After holding stable for two years, China’s carbon emissions may climb back up as the construction of new fossil fuel power plants accelerates and recent policy changes cloud the outlook for clean energy, a new report warned.

The world’s biggest carbon polluter is expected to keep total emissions flat in 2025 despite rising energy demand – a sign that clean power may, for the first time, fully offset the growth in electricity consumption, the analysis by the Centre for Research on Energy and Clean Air (CREA) showed.

But the Finland-based research group cautioned that a “concerning” policy environment for the next few years increased the risk of an emissions rebound. It added that China was also set to miss its key target for cutting carbon intensity – CO2 emissions per unit of gross domestic product – this year, meaning steeper reductions will be needed to hit its headline 2030 climate goal of slashing carbon intensity by 65%.

Belinda Schäpe, China policy analyst at CREA, said it was unclear how strongly committed China remained to its targets, despite leaders’ assertions that the government always makes good on its climate promises.

“All of this uncertainty raises a lot of questions around where emissions are going,” Schäpe told Climate Home News. “At the moment, it’s very finely balanced. They are just about flat but could well go up or down again based on the decisions that the government will make.”

New pricing model for renewables

Record solar energy installations and strong growth in wind power capacity have increased the share of non-fossil fuel electricity this year, with emissions from the power sector set to decline for the first time since 2016, the report said. But that progress has been partially countered by the rapidly growing use of coal for the production of plastics and other chemical products, meaning overall emissions are expected to remain stable.

At the same time, experts have warned that China’s new pricing system for solar and wind projects risks slowing the clean energy boom. Under the new policy introduced last June, developers of new solar and wind power plants need to secure contracts with provincial authorities through competitive auctions, instead of being guaranteed a fixed price.

Schäpe said prices had been “very, very low” in some of the auctions so far. “Of course, that’s great for consumers, but it’s really bad for project developers because they don’t want to go ahead and invest in new projects facing the risk of no returns,” she said.

Earlier this year, the International Energy Agency (IEA) cut its forecast for China’s 2025-2030 renewables growth by 5% due to the changes in the pricing model. The watchdog’s head Fatih Birol said the profitability of renewables projects – especially solar and wind – was expected to decline between 10% and 15% with the new policy.

Coal power boom continues

Coal power plants, on the other hand, are protected from this market-based system, relying instead on long-term power purchase agreements that lock in prices, Schäpe said, describing it as “unfair competition”.

China’s rapidly expanding coal power fleet is adding to the concerns. In 2025, the country has added the largest amount of coal-fired capacity since 2015, while progress on retiring older plants remains very slow, CREA’s report highlighted.

This runs contrary to a pledge made by President Xi Jinping in 2021 to “strictly control” new coal power projects. That commitment was omitted from Beijing’s updated national climate plan (NDC) submitted in late October ahead of COP30.

In its new NDC, China set an absolute emission reduction target for the first time, committing to cutting its greenhouse gas emissions by between 7% and 10% by 2035 from unspecified “peak levels”.

Focus on next five-year plan

Schäpe said that the absence of a base year could create an incentive to raise emissions and “storm the peak” – pushing them as high as possible to make future reduction targets easier to meet.

She said this put the focus on China’s 2030 carbon intensity target, adding that if Beijing was still serious about meeting it, emissions would need to peak “around now”.

China targeted an 18% reduction between 2021 and 2025, but it is projected to achieve about 12% by the end of this year, CREA’s report said. If that is confirmed, China will then need to significantly ramp up efforts to cut carbon intensity in the next five years to achieve its headline climate commitment for 2030.

Analysts expect China’s new five-year plan – the blueprint for its economic development – to provide more clarity on the country’s energy policies next year.

“We will see how the government is going to balance these two opposing forces: the outgoing coal industry interests and the new cleantech sectors that are meant to become the driver of future growth,” Schäpe said.

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China risks emissions rebound amid policy shifts, experts warn