China has seen a series of temperature records broken this summer, as heatwaves have struck various regions across the country.
Between mid-March and mid-July 2025, it was hit by an unprecedented number of “hot days” – where temperatures reach or exceed 35C – according to the China Meteorological Administration (CMA) .
In both May and June, heatwaves swept across northern regions, with temperatures in Xinjiang reaching as high as 46.8C.
Such a record-breaking summer is becoming increasingly common, with the CMA’s annual Climate Bulletins showing that hundreds of local heat records have been surpassed over the past decade.
The CMA says that “extreme high temperatures” have shown an “increasing trend” in China since its records began in 1961.
Experts tell Carbon Brief that heatwaves strongly affect public health, agricultural output and economic activity.
They also put significant strain on the electricity system.
In this Q&A, Carbon Brief looks at how heat extremes are changing in China, the role of climate change in making these worse and how the country is adapting to the impacts.
How are heat extremes changing in China?
The latest science report from the Intergovernmental Panel on Climate Change (IPCC) states that it is “virtually certain” that “the frequency and intensity of hot extremes have increased” across the world since 1950.
The IPCC adds that it is “virtually certain” that human-caused greenhouse gas emissions are “the main driver”.
China is no exception. In a press release for its latest 2025 “blue book on climate change in China”, the CMA says China is “susceptible to the impacts of global climate change”, noting:
“[China’s] warming rate is higher than the global average…and extreme weather and climate events are becoming more frequent and intense.”
Data from the CMA’s Climate Bulletins show how the average annual temperature in China is rising and how 2024 was the hottest year on record, as shown in the chart below.
While 2024 was the hottest year on record overall, this was a result of consistently high temperatures throughout the seasons.
At a CMA press conference in 2025, Chan Xiao, deputy director of the CMA commented:
“Temperatures were consistently high throughout the year, with significant fluctuations in temperature during winter. Spring, summer and autumn temperatures were all record highs for the same period.”
In contrast, more heat records were broken during 2022, even though it was not quite as hot overall. Explaining this, Prof Yang Chen from Chinese Academy of Meteorological Sciences, which falls under the CMA, tells Carbon Brief:
“[For] the annual mean air temperatures, every day counts. So even if the 2022 was exceptional for its large number – actually also very long duration-consecutive days and high-magnitude – of hot extremes, mainly during summer and in the Yangtze River Valley, it does not mean the remaining days were hotter than the counterparts in 2024.”
The CMA defines a “hot day” or “high temperature day” as one that reaches or exceeds 35C. It adds that “high temperatures for several consecutive days constitute a heatwave”.
As the global climate has warmed, the number of “hot days” that China is experiencing has been on the rise, shown in the figure below.
The year 2022 set a new record, with meteorological stations in China recording an average of 16.4 hot days. This was 7.3 more than the average for 1991-2020. The year 2024 came close to this record, with 15.6 hot days. These two years have also seen China’s hottest summers on record.
In 2022, more than 1,000 meteorological stations in China reported heatwaves, with 441 breaking “historical records”. For 2024, 74 stations reported “consecutive high temperature days” and 81 of them broke records.
Xiao said at a press conference in 2023 that “continuous high temperatures” in China’s central and eastern regions lasted for 79 days in the summer of 2022. The provinces of Gansu and Xinjiang in north-west China, Hubei in central China and Sichuan in south-west China all reported their “highest temperatures since 1961”.
In addition, the “maximum daily temperature [in the summer of 2022] at 361 national meteorological stations – accounting for 14.9% of the total number of stations in the country – reached or exceeded historical extremes”, Xiao added.
The CMA has also highlighted that summer is arriving earlier for much of China. In 2024, for example, summer in regions including most of Hainan province in south China, central Yunnan province in south-west China as well as central and southern Xinjiang province in north-west China arrived more than 20 days earlier than average.
“If a year’s spring and summer are longer, the potential heatwaves…will also be longer,” Prof Wenjia Cai, from the department of earth system science of Tsinghua University, tells Carbon Brief.
Cai notes that there are more ways to define heatwaves than CMA’s absolute threshold of 35C.
For example, a heatwave can also be defined by how long the hot weather persists, or based on “the daily maximum temperature, daily average temperature, or even nighttime temperature”, she tells Carbon Brief.
However, regardless of the definition used, the “number of heatwave days is definitely increasing as a result of climate change”, she adds.
What role does human-caused climate change play?
A field of climate science called “attribution” has emerged over the past two decades to establish the role that human-caused warming plays in individual extreme weather events, including heatwaves, floods, droughts and storms.
Attribution studies can also be used to find the “fingerprint” of human-caused climate change in longer-term trends, such as the gradual increase in surface temperatures over multiple decades.
Heat is the most-studied extreme event in attribution literature, as it is mainly driven by thermodynamic influences – in other words, it is relatively easy to study.
In contrast, storms and droughts are more strongly affected by complex atmospheric dynamics and, as such, can be trickier to simulate in a model. Cai tells Carbon Brief:
“High temperature is the most obvious trend against the background of climate change. Heatwaves, in comparison to events such as rainfall and typhoons, are also more predictable.”
Carbon Brief has produced an interactive map showing every attribution study published up to November 2024. In total, 114 extremes and trends in China have been the subject of an attribution study, including more than 20 relating specifically to extreme heat.
One study included on the map looks at the change in the intensity and frequency of extreme temperatures across China over 1951-2018. The authors say that, over this time period, “more intense and more frequent warm extremes” were observed across “most regions” in China – and that “greenhouse gas forcing plays a dominant role” in this.
Looking at individual extreme events, one analysis by the “rapid attribution” group World Weather Attribution investigates the then-record-breaking heat across China in July 2023. The analysis says that temperatures exceeded 50C in north-west China, adding that Sanbao, in Xinjiang, hit 52.2C on 16 July of that year.
The study finds that, in a world without climate change, such an extreme heat event would have been “extremely rare” and would only have happened once every 250 years. However, in today’s climate, as a result of human-caused climate change, a heatwave of this intensity is now expected once every five years.
This means China’s extreme heat of July 2023 was 50 times more likely due to climate change. The study also finds that in a world without climate change, the heatwave over China would have been 1C cooler.
A separate study finds that human-caused climate change also caused a more than 60-fold increase in the likelihood of the extremely warm 2013 summer, compared to the early 1950s.
It adds that other factors such as urbanisation and changes in atmospheric circulation patterns can also make heat extremes more intense and frequent.
What impact are these heatwaves having?
Heatwaves have a wide variety of impacts on human activities, such as public health, crop yields and economic output.
Older people are particularly vulnerable to extreme heat. The 2024 report from the Lancet Countdown on Health and Climate Change found that, in 2023, demographic changes alone could have driven a 65% increase in heat-related deaths among over-65s, compared to the 1990-99 average.
Cai, who is also the lead author of the Lancet Countdown’s China report, tells Carbon Brief that older people are the “most commonly mentioned vulnerable group” and that the number of people affected by heatwaves will grow as societies age.
However, heatwaves also “affect outdoor activities” regardless of age group, she adds, as well as having impacts on sleep and allergies:
“We don’t want anyone to think they are in a group of people unaffected by heatwaves.”
Cai says that heat exposure can increase the incidence of certain dangerous behaviours, such as domestic violence, as well as a wide range of diseases – including cardiovascular diseases and respiratory diseases – and mental health disorders.
In 2023, more than 30,000 deaths were related to heatwaves in China – 1.9 times higher than the average over 1986-2005, according to Cai and her colleagues’ China report.
This was a result of increased heat exposure – the average number of “heatwave exposure days” per person reached 16 days in 2023, more than three times the historical average (1986-2005), the report adds.
A 2022 attribution study on China notes that extreme heat can also increase the risk of preterm births. The authors find that over 2010-20, an average of 13,262 premature births were recorded in China due to heatwave exposure. The study linked one-quarter of these early births to climate change.
Another profound impact of heatwaves is that they can exacerbate droughts, with knock-on impacts for agriculture.
Reuters reported last June that “China’s agriculture ministry said…searing temperatures have adversely impacted summer planting and that fighting drought and protecting summer planting were arduous tasks”.
Droughts in 2024 hit more than 11 million people in China, with more than 1.2m hectares of affected crops and direct economic losses topping nearly 8.4bn yuan ($1.2bn), the Ministry of Emergency Management said in early 2025.
Heat-related economic losses could reach nearly 5% of China’s GDP by 2060, according to a recent guest post for Carbon Brief. Authors Prof Guan Dabo and doctoral student Sun Yida from Tsinghua University wrote:
“By 2060, China’s heat-induced economic losses could total about 1.5% of total GDP under 1.5C of global warming, 3% under 2C of warming and 4.9% under 2.5C of warming.”
Those predicted losses include “indirect economic losses”, which “could be due to changes in production, consumption or employment” in the global supply chain, including crop failures and labour slowdowns, they explained.
The figure below, based on their study, shows Chinese GDP losses under three different scenarios of future emissions, called “shared socioeconomic pathways” (SSPs).
The SSP1-1.9, SSP2-4.5 and SSP5-8.5 scenarios project average global temperature rises of around 1.5C, 2C and 2.5C by mid-century, respectively.
Economic losses are split into indirect losses (dark blue), labour losses (blue) and health losses (light blue).
Sectors such as the extractive industries, construction and non-metallic manufacturing “could see the highest losses” of about 4.6-6.4% of their “value-added” – the increase in worth of a product or service as it moves through different stages of production – largely because they are in Chinese “regions with significant warming”, according to Guan and Sun.
Those industries also have close business connections with south-east Asia, Africa and South America, which are “expected to face heightened exposure to production volatility caused by high temperatures”, they add.
The total economic loss globally could reach up to 4.6% by 2060, according to their study, and manufacturing-heavy countries such as China and the US, in particular, could be “strong[ly] hit”.
Other than manufacturing, electricity supplies in China have also been frequently reported to be affected by hot days.
Chinese news outlet China Business Network reports that China’s National Energy Administration said last year that summer was the hardest time to ensure sufficient electricity supply during a year and that extreme weather would make the supply even harder.
For 2025, China’s State Grid Corporation expected maximum electricity demand to exceed 1,200 gigawatts (GW), a new record.
Dr Muyi Yang, senior energy analyst at thinktank Ember, tells Carbon Brief that “when temperatures soar, electricity demand spikes – mainly due to air conditioning – and that can stretch the grid, especially in already tight systems”.
Biqing Yang, energy analyst at Ember, adds:
“In the third quarter of last year, for example, China’s residential electricity consumption rose significantly, by 17.8% year-on-year, largely due to elevated temperatures…It is clear that we are now entering an era [w]here climate change is having a real-time impact on our energy system.”
China’s electricity demand reached a new record in July 2025 after year-on-year growth of 8.6%, consuming more power in one month than Japan did in all of 2024, according to David Fishman, Shanghai-based principal at consultancy the Lantau Group.
The “staggering” July 2025 figures – including another 18% year-on-year rise in residential demand, partly due to rising household incomes, as well as air conditioning use – illustrates the impact of climate change on China’s power sector, Fishman writes on LinkedIn:
“We know it’s hot out and everyone knows every summer the intense heat seems to last for longer and longer. But these power consumption numbers are telling a story about China’s climate patterns like few other datasets can…and it’s a scary story.”
Yang, Chen and Cai tell Carbon Brief that it is important for China to adapt to the rising temperature and intensive heatwaves.
Chen specifically describes “successful” forecasts and early warnings as “critical” , saying that they are the “very first step toward adaptation”.
In his LinkedIn post, Fishman notes that the rapidly rising demand for electricity, including as a result of growing air conditioning use, also poses a “considerable challenge to China’s ability to meet rising demand solely with clean power sources”.
How is China adapting to heatwaves?
In recent years, China has implemented more and more policies aimed at adapting to heatwaves.
For example, weather forecasts and heatwave alerts have been provided.
Central and local governments have also issued labour policies aimed at protecting workers against extreme heat.
Under a policy from the Ministry of Human Resources and Social Security, for instance, outdoor works are not expected to be undertaken when temperatures exceed 40C. In addition, outdoor working hours should be shorter than six hours when the temperature is 37-40C.
Similarly, school students in some cities, such as Wuhan and Chengdu, have been advised to study from home during hot days in recent years.
Since 2021, the city of Tianjian has been sending text warnings of heatwaves to its residents, reminding people of the health risks it poses. The messages, according to Southern Metropolis Daily, warn that strokes might be triggered in the coming hot days and advises people to avoid outdoor activities and take medication if needed.
These text reminders have “significantly” reduced the number of hospitalised people in Tianjin, saving the city 140m yuan ($19.5m) since being introduced, adds the outlet.
In 2013, the central government published its first “national climate change adaptation strategy” – an attempt to implement the “clear requirement” of “enhancing our ability to adapt to climate change” included in the 12th “five-year plan” (2011-15).
In the latest version for 2035, heatwaves appear in sections related to the power sector, as well as agriculture and health.
The strategy aims to “improve” and “reinforce” nationwide “labour protection standards”, as well as “work system[s] that adapt to change and reduce agricultural disasters”. Its purpose is also to ensure the energy and electricity sectors’ abilities to “withstand extreme weather and climate events” in relation to heatwaves.
The strategy says that “health-risk assessment guidelines” and public health-related “implementation plans for adaptation under major extreme weather and climate events”, such as heat and heatwaves,in “various regions”, will be developed.
Last year, following the release of the latest overall adaptation strategy, China published the “national climate change health adaptation action plan (2024-30)”.
Cai calls the document a “very very important” blueprint for health risk management, bringing together a range of organisations, including hospitals, to form a “system related to climate change and health” that has “monitoring and early warning capabilities”.
She adds that this plan will also see heat-health alerts being issued nationwide:
“It is worth mentioning that the National Administration of Disease Control and Prevention and the China Meteorological Administration signed a joint agreement [in May 2025] on issuing [nationwide] health alerts – and that the first product is related to heatwaves.”
Ember’s Yang says that in terms of electricity, China is moving toward building a “‘new electricity system (新型电力系统)’ that is more compatible with high shares of renewables”. But, he adds, the old “planning psychology” needs to change so that it can better cope with extreme heat:
“Traditionally, the mindset has been very supply-driven – just keep adding enough generation and network capacity to meet demand…[With the new system] the demand side has to become an active player – a prosumer – that can actually support grid reliability.
“For example, during extreme heat, instead of just ramping up supply, we should also be encouraging users to reduce or shift their electricity use during peak hours, using price signals or incentives…This is the essence of what we call ‘coordinating generation, grid, load, and storage’ (源网荷储一体化) – a system that works together [and works] more efficiently and flexibly.”
The post Q&A: How China is adapting to ‘more frequent and intense’ heat extremes appeared first on Carbon Brief.
Q&A: How China is adapting to ‘more frequent and intense’ heat extremes
Climate Change
Maryland Passes Energy Bill That Delivers Short-Term Relief, Locks Ratepayers into Long-Term Nuclear Subsidy
Advocates say Maryland lawmakers passed consequential energy proposals without adequate analysis or public debate during the 2026 session.
Maryland lawmakers’ new solution for rising utility bills reduces a surcharge funding an effective energy-efficiency program, offers rebates by raiding the state’s clean energy fund and includes subsidies for nuclear power that advocates say may prove costly over time.
Climate Change
To avoid COP mistakes, Santa Marta conference must be shielded from fossil fuel influence
Rachel Rose Jackson is a climate researcher and international policy expert whose work involves monitoring polluter interference at the UNFCCC and advancing pathways to protect against it.
Next week, dozens of governments will gather in the Colombian city of Santa Marta for a conference on transitioning away from fossil fuels.
The conference is a first of its kind, in name and in practice. It’s a welcome change to see a platform for global climate action actually acknowledge the primary cause of the climate crisis – fossil fuels. This sends a clear message about what needs to be done to avoid tumbling off the climate cliff edge we are precariously balancing on.
The agenda set for governments to hash out goes further than any other multilateral space has managed to date. Over the week, participants will discuss how to overcome the economic dependence on fossil fuels, transform supply and demand, and advance international cooperation to transition away from fossil fuels.
Alongside the conference, academics, civil society, movements and others are convening to put forward their visions of a just and forever fossil fuel phase out. The conference can help shape pathways and tools governments can use to achieve a fossil-fuel-free future, particularly if the dialogue begins with an honest assessment of “fair shares.”
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Santa Marta: fossil fuel transition in an unstable world
Transitioning away from fossil fuels in an unstable world: how can Santa Marta deliver? -
Major oil producers among 46 nations joining fossil fuel phase-out summit
Canada, Australia, Brazil and Norway are set to attend the Santa Marta summit, but the world’s biggest fossil fuel producers are missing from the list -
Iran war could boost fossil fuel phase-out push, says Colombian minister
Colombia’s environment minister Irene Vélez Torres said she hopes that a new fossil fuel phase out summit in Santa Marta can cement a coalition of countries
This means assessing who is most responsible for emissions and exploring truer means of international collaboration that can unlock the technology, resources and finances necessary for a just transition.
Fossil fuel-driven violence is spiraling in places like Palestine, Iran, and Venezuela. Climate disasters are causing billions and billions of dollars in damage annually with no climate reparations in sight. All of this remains recklessly unaddressed on account of corporate-funded fascism.
We know the world’s addiction to fossil fuels must end. Is it surprising that a global governmental convening chooses now to try to tackle fossil fuels? It shouldn’t be, but it is.
COP failures
By contrast, meetings of governments signed up to the longest-standing multilateral forum for climate action—the United Nations Framework Convention on Climate Change (UNFCCC) – took nearly three decades before it officially responded to the power built by movements and acknowledged the need to address fossil fuel use at COP28 in 2023.
Even then, this recognition came riddled with loopholes. It may seem illogical that a forum established by governments in 1992 to coordinate a response to climate change should take decades to acknowledge the root of the problem. Yet there are clear reasons why arenas like the UNFCCC have consistently failed to curb fossil fuels decade after decade.
What would the outcome be when a fossil fuel executive literally oversaw COP28 and when Coca-Cola was one of the sponsors for COP27?
How can strong action take hold when, year after year, the UNFCCC’s COPs are inundated with thousands of fossil fuel lobbyists?
And how can justice be achieved when there are zero safeguards in place to protect against the conflicts of interest these polluters have?
Colombia pledges to exit investment protection system after fossil fuel lawsuits
Justly transitioning off fossil fuels cannot be charted when the very actors that have knowingly caused the climate crisis are at the helm—the same actors that consistently spend billions to spread denial and delay.
Unless platforms like the UNFCCC take concerted action to protect climate policymaking from the profit-at-all-costs agenda of polluters, the world will not deliver the climate action people and the planet deserve.
The impacts of climate action failure are now endured on a daily basis in some way by each of us – and especially by frontline communities, Indigenous Peoples, youth, women, and communities in the Global South. We must be closing gaps and unlocking pathways for advancing the strongest, fairest and fastest action possible.
Learn from mistakes
Yet, as we chase a fossil-fuel-free horizon, it’s essential that we learn from the mistakes of the past. We do not have the luxury or time to repeat them. History shows us we must protect against the polluting interests that want the world addicted to fossil fuels for as long as humanly possible.
We must also reject their schemes that undermine a just transition—dangerous distractions like carbon markets and Carbon Capture Utilisation and Storage (CCUS) that are highly risky and spur vast harm, all while allowing for polluters to continue polluting.
Fossil Free Zones can be on-ramps to the clean energy transition
We get to a fossil-fuel-free future by following the leadership of the movements, communities and independent experts who hold the knowledge and lived experience to guide us there.
We succeed by protecting against those who have a track record of prioritising greed over the sacredness of life.
And we arrive at a world liberated from fossil fuels by doing all of these things from day one, before the toxicity of the fossil fuel industry’s poison takes hold.
If this gathering in Santa Marta can do this, then it can help set a new precedent for what people-centered and planet-saving climate action looks like. When everything hangs in the balance, there can be no if’s, and’s, or but’s. There’s only here and now, what history shows us must be done, and what we know is lost if we do not.
The post To avoid COP mistakes, Santa Marta conference must be shielded from fossil fuel influence appeared first on Climate Home News.
To avoid COP mistakes, Santa Marta conference must be shielded from fossil fuel influence
The UK government has announced a series of measures to “double down on clean power” in response to the energy crisis sparked by the Iran war.
The conflict has caused a spike in fossil-fuel prices – and the high cost of gas is already causing electricity prices to increase, particularly in countries such as the UK.
In response, alongside plans to speed the expansion of renewables and electric vehicles, the UK government says it will “move…to break [the] link between gas and electricity prices”.
Ahead of the announcement, there had been speculation that this could mean a radical change to the way the UK electricity market operates, such as moving gas plants into a strategic reserve.
However, the government is taking a more measured approach with two steps that will weaken – but not completely sever – the link between gas and electricity prices.
- From 1 July 2026, the government will increase the “electricity generator levy”, a windfall tax on older renewable energy and nuclear plants, using part of the revenue to limit energy bills.
- The government will encourage older renewable projects to sign fixed-price contracts, which it says will “help protect families and businesses from higher bills when gas prices spike”.
There has been a cautious response to the plans, with one researcher telling Carbon Brief that it is a “big step in the right direction in policy terms”, but that the impact might be “relatively modest”.
Another says that, while the headlines around the government plans “suggest a decisive shift” in terms of “breaking the link” between gas and power, “the reality is more incremental”.
- Why are electricity prices linked to gas?
- What is the government proposing?
- What is not being proposed?
- What will the impact be?
Why are electricity prices linked to gas?
The price of electricity is usually set by the price of gas-fired power plants in the UK, Italy and many other European markets.
This is due to the “marginal pricing” system used in most electricity markets globally.
(For more details of what “marginal pricing” means and how it works, see the recent Carbon Brief explainer on why gas usually sets the price of electricity and what the alternatives are.)
As a result, whenever there is a spike in the cost of gas, electricity prices go up too.
This has been illustrated twice in recent years: during the global energy crisis after Russia invaded Ukraine in 2022; and since the US and Israel attacked Iran in February 2026.
Notably, however, the expansion of clean energy is already weakening the link between gas and electricity, a trend that will strengthen as more renewables and nuclear plants are built.
The figure below shows that recent UK wholesale electricity prices have been lower than those in Italy, as a result of the expansion of renewable sources.
The contrast with prices in Spain is even larger, where thinktank Ember says “strong solar and wind growth [has] reduced the influence of expensive coal and gas power”.
The share of hours where gas sets the price of power on the island of Great Britain (namely, England, Scotland and Wales) has fallen from more than 90% in 2021 to around 60% today, according to the Department of Energy Security and Net Zero (DESNZ). (Northern Ireland is part of the separate grid on the island of Ireland.)
This is largely because an increasing share of generation is coming from renewables with “contracts for difference” (CfDs), which offer a fixed price for each unit of electricity.
CfD projects are paid this fixed price for the electricity they generate, regardless of the wholesale price of power. As such, they dilute the impact of gas on consumer bills.
The rise of CfD projects means that the weeks since the Iran war broke out have coincided with the first-ever extended periods without gas-fired power stations in the wholesale market.
This shows how, in the longer term, the shift to clean energy backed by fixed-price CfDs will almost completely sever the link between gas and electricity prices.
The National Energy System Operator (NESO) estimated that the government’s target for clean power by 2030 could see the share of hours with prices set by gas falling to just 15%.
What is the government proposing?
For now, however, about one-third of UK electricity generation comes from renewable projects with an older type of contract under the “renewables obligation” scheme (RO).
It is these projects that the new government proposals are targeting.
The government hopes to move some of these projects onto fixed-price contracts, which would no longer be tied to gas prices, further weakening the link between gas and electricity prices overall.
When RO projects generate electricity, they earn the wholesale price, which is usually set by gas power. In addition, they are paid a fixed subsidy via “renewable obligation certificates” (ROCs).
This means that the cost of a significant proportion of renewable electricity is linked to gas prices. Moreover, it means that, when gas prices are high, these projects earn windfall profits.
In recognition of this, the Conservative government introduced the “electricity generator levy” (EGL) in 2022. Under the EGL, certain generators pay a 45% tax on earnings above a benchmark price, which rises with inflation and currently sits at £82 per megawatt hour (MWh).
The tax applies to renewables obligation projects and to old nuclear plants.
The current government will now increase the rate of the windfall tax to 55% from 1 July 2026, as well as extending the levy beyond its previously planned end date in 2028.
It says it will use some of the additional revenue to “support businesses and households with the impacts of the conflict in the Middle East on the cost of living”. Chancellor Rachel Reeves said:
“This ensures that a larger proportion of any exceptional revenues from high gas prices are passed back to government, providing a vital revenue stream so that money is available for government to support businesses and families with the impacts of the conflict in the Middle East.”
The increase in the windfall tax may also help to achieve the government’s second aim, which is to persuade older renewable projects to accept new fixed-price contracts.
Reeves made this aim explicit in her comments to MPs, saying the higher levy “will encourage older, low-carbon electricity generators, which supply about a third of our power, to move from market pricing to fixed-price contracts for difference”.
(This is an adaptation of a proposal for “pot zero” fixed-price contracts, made by the UK Energy Research Centre (UKERC) in 2022, see below for more details.)
As with traditional CfDs, the new fixed-price contracts would not be tied to the price of gas power. Instead of earning money on the wholesale electricity market, these generators would take a fixed-price “wholesale CfD”. In addition, they would be exempted from the windfall tax and would continue to receive their fixed subsidy via ROCs.
The government says this will be voluntary. It will offer further details “in due course” and will then consult on the plans “later this year”, with a view to running an auction for such contracts next year.
It adds: “Government will only offer contracts to electricity generators where it represents clear value for money for consumers.”
(It is currently unclear if the proposals for new fixed-price contracts would also apply to older nuclear plants. Last month, the government said it intended to “enable existing nuclear generating stations to become eligible for CfD support for lifetime-extension activities”.)
What is not being proposed?
Contrary to speculation ahead of today’s announcement, the government is not taking forward any of the more radical ideas for breaking the link between gas and electricity prices.
Many of these ideas had already been considered in detail – and rejected – during the government’s “review of electricity market arrangements” (REMA) process.
This includes the idea of creating two separate markets, one “green power pool” for renewables and another for conventional sources of electricity.
It also includes the idea of operating the market under “pay as bid” pricing. This has been promoted as a way to ensure that each power plant is only paid the amount that it bid to supply electricity, rather than the higher price of the “marginal” unit, which is usually gas.
However, “pay as bid” would have been expected to change bidding behaviour rather than cutting bills, with generators guessing what the marginal unit would have been and bidding at that level.
Finally, the government has also not taken forward the idea of putting gas-fired power stations in a strategic reserve that sits outside the electricity market.
Last year, this had been proposed jointly by consultancy Stonehaven and NGO Greenpeace. In March, they shared updated figures with Carbon Brief showing that – according to their analysis – this could have cut bills by a total of around £6bn per year, or about £80 per household.
However, some analysts argued that it would have distorted the electricity market, removing incentives to build batteries and for consumers to use power more flexibly.
What will the impact be?
The government’s plan for voluntary fixed-price contracts has received a cautious response.
UKERC had put forward a similar proposal in 2022, under which older nuclear and renewable projects would have received a fixed-price “pot zero” CfD.
(This name refers to the fact that CfDs are given to new onshore wind and solar under “pot one”, with technologies such as offshore wind bidding into a separate “pot two”.)
In April 2026, UKERC published updated analysis suggesting that its “pot zero” reforms could have saved consumers as much as £10bn a year – roughly £120 per household.
Callum McIver, research fellow at the University of Strathclyde and a member of the UKERC, tells Carbon Brief that the government proposals are a “big step in the right direction in policy terms”.
However, he says the “bill impact potential is lower” than UKERC’s “pot zero” idea, because it would leave renewables obligation projects still earning their top-up subsidy via ROCs.
As such, McIver tells Carbon Brief that, in his view, the near-term impact “could be relatively modest”. Still, he says that the idea could “insulate electricity prices” from gas:
“The measures are very welcome and, with good take-up, they have the potential to insulate electricity prices further from the impact of continued or future gas price shocks, which should be regarded as a win in its own right.”
In a statement, UKERC said the government plan “stops short of the full pot-zero proposal, since it will leave the RO subsidy in place”. It adds:
“This makes the potential savings smaller, but it will break the link with gas prices. The devil will be in the detail, but provided the majority of generators join the scheme, most of the UK’s power generation fleet will have a price that is not related to the global price of gas.”
Marc Hedin, head of research for Western Europe and Africa at consultancy Aurora Energy Research, tells Carbon Brief that, while the headlines “suggest a decisive shift” in terms of “breaking the link” between gas and power, “the reality is more incremental”. He adds:
“In principle, moving a larger share of generation onto fixed prices would reduce consumers’ exposure to gas‑driven price spikes and aligns well with the direction already taken for new build [generators receiving a CfD].”
However, he cautioned that “poorly calibrated [fixed] prices would transfer value to generators at consumers’ expense, while overly aggressive pricing could result in low participation”.
In an emailed statement, Sam Hollister, head of UK market strategy for consultancy LCP, says that the principle of the government’s approach is to “bring stability to the wholesale market and avoid some of the disruption that a more radical break might have caused”.
However, he adds that the reforms will not “fundamentally reduce residential energy bills today”.
Johnny Gowdy, a director of thinktank Regen, writes in a response to the plans that while both the increased windfall tax and the fixed-price contracts “have merit and could save consumers money”, there were also “pitfalls and risks” that the government will need to consider.
These include that a higher windfall tax could “spook investors”. He writes:
“A challenge for policymakers is that, while the EGL carries an investment risk downside, unless there is a very significant increase in wholesale prices, the tax revenue made by the current EGL could be quite modest.”
Gowdy says that the proposed fixed-price contracts for older renewables “is not a new idea, but its time may have come”. He writes:
“It would offer a practical way to hedge consumers and generators against volatile wholesale prices. The key challenge, however, is to come up with a strike price that is fair for consumers and does not lock future consumers into higher prices, given that we expect wholesale prices to fall over the coming decade.”
Gowdy adds that it might be possible to use the scheme as a way to support “repowering”, where old windfarms replace ageing equipment with new turbines.
On LinkedIn, Adam Bell, partner at Stonehaven and former head of government energy policy, welcomes the principle of the government’s approach, saying: “The right response to yet another fossil fuel crisis is to make our economy less dependent on fossil fuels.”
However, he adds on Bluesky that the proposals were “unlikely to reduce consumer bills”. He says this is because they offered a weak incentive for generators to accept fixed-price contracts.
The post Q&A: How the UK government aims to ‘break link between gas and electricity prices’ appeared first on Carbon Brief.
Q&A: How the UK government aims to ‘break link between gas and electricity prices’
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