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 reaffirmed climate stance 

TRUMP WITHDRAWS: A government spokesperson said China’s “resolve and actions to actively respond to climate change will remain unchanged” at a press conference on 21 January. Asked by the New York Times to respond to president Donald Trump withdrawing the US from the Paris Agreement again, foreign ministry spokesperson Guo Jiakun said China was “concerned” and that “China will work with all parties to…promote a global green and low-carbon transition for the shared future of humanity”, state-supporting Global Times reported. At the World Economic Forum in Davos, China’s vice premier Ding Xuexiang reiterated that the world needs to “jointly tackle global challenges”, including climate change and energy security, said the Hong Kong-based South China Morning Post (SCMP).

BYE BYE BIDEN: Before leaving the White House, outgoing US president Joe Biden urged his successor to “tackle China’s ‘overcapacity’ and dominance in clean-energy supply chains, calling it a competition the US ‘must win’”, SCMP reported. Jennifer Granholm, Biden’s energy secretary, wrote in the New York Times that “it is no secret China wants to dominate the global market” for electric vehicles (EV) under the headline: “China will be thrilled if Trump kills America’s green economy.” One of the Biden administration’s last moves was finalising rules that will “effectively bar nearly all Chinese cars and trucks” from the US, said Reuters. He also barred five Chinese solar companies – allegedly using forced labour in Xinjiang – from entering the US market, reported the New York Times. The move has led to criticism from China’s Ministry of Foreign Affairs, which denied the forced labour claims, said BJX News. BBC News reported that tariffs from the US, Canada and the EU could force China to turn to “emerging markets”, but as the new markets “don’t have the same levels of demand…that could impact Chinese businesses that are hoping to expand, in turn hitting suppliers of energy and raw materials”. A comment for Dialogue Earth by analysts at the Centre for Research on Energy and Clean Air (CREA) said emerging markets in the global south are already driving China’s export growth.

New UK, EU-China geopolitical situation

REEVES IN BEIJING: UK chancellor Rachel Reeves visited China between 10-13 January and “secured benefits worth up to £1bn for the UK economy”, reported the Guardian. According to a UK government document, both sides agreed to “deeper cooperation across areas such as financial services, trade, investment and the climate to support secure growth”, while also agreeing on “strengthening the existing UK-China clean energy partnership”. An unbylined comment piece in China’s state-supporting Global Times said that “China-UK relations have shown signs of warming up”. It added that Reeves responded that the UK would “make decisions in our national interest” when asked whether it would follow the US and EU in imposing tariffs on Chinese EVs. Meanwhile, Zheng Zeguang, the Chinese ambassador to the UK, called on both sides to “maintain the momentum and focus on cooperation” at an event in London attended by Carbon Brief.

EU-CHINA TENSIONS: Just before Reeves’ arrival, China had “concluded that the EU’s recent [anti-subsidies] investigations into Chinese enterprises…were ‘unfair and non-transparent’”, SCMP reported. However, Beijing did not confirm whether it would “take any retaliatory measures in light of the probe’s findings”, added the newspaper. Bloomberg reported that the EU was “set to warn” that the bloc is “facing stiffening pressure” from nations including China. China’s president Xi Jinping, nevertheless, told European Council president Antonio Costa that “China has always regarded Europe as an important pole in a multipolar world”, reported Xinhua. In her own Davos speech, European Commission president Ursula von der Leyen noted concerns over “a second China shock – because of state-sponsored over-capacity”, but said “we should…strive for mutual benefits in our conversation with China”.

Analysts debate China’s oil demand peak

OIL PEAKING?: As much as 10% of China’s oil-refining capacity could be closed in the next 10 years due to “an earlier-than-expected peak” in oil demand, Reuters reported. Chinese oil imports in 2024 fell 1.9% to 11.04m barrels per day, the “first annual decline in two decades outside of pandemic-induced falls”, another Reuters article said. A Financial Times “big read” – titled “Has China already reached peak oil?” – attributed the decline to China’s property crisis and rising electrification of transport. It quoted the head of oil giant Saudi Aramco claiming plastic and petrochemical demand could sustain demand going forward, but also quoted an International Energy Agency analyst saying the decline in transport oil use would outweigh this. The sale of petrol-powered cars in China “plunged” last year, as sales of all types of EVs rose more than 40%, according to the Associated Press.

COAL POWER-UP: China’s thermal power generation – largely coal – rose 1.5% in 2024 to 6,340 terawatt-hours (TWh), Reuters reported, “defying “expectations that coal generation was peaking”. However, the aggregate data mask a “very significant breakpoint”, it quoted CREA lead analyst Lauri Myllyvirta saying, as an 11% “spike” in coal-fired power growth in January and February was followed by a plateau from March to November. Total power consumption reached 9,852TWh, up 6.8% year-on-year, BJX News reported. On Twitter, David Fishman, senior manager at consultancy Lantau Group, said growth in power consumption in the past six months of 2024 “was considerably slower than in the [first] half of the year”.

RENEWABLE RECORDS: China has broken its “own records for new wind and solar power installations again” in 2024, reported Reuters. Solar capacity grew to nearly 890 gigawatts (GW), up 45% – or 277GW – year-on-year, Jiemian reported, while wind capacity grew 79GW to around about 520GW. The news outlet added that thermal power “is still the largest source of electricity” in China overall. To “keep pace with surging renewable generation”, China’s State Grid Corporation will spend 650bn yuan ($89bn) – a record amount – on upgrading the nation’s power infrastructure this year, Bloomberg said. It added that most of this would likely go to “ultra-high-voltage power lines” and “smaller networks linking rooftop solar panels”.

Annual environment conference

MEE CONFERENCE: China’s Ministry of Ecology and Environment (MEE) confirmed eight “key tasks” for 2025, including expanding the national carbon market and promoting “green, low-carbon and high-quality development”, at its annual work conference on 14-15 January, reported Shanghai-based media outlet the Paper. The ministry also announced that “approximately 80% of the nation’s crude steel production capacity has undergone either comprehensive ultra-low emission transformations or targeted upgrades in key segments of their production processes”, according to the Communist party-affiliated People’s Daily. At a separate press conference, MEE said it has approved environmental investments worth 980bn yuan ($133bn) in 2024, while pledging to “refine the conviction and sentencing standards for falsifying environmental assessments” within the legal system in China.

EMISSIONS ACCOUNTING: Meanwhile, China released its first “national database of emission factors” for “improving the accuracy” of greenhouse gas emission calculations, Science and Technology Daily reported. It also released the “first batch of carbon footprint accounting rules”, covering steel, cement, EV batteries and 12 other “industrial products”, said China Energy Network.

Spotlight

Q&A: How China became the world’s leading market for energy storage

China is the world’s largest market for energy storage, followed by the US and Europe, according to BloombergNEF. The storage industry has attracted investments worth hundreds of billions of yuan and rapidly developed in recent years.

However, rapid growth has caused other problems, such as “temporary structural overcapacity” and low utilisation.

In this issue, Carbon Brief explores how China has been driving the sector forwards and how it fits into the nation’s wider energy transition. The full article is available on Carbon Brief’s website.

Soaring battery deployment

China is experiencing a renewable energy boom, adding a massive 301 gigawatts (GW) of renewable capacity, including solar, wind and hydro, in 2023 alone – more than the total renewable generating capacity installed in most countries over all time.

However, the country’s power system still struggles to absorb all of the generation, making energy storage – which bridges temporal and geographical gaps between energy supply and demand – a key tool for the country to improve its renewable energy integration.

Pumped hydro storage is the most common utility-scale storage system and has a long history in China. As of 2023, pumped hydro storage surpassed 50GW, making up more than half of the country’s overall storage capacity.

The remaining half is comprised primarily of batteries and emerging technologies, such as compressed air and flywheels, as well as thermal energy.

These technologies, known as the “new type” energy storage in China, have seen rapid growth in recent years. Lithium-ion batteries dominate the “new type” sector.

The deployment of “new type” energy storage capacity almost quadrupled in 2023 in China, increasing to 31.4GW, up from just 8.7 GW in 2022, according to data from the National Energy Administration (NEA).

This means that China surpassed its target of reaching 30GW of the “new type” energy storage by 2025 two years earlier than planned. The goal had been set by the NEA and China’s top economic planner the National Development and Reform Commission, under the 14th “five year plan”.

(Read Carbon Brief’s Q&A: What does China’s 14th ‘five year plan’ mean for climate change?)

High deployment, low usage

To promote battery storage, China has implemented a number of policies, most notably the gradual rollout since 2017 of the “mandatory allocation of energy storage” policy (强制配储政策), which is also known as the “new energy plus storage” model (新能源+储能).

Under the mandate, which applies in dozens of provinces, renewable companies are required to include a certain amount of energy storage capacity alongside new solar and wind generation projects, with the storage allocation rate ranging between 5% to 20%.

Cheaper costs led by technology innovation have also helped the market’s increasing adoption of batteries, Sun Yongping, researcher of emissions trading and vice-dean of the Institute of State Governance at Huazhong University of Science and Technology, told Carbon Brief.

Despite its positive intentions, the mandatory storage policy has had unintended consequences. Notably, a significant portion of the installed storage capacity remains underutilised.

In regions covered by the State Grid – the government-owned operator that runs the majority of the country’s electricity transmission network – more than four-fifths of the storage systems operate less than 10% of the time, with many used only once every two days, according to a Bloomberg report.

Another challenge, according to Guo, is the additional project costs and lack of effective incentives, as many storage facilities were built or rented to fulfil government requirements, but went unused afterwards.

Both Guo and Sun argue that China needs a deeper level of electricity market pricing reforms to create incentives to use storage.

Guo said: “We still hope that each place deploys new energy storage according to its needs and understands its own situation instead of adopting a ‘one-size-fits-all’ approach.”

‘New driving force’ for economy

Earlier this year, the NEA named the energy storage sector as a “new driving force” for the country’s “new quality productive forces ” (NQPF).

(Read more on Carbon Brief’s Q&A: “What China’s push for ‘new quality productive forces’ means for climate action.”)

Regional governments also saw the economic opportunity in energy storage. Guangdong, for example, aimed to make energy storage a “strategic pillar industry” by 2025.

Meanwhile, Zhejiang, Anhui and Guangdong also have ambitious targets of installing local storage capacity of 3GW each by 2025, according to a recent tally by Greenpeace East Asia, based on government documents.

The booming market has attracted more than 100bn yuan ($14bn) since 2021.

But risks of market turmoil also exist. According to battery industrial information provider Gaogong Industrial Institute, last year China saw more than 70,000 newly registered companies in the sector, which indicated that the market – already seeing fierce competition – may now be undergoing an “overcapacity” period.

Guo said this period of “overcapacity”, however, is “temporary”. She adds:

“There exists a temporary structural overcapacity, as the current expansion of new type energy storage is outpacing the market needs.

“However, if the regional governments could provide more policy support for the application of storage projects, this ‘excess capacity’ due to insufficient market demand could be avoided.”

This Spotlight was written by freelance climate journalist Yuan Ye for Carbon Brief.

Watch, read, listen

CARBON ‘SPIRIT’: Zheng Shanjie, head of China’s top planner National Development and Reform Commission (NDRC), wrote a comment for People’s Daily about the “spirit” of the Central Committee of the Communist party, including insisting on the “dual-carbon” goals.

PARIS ‘THREATS’: Caixin published a speech by former Chinese central bank governor Zhou Xiaochuan arguing that the Paris Agreement faces “mounting threats”, with funding for climate change initiatives “remain[ing] critically insufficient”.

CBAM SOLUTION: A comment for the 21st Century Business Herald by Lin Boqiang, dean at the China Institute for Studies in Energy Policy of Xiamen University, discussed developing China’s carbon market as a response to the EU’s carbon border tariff (CBAM).

US-CHINA CLIMATE: US thinktank the Brookings Institution released a video recording of a panel discussion on the “evolving dynamics of US-China relations on climate change and green technology”.  

New science

Maximum carbon uptake potential through progressive management of plantation forests in Guangdong province, China
Communications Earth & Environment

Harvesting young planted forests and then replanting over a 20-year period could sequester 2.5 times more carbon than simply preserving forests, according to new research on China’s Guangdong province. The authors used satellite data, forest growth models and machine learning to identify “key drivers of carbon accumulation”. The study found that the optimal scenario for carbon sequestration, described above, “could yield a potential carbon stock of 0.5 gigatonnes of carbon by 2060, without expanding forest cover”.

Evaluation and future projection of compound extreme events in China using CMIP6 models
Climate change

A new study evaluated the simulation performance of CMIP6 climate models for “six types of compound extreme event” in China. The research found four major results including “the performance of general circulation models (GCMs) in the simulation of extreme temperature indices is better than that for extreme precipitation indices, and positive biases exist in extreme precipitation indices for most models”. It added that the frequency of warm extremes may increase in the future, while cold extremes showed a decreasing trend.

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

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The post China Briefing 23 January 2025: China’s climate ‘concern’ over Trump; Peak oil debate; China’s energy storage lead appeared first on Carbon Brief.

China Briefing 23 January 2025: China’s climate ‘concern’ over Trump; Peak oil debate; China’s energy storage lead