving recent ‘surge’ in compound drought and heat extremes
Greenhouse Gases
DeBriefed 6 March 2026: Iran energy crisis | China climate plan | Bristol’s ‘pioneering’ wind turbine
Welcome to Carbon Brief’s DeBriefed.
An essential guide to the week’s key developments relating to climate change.
This week
Energy crisis
ENERGY SPIKE: US-Israeli attacks on Iran and subsequent counterattacks across the Middle East have sent energy prices “soaring”, according to Reuters. The newswire reported that the region “accounts for just under a third of global oil production and almost a fifth of gas”. The Guardian noted that shipping traffic through the strait of Hormuz, which normally ferries 20% of the world’s oil, “all but ground to a halt”. The Financial Times reported that attacks by Iran on Middle East energy facilities – notably in Qatar – triggered the “biggest rise in gas prices since Russia’s full-scale invasion of Ukraine”.
‘RISK’ AND ‘BENEFITS’: Bloomberg reported on increases in diesel prices in Europe and the US, speculating that rising fuel costs could be “a risk for president Donald Trump”. US gas producers are “poised to benefit from the big disruption in global supply”, according to CNBC. Indian government sources told the Economic Times that Russia is prepared to “fulfil India’s energy demands”. China Daily quoted experts who said “China’s energy security remains fundamentally unshaken”, thanks to “emergency stockpiles and a wide array of import channels”.
‘ESSENTIAL’ RENEWABLES: Energy analysts said governments should cut their fossil-fuel reliance by investing in renewables, “rather than just seeking non-Gulf oil and gas suppliers”, reported Climate Home News. This message was echoed by UK business secretary Peter Kyle, who said “doubling down on renewables” was “essential” amid “regional instability”, according to the Daily Telegraph.
China’s climate plan
PEAK COAL?: China has set out its next “five-year plan” at the annual “two sessions” meeting of the National People’s Congress, including its climate strategy out to 2030, according to the Hong Kong-based South China Morning Post. The plan called for China to cut its carbon emissions per unit of gross domestic product (GDP) by 17% from 2026 to 2030, which “may allow for continued increase in emissions given the rate of GDP growth”, reported Reuters. The newswire added that the plan also had targets to reach peak coal in the next five years and replace 30m tonnes per year of coal with renewables.
ACTIVE YET PRUDENT: Bloomberg described the new plan as “cautious”, stating that it “frustrat[es] hopes for tighter policy that would drive the nation to peak carbon emissions well before president Xi Jinping’s 2030 deadline”. Carbon Brief has just published an in-depth analysis of the plan. China Daily reported that the strategy “highlights measures to promote the climate targets of peaking carbon dioxide emissions before 2030”, which China said it would work towards “actively yet prudently”.
Around the world
- EU RULES: The European Commission has proposed new “made in Europe” rules to support domestic low-carbon industries, “against fierce competition from China”, reported Agence France-Presse. Carbon Brief examined what it means for climate efforts.
- RECORD HEAT: The US National