China’s carbon dioxide (CO2) emissions were unchanged from a year earlier in the third quarter of 2025, extending a flat or falling trend that started in March 2024.
The rapid adoption of electric vehicles (EVs) saw CO2 emissions from transport fuel drop by 5% year-on-year, while there were also declines from cement and steel production.
The new analysis for Carbon Brief shows that while emissions from the power sector were flat year-on-year, a big rise in the chemical industry’s CO2 output offset reductions elsewhere.
Other key findings include:
- Power-sector CO2 emissions were flat in the third quarter, even as electricity demand growth accelerated to 6.1%, from 3.7% in the first half of the year.
- This was achieved thanks to electricity generation from solar growing by 46% and wind by 11% year-on-year in the third quarter of 2025.
- In the first nine months of the year, China completed 240 gigawatts (GW) of solar and 61GW of wind capacity, putting it on track for a new renewable record in 2025.
- Oil demand and emissions in the transport sector fell by 5% in the third quarter, but grew elsewhere by 10%, as the production of plastics and other chemicals surged.
After the first three quarters of the year, China’s CO2 emissions in 2025 are now finely balanced between a small fall or rise, depending on what happens in the last quarter.
A drop in the full-year total became much more likely after September, which recorded an approximately 3% drop in emissions year-on-year.
Electricity demand – and associated emissions – have tended to grow fastest during the summer months, due to rapidly rising demand for air conditioning amid hotter summers.
If this pattern repeats, then China’s CO2 emissions will record a fall for the full year of 2025.
While an emission increase or decrease of 1% or less might not make a huge difference in an objective sense, it has heightened symbolic meaning, as China’s policymakers have left room for emissions to increase for several more years, leaving the timing of the peak open.
Either way, China is set to miss its target to cut carbon intensity – the CO2 emissions per unit of GDP – from 2020 to 2025, meaning steeper reductions are needed to hit the county’s 2030 goal.
Finely balanced emissions
China’s CO2 emissions have now been flat or falling for 18 months, starting in March 2024. This trend continued in the third quarter of 2025, when emissions were unchanged year-on-year.
This picture is finely balanced, however, with contrasting trends in different sectors of the economy underlying the ongoing plateau in CO2 emissions, shown in the figure below.
Emissions from the production of cement and other building materials fell by 7% in the third quarter of 2025, while emissions from the metals industry fell 1%. This is due to the ongoing real-estate contraction, as the construction sector uses most of the country’s steel and cement output.
Emission reductions from steel production continued to lag the reductions in output, which fell 3%. This is because the fall in demand was absorbed by the lower-carbon electric-arc steelmakers, whereas carbon-intensive coal-based steel production was less affected.
China has struggled to increase the share of electric-arc steelmaking despite targets, due to the large capacity base and entrenched position of coal-based steelmaking crowding out the lower-emission producers.
Power-sector emissions were unchanged year-on-year in the third quarter, as strong growth from solar and wind generation, along with small increases from nuclear and hydro, nearly matched a rapid rise in demand.
Emissions from transport fell by 5% over the period, but oil consumption in other sectors grew by 10%, driven by chemical industry expansion. This resulted in a 2% rise in oil consumption overall.
Gas demand and emissions grew by 3% overall in the three-month period, with consumption in the power sector up by 9% and by 2% in other sectors.
The figure below shows how emissions in each of these sectors has changed in the first nine months of 2025, for example, power-sector CO2 output is down 2% in the year so far.
The rapid recent growth of CO2 emissions in the chemical industry is a continuation of recent trends and, as such, the sector’s coal and oil use have both surged in 2025 to date.
The outlook for emissions in the final quarter of 2025 – and the year as a whole – depends on whether further declines in cement, transport and power are enough to offset increases elsewhere.
Solar and wind growth keep power sector emissions flat
In the power sector, China’s dominant source of CO2, emissions remained flat in the third quarter even as electricity demand grew strongly.
Electricity generation from solar and wind grew by 30%, with solar up 46% and wind power generation increasing 11%. With small increases from nuclear and hydropower, non-fossil power sources covered almost 90% of the increase in demand, even as demand growth accelerated to 6.1% in the third quarter, up from 3.7% in the first half of the year.
This is illustrated in the figure below, where the columns show the change in generation by each source of non-fossil power every quarter and the line shows the increase in electricity demand.
Despite a small increase in electricity generation from fossil fuels to cover the remaining 10% of demand growth, power sector emissions stayed unchanged in the third quarter of 2025.
This is because the average thermal efficiency of coal power – the amount of fuel per unit of output – improved slightly, while the share of gas-fired generation increased at the expense of coal.
The figure above shows that the growth in clean-power sources has been covering all or nearly all of the rise in electricity demand in recent quarters, but once again there is a fine balance.
As such, the outlook for the final quarter of 2025 and for power-sector emissions over the years ahead depends on the relative strength of rising demand and clean-power output.
From 2021 to 2025, there has been a marked seasonal pattern in electricity demand growth, with more rapid rises in the summer peak “cooling season”, from June to August.
In these months, residential electricity consumption grew by a striking 13% per year, compared with just 6% during other parts of the year. Industry and service-sector consumption also grew faster in the summer months.
As a result, growth in total power demand has been significantly faster, at 6.8% during the summer months, compared with 4.6% in the rest of the year.
This is due to both increased prevalence of air conditioning and to hotter summers, with the average number of “cooling-degree days” increasing by one third from 2015–16 to 2024–25, as shown in the figure below.
This seasonal pattern implies that electricity consumption might ease off in the final quarter of 2025, which would set a lower bar for clean-power growth to meet or exceed rising demand.
On the generation side, the first nine months of 2025 has seen China adding 240GW of solar and 61GW of wind power capacity. While the rate of new installations has slowed down sharply since May, China is still on track for a new record for the whole year as developers rush to complete projects included in the 14th five-year plan, which finishes at the end of 2025.
China had 181GW of wind and 234GW of utility-scale solar under construction in early 2025, according to the Global Energy Monitor. After the capacity additions in the first nine months of 2025, this leaves 120GW of wind and 123GW of utility-scale solar under construction, much of which is likely to be commissioned this year.
The rate of new wind and solar additions in 2025 to date is shown in the figure below, alongside comparable figures for each year since 2020.
The slowdown in installations in recent months is due to a new pricing system that requires developers of new solar and wind-power plants to secure contracts directly with buyers, instead of being guaranteed the benchmark price for coal power, which was the case until May.
The change in pricing led to a major rush to complete projects faster than originally scheduled, seen in the May 2025 bump in the figure above.
This left few projects to complete in the third quarter, meaning that the current slow pace in installations does not yet reflect the capacity growth that can be expected under the new system.
China’s power-sector emissions have been falling slowly since early 2024, due to the rapid growth of solar and wind power generation. The unprecedentedly large capacity additions have enabled non-fossil power generation to cover electricity demand growth, but only barely.
Any sustained slowdown in solar and wind deployment would mean that power-sector emissions would begin to creep up again, unless electricity demand slows sharply. This is not expected – the State Grid has forecast 5.6% annual demand growth until 2030, compared with 6.1% from 2019 to 2025.
One indicator pointing towards robust ongoing solar capacity growth is that the production of solar cells has continued at or above 2024 levels – even after the slowdown in installations in recent months – growing 8% year-on-year in the third quarter.
The amount of new solar-cell capacity produced in Chinese factories each month, minus exports, has tended to predict new domestic solar installations, with a lag.
However, the outlook for wind and solar growth in China is clouded by a large gap between industry and government expectations for the sector.
The China Wind Energy Association is targeting at least 120GW of wind-power capacity added per year in the next five years, while the China Photovoltaic Industry Association projects 235-270GW of solar added in 2026, rising to 280-340GW in 2030.
In contrast, president Xi Jinping recently announced that China would “strive to” bring the county’s installed solar and wind capacity to 3,600GW by 2035. This implies just 200GW of capacity added per year over the next decade, extending a target set earlier for 2025-27.
The pace of solar and wind deployment under the new pricing system depends heavily on the implementation of the national-level rules at the provincial level, particularly the choice of minimum pricing. Most provinces are yet to finalise their rules and only six provinces have published results from auctions for “contracts for difference” – the key policy instrument under the new rules – so far, with nine more auctions underway.
Meanwhile, the additions of new coal and gas-fired power capacity have accelerated, as the projects started after the government loosened permitting and started to promote coal-fired power projects in 2020 are starting to complete.
The result has been that the utilisation of coal-fired power capacity – the share of hours during which each unit is in operation – has begun to fall significantly, as power generation from coal has declined since April 2024. Utilisation peaked at 54% in the 12 months to February 2024 and fell to 51% in the 12 months to September 2025.
Another 230GW of coal-fired power capacity is under construction. If power generation from coal continues to stay stagnant and if all of this new capacity is added to the system, then utilisation would fall to 43%. This could prompt a rethink of the government’s promotion of coal-fired power projects.
Chemical industry’s runaway growth pushes up oil demand
In the oil sector, there are once again competing factors at work. China’s transport oil consumption has been falling since April 2024, driven in large part by the rapid adoption of EVs.
However, total oil consumption still increased 2% in the year to September, as a 4% fall in transport fuel use was more than offset by an 8% rise elsewhere, dominated by industrial demand.
Consumption fell by 4-5% across each of the three main transport fuels: diesel, used in trucks and other heavy vehicles; petrol, mainly used in cars; and jet fuel.
The reduction in petrol consumption accelerated in October, falling 8% year-on-year, erasing the usual spike seen at this time of year related to the week-long national holiday.
Within industry, the production of primary plastics grew 12% year-on-year in the first three quarters of 2025, while the production of chemical fibres grew by 11% and the production of ethylene by 7%. The increase in the output of these products accounts for the entire increase in oil use outside the transportation sector.
These sharp increases in chemical production are shown in the figure below.
One clear driver of the growth in plastics production is import substitution – replacing equivalent products imported from overseas – as well as growing exports.
China is still a net importer of primary plastics by value in 2025 so far, but only just. The value of imports fell by 8% while the value of exports increased by 8% in the first nine months of the year.
The five-year plan for 2021-25 targeted an increase in chemicals production to reduce the imports of key raw materials to less than 40% of demand, with projects launched to meet this target coming online this year.
More recently, the government has encouraged oil refineries to shift from the production of transport fuels to chemicals, in order to adapt to falling demand for oil in transportation. It set a target for the petrochemical and chemical sector’s economic output to grow by more than 5% per year in 2025-26.
The US-China tariff tit-for-tat has added further momentum to import substitution. The US has been China’s largest source of imports of polyethylene – the most widely used plastic in the world – since 2023, but China has expanded its domestic production in response to the trade spat.
Still, the change in China’s net exports of plastics cannot account for more than a fraction of the increase in output volume, however, as estimated based on reported polymer prices. This indicates that growing domestic demand is a major driver of the rapid growth in plastics production.
Packaging is the largest use of plastics in China, with the booming online retail and food delivery industry driving rapid growth.
Express parcel volumes grew 21% in 2024 and 17% through September 2025. The value of the single-use plastic tableware market averaged 21% annual growth from 2017 to 2022 and the revenue of the online food delivery industry is projected to grow 11% in 2025.
The government is taking measures to curb single-use plastics, but these would need to be intensified to fully counteract the growth rates seen in food deliveries and other drivers. The demand for high-performance materials in new manufacturing industries is also a significant driver.
Will China’s emissions peak early or rebound?
After the third quarter of 2025, it is clear that the plateau or slow decline of China’s CO2 emissions that started in early 2024 continues.
Whether emissions increased or decreased marginally in the first three quarters of the year is too close to call, given the uncertainties involved, but a drop in full-year emissions became much more likely after September, which recorded an approximately 3% drop in emissions year-on-year.
Still, either a small increase or decrease in the calendar year of 2025 remains possible and will be ultimately be decided by developments in the fourth quarter.
China’s emissions from fossil-fuel use are highly likely to increase this year, with the increase of coal and oil use in the chemical industry outweighing the reductions in emissions from the power, metals, building materials and transportation sectors. This will be balanced out by a fall in cement process emissions.
What is already clear is that the 2025 carbon-intensity target will be missed, as it would have required absolute emission reductions of 4% or more this year, after slow progress during the earlier years of the five-year period.
This also means that the carbon-intensity target in the next 15th five-year plan for 2026-2030 would need to be more ambitious than the one that China missed during the current period, to close the shortfall to the country’s 2030 intensity target.
China targeted an 18% reduction in 2021-25, but will only have achieved around 12% by the end of this year. It would then need a reduction of around 22-24% in the next five years to achieve its headline climate commitment for 2030, a 65% carbon-intensity reduction on 2005 levels.
Whether emissions fall this year – or not – has high symbolic significance. Having committed to peaking emissions “before 2030”, China’s policymakers have left their specific peaking year open.
China’s new greenhouse gas emission target for 2035, announced by Xi in September, was set as a reduction of 7-10% below an undefined “peak level”, making it clear that policymakers are still planning for – or at least leaving the door open to – a late peak, only just before 2030.
Setting this target from “peak levels” means that the timing and level of China’s emissions peak affects not only the path of its CO2 output in the next few years, but also the size of cuts needed to meet the 2035 goal – and presumably also subsequent targets thereafter.
The target of reducing emissions from “peak levels” could also create an incentive for provinces to increase emissions before the expected peak year, known as “storming the peak” in Chinese.
This incentive could be curbed by the creation of the “dual control” system for carbon intensity and total carbon emissions. The Central Committee of the Communist Party recently reiterated that this should happen during the next five-year period, but the specific timeline is an open question.
If the system is not operational from 2026, with annual carbon intensity and possibly absolute carbon emission targets allocated to provinces, then that could further allow for and incentivise emissions increases in the short term.
At the same time, China has made commitments to peak emissions before 2030, reduce coal consumption gradually during the 2026-30 period and to reduce carbon emissions per unit of GDP by more than 65% by 2030, from 2005 levels.
Meeting the last target – which China has made internationally as part of its 2030 Paris pledge – would require, in practice, that emissions in 2030 are limited at or below their 2024 level, given progress to date and expected GDP growth rates.
Realising these targets, in turn, would require clean-energy growth rates well above the minimum of 200GW of new wind and solar capacity per year, set by China’s 2035 pledge – unless the rate of energy-demand growth sees a sharp and unexpected slowdown.
Beating these minimum clean-energy growth rates would also be necessary if policymakers want to maintain the tailwind that these sectors have provided to China’s economy in recent years.
About the data
Data for the analysis was compiled from the National Bureau of Statistics of China, National Energy Administration of China, China Electricity Council and China Customs official data releases, from WIND Information, an industry data provider, and Sinopec, China’s largest oil refiner.
Wind and solar output, and thermal power breakdown by fuel, was calculated by multiplying power generating capacity at the end of each month by monthly utilisation, using data reported by China Electricity Council through Wind Financial Terminal.
Total generation from thermal power and generation from hydropower and nuclear power was taken from National Bureau of Statistics monthly releases.
Monthly utilisation data was not available for biomass, so the annual average of 52% for 2023 was applied. Power sector coal consumption was estimated based on power generation from coal and the average heat rate of coal-fired power plants during each month, to avoid the issue with official coal consumption numbers affecting recent data.
CO2 emissions estimates are based on National Bureau of Statistics default calorific values of fuels and emissions factors from China’s latest national greenhouse gas emissions inventory, for the year 2021. Cement CO2 emissions factor is based on annual estimates up to 2024.
For oil consumption, apparent consumption of transport fuels (diesel, petrol and jet fuel) is taken from Sinopec quarterly results, with monthly disaggregation based on production minus net exports. The consumption of these three fuels is labeled as oil product consumption in transportation, as it is the dominant sector for their use.
Apparent consumption of other oil products is calculated from refinery throughput, with the production of the transport fuels and the net exports of other oil products subtracted. Fossil-fuel consumption includes non-energy use, as most products are short-lived and incineration is the dominant disposal method.
The post Analysis: China’s CO2 emissions have now been flat or falling for 18 months appeared first on Carbon Brief.
Analysis: China’s CO2 emissions have now been flat or falling for 18 months
In 2026, the dangers of fossil fuel dependence have been laid bare like never before. The illegal invasion of Iran has brought pain and destruction to millions across the Middle East and triggered a global energy crisis impacting us all. Communities in the Pacific have been hit especially hard by rising fuel prices, and Australians have seen their cost-of-living woes deepen.
Such moments of crisis and upheaval can lead to positive transformation. But only when leaders act with courage and foresight.
There is no clearer statement of a government’s plans and priorities for the nation than its budget — how it plans to raise money, and what services, communities, and industries it will invest in.
As we count down the days to the 2026-27 Federal Budget, will the Albanese Government deliver a budget for our times? One that starts breaking the shackles of fossil fuels, accelerates the shift to clean energy, protects nature, and sees us work together with other countries towards a safer future for all? Or one that doubles down on coal and gas, locks in more climate chaos, and keeps us beholden to the whims of tyrants and billionaires.
Here’s what we think the moment demands, and what we’ll be looking out for when Treasurer Jim Chalmers steps up to the dispatch box on 12 May.
1. Stop fuelling the fire
2. Make big polluters pay
3. Support everyone to be part of the solution
4. Build the industries of the future
5. Build community resilience
6. Be a better neighbour
7. Protect nature
1. Stop fuelling the fire
In mid-April, Pacific governments and civil society met to redouble their efforts towards a Fossil Fuel Free Pacific. Moving beyond coal, oil and gas is fundamental to limiting warming to 1.5°C — a survival line for vulnerable communities and ecosystems. And as our Head of Pacific, Shiva Gounden, explained, it is “also a path of liberation that frees us from expensive, extractive and polluting fossil fuel imports and uplifts our communities”.
Pacific countries are at the forefront of growing global momentum towards a just transition away from fossil fuels, and it is way past time for Australia to get with the program. It is no longer a question of whether fossil fuel extraction will end, but whether that end will be appropriately managed and see communities supported through the transition, or whether it will be chaotic and disruptive.
So will this budget support the transition away from fossil fuels, or will it continue to prop up coal and gas?
When it comes to sensible moves the government can make right now, one stands out as a genuine low hanging fruit. Mining companies get a full rebate of the excise (or tax) that the rest of us pay on diesel fuel. This lowers their operating costs and acts as a large, ongoing subsidy on fossil fuel production — to the tune of $11 billion a year!
Greenpeace has long called for coal and gas companies to be removed from this outdated scheme, and for the billions in savings to be used to support the clean energy transition and to assist communities with adapting to the impacts of climate change. Will we see the government finally make this long overdue change, or will it once again cave to the fossil fuel lobby?
2. Make big polluters pay
While our communities continue to suffer the escalating costs of climate-fuelled disasters, our Government continues to support a massive expansion of Australia’s export gas industry. Gas is a dangerous fossil fuel, with every tonne of Australian gas adding to the global heating that endangers us all.
Moreover, companies like Santos and Woodside pay very little tax for the privilege of digging up and selling Australians’ natural endowment of fossil gas. Remarkably, the Government currently raises more tax from beer than from the Petroleum Resource Rent Tax (PRRT) — the main tax on gas profits.
Momentum has been building to replace or supplement the PRRT with a 25% tax on gas exports. This could raise up to $17 billion a year — funds that, like savings from removing the diesel tax rebate for coal and gas companies, could be spent on supporting the clean energy transition and assisting communities with adapting to worsening fires, floods, heatwaves and other impacts of climate change.
As politicians arrive in Canberra for budget week, they will be confronted by billboards calling for a fair tax on gas exports. The push now has the support of dozens of organisations and a growing number of politicians. Let’s hope the Treasurer seizes this rare window for reform.
3. Support everyone to be part of the solution
As the price of petrol and diesel rises, electric vehicles (EVs) are helping people cut fuel use and save money. However, while EV sales have jumped since the invasion of Iran sent fuel prices rising, they still only make up a fraction of total new car sales. This budget should help more Australians switch to electric vehicles and, even more importantly, enable more Australians to get around by bike, on foot, and on public transport. This means maintaining the EV discount, investing in public and active transport, and removing tax breaks for fuel-hungry utes and vans.
Millions of Australians already enjoy the cost-saving benefits of rooftop solar, batteries, and getting off gas. This budget should enable more households, and in particular those on lower incomes, to access these benefits. This means maintaining the Cheaper Home Batteries Program, and building on the Household Energy Upgrades Fund.
4. Build the industries of the future
If we’re to transition away from fossil fuels, we need to be building the clean industries of the future.
No state is more pivotal to Australia’s energy and industrial transformation than Western Australia. The state has unrivaled potential for renewable energy development and for replacing fossil fuel exports with clean exports like green iron. Such industries offer Western Australia the promise of a vibrant economic future, and for Australia to play an outsized positive role in the world’s efforts to reduce emissions.
However, realising this potential will require focussed support from the Federal Government. Among other measures, Greenpeace has recommended establishing the Australasian Green Iron Corporation as a joint venture between the Australian and Western Australian governments, a key trading partner, a major iron ore miner and steel makers. This would unite these central players around the complex task of building a large-scale green iron industry, and unleash Western Australia’s potential as a green industrial powerhouse.
5. Build community resilience
Believe it or not, our Government continues to spend far more on subsidising fossil fuel production — and on clearing up after climate-fuelled disasters — than it does on helping communities and industries reduce disaster costs through practical, proven methods for building their resilience.
Last year, the Government estimated that the cost of recovery from disasters like the devastating 2022 east coast floods on 2019-20 fires will rise to $13.5 billion. For contrast, the Government’s Disaster Ready Fund – the main national source of funding for disaster resilience – invests just $200 million a year in grants to support disaster preparedness and resilience building. This is despite the Government’s own National Emergency Management Agency (NEMA) estimating that for every dollar spent on disaster risk reduction, there is a $9.60 return on investment.
By redirecting funds currently spent on subsidising fossil fuel production, the Government can both stop incentivising climate destruction in the first place, and ensure that Australian communities and industries are better protected from worsening climate extremes.
No communities have more to lose from climate damage, or carry more knowledge of practical solutions, than Aboriginal and Torres Strait Islander peoples. The budget should include a dedicated First Nations climate adaptation fund, ensuring First Nations communities can develop solutions on their own terms, and access the support they need with adapting to extreme heat, coastal erosion and other escalating challenges.
6. Be a better neighbour
The global response to climate change depends on the adequate flow of support from developed economies like Australia to lower income nations with shifting to clean energy, adapting to the impacts of climate change, and addressing loss and damage.
Such support is vital to building trust and cooperation, reducing global emissions, and supporting regional and global security by enabling countries to transition away from fossil fuels and build greater resilience.
Despite its central leadership role in this year’s global climate negotiations, our Government is yet to announce its contribution to international climate finance for 2025-2030. Greenpeace recommends a commitment of $11 billion for this five year period, which is aligned with the global goal under the Paris Agreement to triple international climate finance from current levels.
This new commitment should include additional funding to address loss and damage from climate change and a substantial contribution to the Pacific Resilience Facility, ensuring support is accessible to countries and communities that need it most. It should also see Australia get firmly behind the vision of a Fossil Fuel Free Pacific.
7. Protect nature
There is no safe planet without protection of the ecosystems and biodiversity that sustain us and regulate our climate.
Last year the Parliament passed important and long overdue reforms to our national environment laws to ensure better protection for our forests and other critical ecosystems. However, the Government will need to provide sufficient funding to ensure the effective implementation of these reforms.
Greenpeace has recommended $500 million over four years to establish the National Environment Agency — the body responsible for enforcing and monitoring the new laws — and a further $50 million to Environment Information Australia for providing critical information and tools.
Further resourcing will also be required to fulfil the crucial goal of fully protecting 30% of Australian land and seas by 2030. This should include $1 billion towards ending deforestation by enabling farmers and loggers to retool away from destructive practices, $2 billion a year for restoring degraded lands, $5 billion for purchasing and creating new protected areas, and $200 million for expanding domestic and international marine protected areas.
Conclusion
This is not the first time that conflict overseas has triggered an energy crisis, or that a budget has been preceded by a summer of extreme weather disasters, highlighting the urgent need to phase out fossil fuels. What’s different in 2026 is the availability of solutions. Renewable energy is now cheaper and more accessible than ever before. Global momentum is firmly behind the transition away from fossil fuels. The Albanese Government, with its overwhelming majority, has the chance to set our nation up for the future, or keep us stranded in the past. Let’s hope it makes some smart choices.
The 2026 budget test: Will Australia break free from fossil fuels?
Anne Jellema is Executive Director of 350.org.
The war on Iran and Lebanon is a deeply unjust and devastating conflict, killing civilians at home, destroying lives, and at the same time sending shockwaves through the global economy. We, at 350.org, have calculated, drawing on price forecasts from the International Monetary Fund (IMF) and Goldman Sachs, just how much that volatility is costing us.
Even under the IMF’s baseline scenario – a de facto “best case” scenario with a near-term end to the war and related supply chain disruptions – oil and gas price spikes are projected to cost households and businesses globally more than $600 billion by the end of the year. Under the IMF’s “adverse scenario”, with prolonged conflict and sustained price pressures, we estimate those additional costs could exceed $1 trillion, even after accounting for reduced demand.
Which is why we urgently need a power shift. Governments are under growing pressure to respond to rising fuel and food costs and deepening energy poverty. And it’s becoming clearer to both voters and elected officials that fossil dependence is not only expensive and risky, but unnecessary.
People who can are voting with their wallets: sales of solar panels and electric vehicles are increasing sharply in many countries. But the working people who have nothing to spare, ironically, are the ones stuck with using oil and gas that is either exorbitantly expensive or simply impossible to get.
Drain on households and economies
In India, street food vendors can’t get cooking gas and in the Philippines, fishermen can’t afford to take their boats to sea. A quarter of British people say that rising energy tariffs will leave them completely unable to pay their bills. This is the moment for a global push to bring abundant and affordable clean energy to all.
In April, we released Out of Pocket, our new research report on how fossil fuels are draining households and economies. We were surprised by the scale of what we found. For decades, governments have reassured people that energy price spikes are unfortunate but unavoidable – the result of distant conflicts, market forces or geopolitical shocks beyond anyone’s control. But the numbers tell a different story.
-
Santa Marta: Ministers grapple with practicalities of fossil fuel phase-out
Around 60 governments that want to make progress on transitioning away from coal, oil and gas are meeting in Colombia to work out how they can do it an equitable way -
Why the transition beyond fossil fuels depends on cities and collective action
Cities will help identify concrete pathways for an equitable shift to clean energy at the Santa Marta conference, with C40 members aiming to halve their fossil fuel use by 2030
What we are living through today is not an energy crisis. It is a fossil fuel crisis. In just the first 50 days of the Middle East conflict, soaring oil and gas prices have siphoned an estimated $158 billion–$166 billion from households and businesses worldwide. That is money extracted directly from people’s pockets and transferred, almost instantly, into fossil fuel company balance sheets. And this figure only captures the immediate impact of price spikes, not the permanent economic drain of fossil dependence. Fossil fuels don’t just cost us once, they cost us over and over again.
First, through our bills. Every time there is a war, an embargo or a supply disruption, fossil fuel prices surge. For ordinary people, this means higher costs for energy, transport and food. Many Global South countries have little or no fiscal space to buffer the shock; instead, workers and families pay the price.
Second, through our taxes. Governments around the world continue to pour vast sums of public money into fossil fuel subsidies. These are often justified as a way to protect the most vulnerable at the petrol pump or in their homes. But in reality, the benefits are overwhelmingly captured by wealthier households and corporations. The poorest 20% receive just a fraction of this support, while public finances are drained.
Third, through climate impacts. New research across more than 24,000 global locations gives a granular account of the true costs of extreme heat, sea level rise and falling agricultural yields. Using this data to update IMF modelling of the social cost of carbon, we found that fossil fuel impacts on health and livelihoods amount to over $9 trillion a year. This is the biggest subsidy of all, because these massive and mounting costs are not charged to Big Oil – they are paid for by governments and households, with the poorest shouldering the lion’s share.
Massive transfer of wealth to fossil fuel industry
Adding up direct subsidies, tax breaks and the unpaid bill for climate damages, the total transfer of wealth from the public to the fossil fuel industry amounts to $12 trillion even in a “normal” year without a global oil shock. That’s more than 50% higher than the IMF has previously estimated, and equivalent to a staggering $23 million a minute.
The fossil fuel industry has become extraordinarily adept at profiting from instability. When conflict drives up prices, companies do not lose, they gain. In the current crisis, oil producers and commodity traders are on track to secure tens of billions of dollars in additional windfall profits, even as households face rising bills and governments struggle to manage the fallout.
Fossil fuel crisis offers chance to speed up energy transition, ministers say
This growing disconnect is impossible to ignore. Investors are advised to buy into fossil fuel firms precisely because of their ability to generate profits in times of crisis. Meanwhile, ordinary people are told to tighten their belts.
In 2026, unlike during the oil shocks of the 1970s, clean energy is no longer a distant alternative. Now, even more than when gas prices spiked due to Russia’s invasion of Ukraine in 2022, renewables are often the cheapest option available. Solar and wind can be deployed quickly, at scale, and without the volatility that defines fossil fuel markets.
How to transition from dirty to clean energy
The solutions are clear. Governments must implement permanent windfall taxes on fossil fuel companies to ensure that extraordinary profits generated during crises are redirected to support households. These revenues can be used to reduce energy bills, invest in public services, and accelerate the rollout of clean energy.
Second, we must shift subsidies away from fossil fuels and towards renewable solutions, particularly those that can be deployed quickly and equitably, such as rooftop and community solar. This is not just about cutting emissions. It is about building a more stable, fair and resilient energy system.
Finally, we need binding plans to phase out fossil fuels altogether, replacing them with homegrown renewable energy that can shield economies from future shocks. Because what the current crisis has made clear is this: as long as we remain dependent on fossil fuels, we remain vulnerable – to conflict, to price volatility and to the escalating impacts of climate change.
The true price of fossil fuels is no longer hidden. It is visible in rising bills, strained public finances and communities pushed to the brink. And it is being paid, every day, by ordinary people around the world.
It’s time for the great power shift.
Full details on the methodology used for this report are available here.
The Great Power Shift is a new campaign by 350.org global campaign to pressure governments to bring down energy bills for good by ending fossil fuel dependence and investing in clean, affordable energy for all
The post What fossil fuels really cost us in a world at war appeared first on Climate Home News.
Computer models that use artificial intelligence (AI) cannot forecast record-breaking weather as well as traditional climate models, according to a new study.
It is well established that AI climate models have surpassed traditional, physics-based climate models for some aspects of weather forecasting.
However, new research published in Science Advances finds that AI models still “underperform” in forecasting record-breaking extreme weather events.
The authors tested how well both AI and traditional weather models could simulate thousands of record-breaking hot, cold and windy events that were recorded in 2018 and 2020.
They find that AI models underestimate both the frequency and intensity of record-breaking events.
A study author tells Carbon Brief that the analysis is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
AI weather forecasts
Extreme weather events, such as floods, heatwaves and storms, drive hundreds of billions of dollars in damages every year through the destruction of cropland, impacts on infrastructure and the loss of human life.
Many governments have developed early warning systems to prepare the general public and mobilise disaster response teams for imminent extreme weather events. These systems have been shown to minimise damages and save lives.
For decades, scientists have used numerical weather prediction models to simulate the weather days, or weeks, in advance.
These models rely on a series of complex equations that reproduce processes in the atmosphere and ocean. The equations are rooted in fundamental laws of physics, based on decades of research by climate scientists. As a result, these models are referred to as “physics-based” models.
However, AI-based climate models are gaining popularity as an alternative for weather forecasting.
Instead of using physics, these models use a statistical approach. Scientists present AI models with a large batch of historical weather data, known as training data, which teaches the model to recognise patterns and make predictions.
To produce a new forecast, the AI model draws on this bank of knowledge and follows the patterns that it knows.
There are many advantages to AI weather forecasts. For example, they use less computing power than physics-based models, because they do not have to run thousands of mathematical equations.
Furthermore, many AI models have been found to perform better than traditional physics-based models at weather forecasts.
However, these models also have drawbacks.
Study author Prof Sebastian Engelke, a professor at the research institute for statistics and information science at the University of Geneva, tells Carbon Brief that AI models “depend strongly on the training data” and are “relatively constrained to the range of this dataset”.
In other words, AI models struggle to simulate brand new weather patterns, instead tending forecast events of a similar strength to those seen before. As a result, it is unclear whether AI models can simulate unprecedented, record-breaking extreme events that, by definition, have never been seen before.
Record-breaking extremes
Extreme weather events are becoming more intense and frequent as the climate warms. Record-shattering extremes – those that break existing records by large margins – are also becoming more regular.
For example, during a 2021 heatwave in north-western US and Canada, local temperature records were broken by up to 5C. According to one study, the heatwave would have been “impossible” without human-caused climate change.
The new study explores how accurately AI and physics-based models can forecast such record-breaking extremes.
First, the authors identified every heat, cold and wind event in 2018 and 2020 that broke a record previously set between 1979 and 2017. (They chose these years due to data availability.) The authors use ERA5 reanalysis data to identify these records.
This produced a large sample size of record-breaking events. For the year 2020, the authors identified around 160,000 heat, 33,000 cold and 53,000 wind records, spread across different seasons and world regions.
For their traditional, physics-based model, the authors selected the High RESolution forecast model from the Integrated Forecasting System of the European Centre for Medium-Range Weather Forecasts. This is “widely considered as the leading physics-based numerical weather prediction model”, according to the paper.
They also selected three “leading” AI weather models – the GraphCast model from Google Deepmind, Pangu-Weather developed by Huawei Cloud and the Fuxi model, developed by a team from Shanghai.
The authors then assessed how accurately each model could forecast the extremes observed in the year 2020.
Dr Zhongwei Zhang is the lead author on the study and a researcher at Karlsruhe Institute of Technology. He tells Carbon Brief that many AI weather forecast models were built for “general weather conditions”, as they use all historical weather data to train the models. Meanwhile, forecasting extremes is considered a “secondary task” by the models.
The authors explored a range of different “lead times” – in other words, how far into the future the model is forecasting. For example, a lead time of two days could mean the model uses the weather conditions at midnight on 1 January to simulate weather conditions at midnight on 3 January.
The plot below shows how accurately the models forecasted all extreme events (left) and heat extremes (right) under different lead times. This is measured using “root mean square error” – a metric of how accurate a model is, where a lower value indicates lower error and higher accuracy.
The chart on the left shows how two of the AI models (blue and green) performed better than the physics-based model (black) when forecasting all weather across the year 2020.
However, the chart on the right illustrates how the physics-based model (black) performed better than all three AI models (blue, red and green) when it came to forecasting heat extremes.
The authors note that the performance gap between AI and physics-based models is widest for lower lead times, indicating that AI models have greater difficulty making predictions in the near future.
They find similar results for cold and wind records.
In addition, the authors find that AI models generally “underpredict” temperature during heat records and “overpredict” during cold records.
The study finds that the larger the margin that the record is broken by, the less well the AI model predicts the intensity of the event.
‘Warning shot’
Study author Prof Erich Fischer is a climate scientist at ETH Zurich and a Carbon Brief contributing editor. He tells Carbon Brief that the result is “not unexpected”.
He adds that the analysis is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
The analysis, he continues, is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
AI models are likely to continue to improve, but scientists should “not yet” fully replace traditional forecasting models with AI ones, according to Fischer.
He explains that accurate forecasts are “most needed” in the runup to potential record-breaking extremes, because they are the trigger for early warning systems that help minimise damages caused by extreme weather.
Leonardo Olivetti is a PhD student at Uppsala University, who has published work on AI weather forecasting and was not involved in the study.
He tells Carbon Brief that “many other studies” have identified issues with using AI models for “extremes”, but this paper is novel for its specific focus on extremes.
Olivetti notes that AI models are already used alongside physics-based models at “some of the major weather forecasting centres around the world”. However, the study results suggest “caution against relying too heavily on these [AI] models”, he says.
Prof Martin Schultz, a professor in computational earth system science at the University of Cologne who was not involved in the study, tells Carbon Brief that the results of the analysis are “very interesting, but not too surprising”.
He adds that the study “justifies the continued use of classical numerical weather models in operational forecasts, in spite of their tremendous computational costs”.
Advances in forecasting
The field of AI weather forecasting is evolving rapidly.
Olivetti notes that the three AI models tested in the study are an “older generation” of AI models. In the last two years, newer “probabilistic” forecast models have emerged that “claim to better capture extremes”, he explains.
The three AI models used in the analysis are “deterministic”, meaning that they only simulate one possible future outcome.
In contrast, study author Engelke tells Carbon Brief that probabilistic models “create several possible future states of the weather” and are therefore more likely to capture record-breaking extremes.
Engelke says it is “important” to evaluate the newer generation of models for their ability to forecast weather extremes.
He adds that this paper has set out a “protocol” for testing the ability of AI models to predict unprecedented extreme events, which he hopes other researchers will go on to use.
The study says that another “promising direction” for future research is to develop models that combine aspects of traditional, physics-based weather forecasts with AI models.
Engelke says this approach would be “best of both worlds”, as it would combine the ability of physics-based models to simulate record-breaking weather with the computational efficiency of AI models.
Dr Kyle Hilburn, a research scientist at Colorado State University, notes that the study does not address extreme rainfall, which he says “presents challenges for both modelling and observing”. This, he says, is an “important” area for future research.
The post Traditional models still ‘outperform AI’ for extreme weather forecasts appeared first on Carbon Brief.
Traditional models still ‘outperform AI’ for extreme weather forecasts
-
Climate Change9 months ago
Guest post: Why China is still building new coal – and when it might stop
-
Greenhouse Gases9 months ago
Guest post: Why China is still building new coal – and when it might stop
-
Greenhouse Gases2 years ago嘉宾来稿：满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
-
Climate Change2 years ago
Bill Discounting Climate Change in Florida’s Energy Policy Awaits DeSantis’ Approval
-
Climate Change2 years ago嘉宾来稿：满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
-
Renewable Energy6 months agoSending Progressive Philanthropist George Soros to Prison?
-
Carbon Footprint2 years agoUS SEC’s Climate Disclosure Rules Spur Renewed Interest in Carbon Credits
-
Greenhouse Gases10 months ago
嘉宾来稿：探究火山喷发如何影响气候预测