Chinese industry is beginning to shift from fossil fuels to clean electricity, with wind, solar and batteries progressively displacing coal, oil and gas across the industrial sectors that made the country the world’s factory and largest carbon emitter, a new analysis shows.

Clean electricity met all of China’s demand growth in 2025 and coal generation fell for the first time in a decade, even as electricity demand rose by 5%, the report found.

Despite a rebound in coal power generation in the first half of 2026, the analysis by global energy think-tank Ember found the growth in clean electricity illustrates a longer-term shift: a massive build-out of wind, solar energy and battery storage and deepening electrification of the economy are starting to make a dent in the fossil-fuel energy system supporting China’s industrial base.

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The research identifies early signs that a structural transformation of China’s industrial economy from coal, oil and gas to clean electricity is underway, even if changes on the ground are not yet reflected in national data.  

“The energy foundation of the Chinese industrial economy is shifting,” Muyi Yang, a senior energy analyst at Ember and the report’s lead author, told Climate Home News.

“Fossil fuels are progressively being replaced in the many functions they have historically assumed. Because of that, fossil fuel peaking is increasingly coming into view,” he said.

Electrifying industry

Coal generation has stopped growing in 17 of the 26 provinces and regions analysed by Ember between 2021 and 2025. This includes industrial centres such as Hunan in southern China and Shandong – home to energy-intensive industries like cement production. Together, these regions are home to more than half of China’s thermal power capacity.

A greater share of the Chinese economy is now running on electricity than in other major economies, accounting for 29% of final energy consumption in 2024, compared with about 23% in Europe and 21% in the US. Less than half of China’s electricity was generated from coal in the first half of the year.

Meanwhile, fossil fuel use has fallen in eight of 11 tracked industrial sectors, declining between 26% and 71% from peak consumption levels across fossil fuel extraction, manufacturing industries such as textiles, machinery and food and beverages, transport equipment and chemical materials.

Earlier this year, German company BASF, the world’s largest chemical producer, opened a new facility in southern China, which is fully supplied by renewable energy. The company said emissions from the site could be 50% lower than conventional petrochemical facilities.

In easier-to-electrify sectors such as machinery, electronics and textiles, electricity now supplies about three-quarters of final energy consumption, Ember found.

Fossil fuel use is also showing signs of flattening in the metals smelting and processing sector – one of the most fossil-intensive parts of the economy – offering “encouraging signs” that the transformation is starting to take hold in harder-to-abate sectors, said Yang.

“If that is happening in more and more provinces, and more and more economic sectors that means that fossil fuels are progressively being squeezed out of the energy system,” he said.

“Growing by greening”

China’s vast cleantech manufacturing power has become an engine for growth in its own right, spurring investment, creating jobs and generating export revenues.

Yang described this “growing-by-greening” dynamic as “turning each step of the transition into a source of strength for the next”.

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For Li Shuo, director of China Climate Hub at the Asia Society Policy Institute, this is part of what makes China’s lead in manufacturing clean energy equipment “irreversible”, comparing its growth with that of a rainforest, where different parts of the ecosystem thrive by reinforcing one another.

The early success of deploying wind and solar helped drive down electricity costs, which created favourable conditions for the rapid adoption of electric vehicles (EVs) and in turn boosted demand for batteries that are now critical to balance the grid.

An oversupply of renewable energy incentivised industrial players to benefit from cheap and readily available clean power generation, encouraging innovative solutions to electrify other parts of the economy. In the transport sector, for example, electrification is moving from passenger vehicles to harder-to-electrify trucks.

This abundance of cheap green energy is also making China competitive in what has long been seen as the anchor of Western competitiveness, Li said.

Stalling fossil fuel use

At the same time, China’s huge legacy fossil fuel generation capacity is still expanding, even as coal power plants are being used less intensively.

China brought 30 GW of new coal power capacity into operation in the first six months of the year and coal-fired generation rose 3% over the same period after local governments fast-tracked coal projects to prevent a repeat of severe power shortages in 2021.

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A further 274 GW of coal capacity is either under construction or has permits to be built while vast amounts of solar and wind power that could not be absorbed by the grid have gone to waste in the first half of the year.

“This doesn’t mean that the transition is losing steam,” said Yang, arguing that China is now grappling with some of the more complex aspects of the transition.

A recent analysis by the Centre for Research on Energy and Clean Air (CREA) for Carbon Brief found that China’s CO2 emissions from fossil fuels and cement have plateaued for more than two years following a peak in March 2024. Ember found that on a 12-month moving average, coal generation has been stalling since then, following years of continuous expansion.

In the second quarter of the year, CO2 emissions fell by 1% after China’s oil consumption plummeted 9% as the US-Iran war prevented the transport of oil cargoes from the Gulf through the Strait of Hormuz.

The electrification of the transport sector, particularly electric trucks, was the biggest driver in displacing oil demand as the conflict in the Middle East accelerated the transition.

A lesson in sequencing

China’s bumpy transition offers a useful lesson for other countries at an earlier stage of their transition, said Xunpeng Shi, president of the Sydney-based International Society of Energy Transition Studies (ISETS), a global network of professionals that shares research and fosters collaborations.

“Build quickly enough so that clean electricity can start taking over and prepare for the pressure on the fossil system before it arrives, because that is the part nobody has done easily,” he said.

For countries that are heavily reliant on revenue from fossil fuel exports, a peak in Chinese fossil fuel use weakens the assumption of rising demand on which investments have long been made.

“For them, the time to plan for that is now, while the revenues are still there,” he said.

The post China’s industrial engine starts to break its fossil fuel habit appeared first on Climate Home News.

China’s industrial engine starts to break its fossil fuel habit

Carbon credit developers, corporate buyers and some leading conservation NGOs are challenging new proposed rules to stop UN carbon credits being wiped out by fire, drought or logging, in what critics have called a “coordinated lobbying campaign” to weaken the nascent market’s push for greater integrity.

According to documents seen by Climate Home News – including a briefing given to government officials – companies, NGOs and the UN Environment Programme (UNEP) have contested the scientific basis for the move, arguing that stronger protection for carbon reductions could hike project costs and restrict the supply of credits to the market.

The climate benefit of credits that claim to reduce or avoid greenhouse gas emissions by storing carbon is undone if that carbon is released back into the atmosphere – something known as reversal risk. To protect against such losses and preserve the credibility of the credits’ carbon-offsetting claims, projects are generally required to set aside a reserve of credits that cannot be sold, as a form of insurance.

How these “buffer pools” are calculated has long been a source of contention, especially in forest conservation projects, which many experts say have historically underestimated the risk of carbon losses.

In July, the technical UN panel tasked with drafting rules for the Article 6.4 mechanism, which underpins the credits that countries and companies can use to meet their climate goals, proposed a new system. It would require project developers to size these insurance pools of credits based on local risk values derived from new research published by a group of independent scientists.

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Its supporters have hailed it as a more rigorous approach than current practice in the voluntary carbon market, which largely relies on expert guesswork and, in some cases, gives significant leeway for project developers to come up with their own data.

“The decision on the reversal risk assessment tool will be crucial,” said Federica Dossi, an expert at Brussels-based advocacy group Carbon Market Watch. “It would bring a new paradigm for calculating the number of units forwarded to the buffer pool based on empirical data.”

The technical panel is due to discuss the reversal risk tool and its application to a specific set of projects at a five-day meeting in Bonn this week. It is then expected to forward new recommendations to the mechanism’s regulator, the Supervisory Body, for a decision on whether to approve them at a meeting in early October.

The rules are set to be applied initially only to clean cookstove projects, one of the market’s most popular and heavily criticised credit types. They could then be extended to other activities, including programmes to protect forests.

Copy and paste?

More than 30 organisations aired their views in lengthy public submissions to the Article 6.4 mechanism, responding to a call from the UN secretariat for external feedback.

A Climate Home News review of those submissions found that there was significant overlap in their messages and, in several cases, sections of the text, or even entire submissions, were copied and pasted by different organisations. This points to a coordinated effort to flag concerns regarding the new rules.

In one instance, tech giant Apple, a large buyer of nature-based carbon credits, warned against relying on one scientific model and called for rules that let project developers use a variety of risk mitigation tools, rather than surrendering buffer credits, to cover the risk of carbon losses.

Apple’s submission is a lightly-edited version of a separate input presented by the Beyond Alliance, a coalition of corporate buyers and NGOs that promote market-based climate investments. In an apparent oversight in one paragraph, the Beyond Alliance’s name appears in Apple’s submission instead of the tech giant’s.

The Beyond Alliance told Climate Home News that, after receiving input from its members, it shared its final submission, leaving them to decide if and how they wanted to use it. The coalition rejected any characterisation that its submission advocates for a weaker tool and only reflects business concerns.

The Beyond Alliance added that its members received briefings by UNEP, which Climate Home News understands has played an important role in wider efforts to influence the development of the rules underpinning the UN carbon market.

Three experts and a European Union diplomat told Climate Home News that the interventions of the UN agency overwhelmingly supported the views of those with a financial interest in carbon markets.

UNEP’s head of mitigation Gabriel Labbate rejected this accusation. He told Climate Home News that the UN agency contributes technical inputs from a “politically-neutral, science-based perspective” and its positions are grounded in an assessment of environmental integrity and are not shaped by, or aligned with, the financial interests of any market participant. 

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In mid-July, representatives from UNEP, Conservation International and The Nature Conservancy (TNC) briefed government officials from Canada, the UK, Germany, Costa Rica, Belgium, Nigeria and Peru, according to a webinar readout seen by Climate Home News.

The online event was organised by the Forest & Climate Leaders Partnership (FCLP), an initiative that brings together 41 countries plus the EU.

The speakers voiced strong criticism of the new proposed rules. A technical advisor to Conservation International, a US-based NGO that runs several large-scale carbon offsetting programmes, told participants the Article 6 panel’s approach was “based on bad science”. This, he said, is because it relies on a single model that he claimed is not appropriate to determine buffer pool contributions, according to a presentation seen by Climate Home News.

During a high-level discussion led by UNEP’s Labbate, speakers said the application of measures to manage reversal risk on cookstove projects could “impose disproportionate costs and undermine the financial viability of these activities”, according to the readout.

Cookstove programmes issue credits by calculating the greenhouse gas emissions prevented by burning less fuel – usually wood or charcoal – through the use of more efficient stoves. With the new reversal risk tool, these activities would be expected to guard against future carbon losses for the first time under the UN carbon market.

But UNEP, as well as leading NGOs and carbon credit firms, have pushed back against the requirement, arguing this type of credit represents a “flow” of avoided emissions rather than a “stock” of stored carbon that can be released. Scientists reject that distinction, noting that the wood left unburned is still standing in a forest exposed to the same risks as any other.

At the online briefing, speakers also raised concerns that the tighter approach would be replicated for nature-based carbon projects with a direct impact on the future of large-scale forest conservation credits. The Conservation International advisor called it a “bad precedent”.

Both Conservation International and TNC run carbon credit programmes that aim to protect trees from being cut down. Labbate leads the UN-REDD programme, which supports countries developing forest protection initiatives including through carbon credits, and is co-chair of the expert panel advising the Integrity Council for the Voluntary Carbon Market (ICVCM).

After the webinar, the organisers shared by email a series of “key messages” and draft submissions produced by the three organisations, which participants were invited to consider and adapt in their own inputs to the Article 6.4 consultation process.

Getting the rules ‘right’

In a statement to Climate Home News, Ghana, Paraguay and the UK – which are FCLP co-leads for its work on forest carbon credits – said members of the coalition welcomed expert views from a range of partners to help them understand the potential impact of Article 6.4 rules on the eligibility of forest carbon credits in international markets.

They added that the FCLP does not have a common position on the rules and its members are free to choose whether to attend webinars and use any of the materials circulated.

In a statement to Climate Home News, Conservation International said “getting these rules right is important to the environmental integrity of the carbon market, while ensuring all sectors have a place in it”. It added that the NGO does not dispute the validity of the scientific research underlying the proposed buffer pool, but recommends a broader approach including multiple models and datasets.

A spokesperson for TNC said the organisation had helped clarify complex materials and their potential implications, while decisions on how to respond remained entirely with participating countries.

‘Inconvenient science’

The scientific basis for the disputed reversal risk tool rests on two pieces of research. A peer-reviewed study, published in Nature in May and led by scientists at several US universities, modelled forest carbon-loss risk across the United States and found existing buffer pools there are undersized by an average factor of six.

To extend that approach worldwide, the Article 6.4 panel also drew on a second, global analysis by the same research team, which has not yet completed peer review. That study used satellite images, weather records and computer modelling to estimate a 31-42% chance of forests worldwide losing stored carbon within 100 years, depending on the scenario.

The panel picked one of these scenarios and turned its estimates into fixed risk percentages for individual countries, and in some cases provinces, which projects in those locations would need to apply.

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Critics say the peer-reviewed portion of the research was calibrated on North American forests, and that applying the same approach to other regions relies on a global study that is still going through academic checks.

But, for William Anderegg, professor of biological sciences at the University of Utah and one of the authors of that research, it is the best science currently available. He described it as “light-years better” than assumptions underlying the voluntary carbon market, where risk numbers are not generally based on independent evidence and tend to be incredibly low.

Scientific research, including by Anderegg, has found that buffer pools in forestry projects in the voluntary carbon market are substantially smaller than they should be to adequately protect against future releases of carbon.

“There really seems to be a fairly coordinated campaign to try to weaken the strength of these [Article 6.4] tools and their scientific underpinning,” he told Climate Home News. “It’s a little dispiriting to see folks attack science that’s inconvenient.”

Regulators under pressure?

An EU diplomat told Climate Home News that experts and negotiators working on the Article 6.4 mechanism have faced intense pressure from big carbon credit developers and large parts of the nature-based solutions community.

“It is very clear that they are lobbying against strong rules, and they want to align the Paris Agreement mechanism with the standards of the voluntary carbon market,” the diplomat said. “They have influence, time and money, even more than some governments, so they can be very effective in their efforts.”

Last year, the Article 6.4 Supervisory Body, the new market’s regulator, approved rules on the permanence of credits aiming to remove carbon from the atmosphere which critics said were watered down compared to the technical panel’s recommendations. This followed feedback from carbon market firms and conservation NGOs, which submitted dozens of critical views.

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Carbon Market Watch’s Dossi said decisions that strengthen environmental integrity are targeted in particular as they tend to reduce the number of credits that can be issued.

Then, as now, those who opposed tighter rules argued that overly strict safeguards would make some projects too expensive to carry out, with a negative impact on local communities and the climate.

But proponents argue that higher-integrity programmes will drive up market prices, ultimately benefiting everyone.

“If rules ensuring better-quality credits make them somewhat more expensive than they are today, that’s an acceptable consequence, not a reason to weaken the rules, especially since these credits will be used to offset continued emissions,” said Dossi.

Efforts to pull the rule-makers in different directions are expected to intensify in the coming weeks as a decision on the new credit protection system nears.

“I really don’t know how this will turn out in the end,” one veteran carbon market expert said. “What I am sure about is that it will be quite a battle.”

The post Industry and NGOs lobby to weaken UN carbon credit rules in “coordinated” push appeared first on Climate Home News.

Industry and NGOs lobby to weaken UN carbon credit rules in “coordinated” push

A relatively ambitious deal to reduce the shipping industry’s 3% of global emissions now looks more likely after four days of closed-door talks in London, observers say.

The International Maritime Organization (IMO), which oversees the negotiations, said there had been “constructive discussions” and “genuine willingness within the group to make concrete further progress”.

Em Fenton, senior director at the NGO Opportunity Green who attended the talks last week, said they “demonstrated a strong spirit of solidarity in the face of blatant attempts to undermine the credibility, ambition and equity of a hard-fought multilateral agreement”.

After several years of debate, governments provisionally agreed in April 2025 on a “Net-Zero Framework” (NZF) – a series of emissions reduction targets for shipowners aimed at incentivising them to use cleaner fuels, backed up with financial rewards for meeting the targets and fees for missing them.

But in October 2025, after a high-profile intervention by US President Donald Trump and threats of US sanctions and visa restrictions, the US convinced a majority of voting nations to postpone the adoption of the NZF for a year.

UCL analysis found that, of those who expressed a view at last week’s talks, 38 were in favour of an NZF-style solution while only 17 were against. Those opposed are “consistently composed of strongly fossil fuel-aligned governments”.

An observer of the talks, who did not want to be named, said the countries opposed include the US, Russia, India, Thailand, Argentina, Ecuador and Uruguay, as well as eight oil-rich Gulf nations and shipowner-reliant Liberia and Panama. Governments that support an NZF-style deal include China, Brazil, Mexico, Türkiye, Canada, Australia, Chile, nine African nations, most European countries and small islands.

A new framework to tackle shipping emissions could be adopted if two-thirds of countries that are present and signed up to a regulation called Marpol Annex VI – endorsed by just over 100 states – vote in favour of it, as they did in April 2025.

UCL’s analysis said it was “reassuring” that governments which had taken strong positions in the media against the NZF were being more compromising in the negotiations.

Tweaks are probable

While there is majority support for the NZF, UCL said adopting it would be difficult politically. “The process from here could therefore be as much about producing what appears to be a new package, but one that broadly ends up with similar outcomes in relation to objectives,” UCL argued.

But tweaking the NZF, which resulted from years of negotiations, comes with risks, it warned. For example, changes could reduce the new system’s planned support for low-income countries, turning them against it. Fenton said compromising should not mean “abandoning the principle of justice in the maritime transition”.

UCL said the speed at which shipowners must reduce their ships’ emissions or face fees is likely to be reduced in the short-term but raised in the long-term to meet a goal of net zero emissions by mid-century.

This was a compromise put forward by NZF-supporter Brazil. However, an analysis by the the Institute of Marine Engineering, Science and Technology (IMarEST) has found that this change would lead to more overall emissions than the original NZF trajectory.

UCL has warned it could incentivise liquefied natural gas as a shipping fuel over greener options, which include hydrogen-based methanol and ammonia.

Analysis by UCL and the Rocky Mountain Institute suggests that, while a slower start to the NZF would reduce transport costs in the short term, it would increase them later due to the costs involved in switching the industry over from more polluting fuel to cleaner fuel.

NZF won’t meet emissions goals

IMarEst’s analysis finds that even in its current form – the most ambitious deal on the table – the NZF will not be sufficient for shipping to meet its emissions reduction goals.

It says that only a Pacific proposal to place a levy on ships’ total emissions – rather than just those above a certain level – would meet the industry’s targets to reduce emissions 20% between 2008 and 2030, 70% by 2040 and then reach net zero “by or around, i.e. close to 2050”. This is highly unlikely to be adopted.

Additional talks will be held from November 23-27 and from November 30-December 3 before a potentially final round of official negotiations begins on December 4.

The post London talks raise hopes for green shipping deal appeared first on Climate Home News.

London talks raise hopes for green shipping deal