In a surprise move, US president Joe Biden has announced a “temporary pause” on liquified natural gas (LNG) terminal expansion.
It has been described by some as an “election year decision” to please climate activists and by others as a distraction that might even raise global emissions.
In recent years LNG exports from the US have boomed, causing the country to leapfrog Australia and Qatar to become the world’s largest LNG exporter in 2023.
These exports have helped Europe make up the shortfall left behind by a drop in fossil-fuel supplies from Russia, following its invasion of Ukraine.
However, current and proposed EU climate policies imply a significant drop in demand for fossil fuels, including LNG imports. As such, a group of EU lawmakers have urged Biden not to use Europe as an “excuse” for further expansion.
Citing his reasons for the temporary pause in new terminal expansion, Biden said there is now “an evolving understanding of the market need for LNG, the long-term supply of LNG and the perilous impacts of methane on our planet”.
Indeed, there is already more than enough LNG export capacity to meet global demand for the fuel, if countries meet national and international climate goals.
But the move has drawn criticism from some commentators and fossil-fuel industry representatives, who have argued that it could lead to countries sourcing LNG from other countries with more polluting practices – or even encourage them to use more coal.
Below, Carbon Brief sets out the reasons why Biden has paused approvals of new LNG terminals, how much LNG capacity is currently in the global pipeline and whether the world really needs more US LNG exports.
It also explores how Biden’s move could affect global emissions, noting that criticisms put forward by oil industry representatives contradict evidence showing that all fossil fuels must rapidly be phased out to meet the world’s climate goals.
- Why has the Biden administration ‘paused’ new LNG expansion?
- How much new LNG capacity is currently in the US, and global, pipeline?
- Does the world need US LNG following Russia’s invasion of Ukraine?
- How will the supply of US LNG affect global greenhouse gas emissions?
- How will the move affect US politics in the coming months?
Why has the Biden administration ‘paused’ new LNG expansion?
On 9 January, Politico reported that Biden’s aides were considering conducting a review that “could tap the brakes on the booming US natural gas export industry”.
It said that the review was being led by the Department of Energy and would “examine whether regulators should take climate change into account when deciding whether a proposed gas export project meets the national interest”.
Examining Biden’s possible motivations for such a review, Politico said:
“US gas exports have jumped four-fold during the past decade as production has surged, turning the US into the world’s largest natural gas exporter and helping Europe replace Russian shipments after Moscow’s invasion of Ukraine. But Biden also faces growing pressure from environmental groups to live up to his pledge to transition away from fossil fuels – something the US also promised to do at last month’s climate summit in Dubai.”
(Nearly every country in the world agreed to “transition away from fossil fuels” at the COP28 climate summit in Dubai in 2023 – with the US among countries at the talks having called for even stronger wording on a total phase-out of coal, oil and gas.)
On 25 January, several publications speculated that the Biden administration was set to announce a review of approvals for new LNG export terminals.
The next day, the Biden administration released a statement announcing “a temporary pause on pending decisions on exports of LNG to non-FTA [free trade agreement] countries until the Department of Energy can update the underlying analyses for authorisation”.
The Financial Times reported that the move will “temporarily halt pending applications from 17 projects awaiting approval to proceed”. (If these projects went ahead, they would together export enough gas to produce more emissions than the EU does in a year, according to one analysis.)
The EU is technically a non-FTA country. However, a senior EU figure told the FT that the European Commission was informed about the US announcement in advance and that an exemption would be made for “immediate national security emergencies”. The official added:
“Therefore, this pause will not have any short-to-medium term impacts on the EU’s security of supply.”
Explaining the reason for the pause, the official statement from the US government said that the analysis that currently underpins new approvals for LNG exports is “roughly five years old” and “no longer adequately account[s] for considerations” such as rising fossil fuel costs or “the latest assessment of the impact of greenhouse gas emissions”. It added:
“Today, we have an evolving understanding of the market need for LNG, the long-term supply of LNG and the perilous impacts of methane on our planet.”
(Biden co-launched an international effort against methane, called the global methane pledge, at the COP26 climate summit in 2021 alongside European Commission president Ursula von der Leyen. At COP27, he described action against methane as a key “gamechanger” for tackling climate change.)
In its coverage, the Associated Press described the move as an “election year decision”. It added that Biden might be keen to align himself with environmentally-conscious voters who fear US LNG exports are “locking in potentially catastrophic planet-warming emissions when the Democratic president has pledged to cut climate pollution in half by 2030”.
Speaking to this suggestion, the official statement from the Biden administration appears to try to make an appeal to voters by saying:
“As Republicans in Congress continue to deny the very existence of climate change while attempting to strip their constituents of the economic, environmental and health benefits of the president’s historic climate investments, the Biden-Harris administration will continue to lead the way in ambitious climate action while ensuring the American economy remains the envy of the world.”
The statement also references the impact of LNG exports on domestic gas prices, which have already affected US consumers.
It comes after a report from the US Energy Information Administration released this month noted that increasing US LNG exports could fuel domestic gas price rises.
Additionally, local communities living along parts of the US coastline that have seen LNG export terminal expansion have appealed to Biden to halt such projects.
Back in December, Travis Dardar, a fisherman and member of the Isle de Jean Charles tribal community off the coast of Louisiana, told Al Jazeera that LNG export terminal expansion threatened his community’s health and ability to fish for income.
The Biden administration references the impact of LNG export terminal expansion on local communities in its official statement, saying:
“We must adequately guard against risks to the health of our communities, especially frontline communities in the US who disproportionately shoulder the burden of pollution from new export facilities.”
How much new LNG capacity is currently in the US, and global, pipeline?
Unlike coal and oil, which are relatively easy to transport by ship, gas has historically been traded predominantly via pipelines.
This began to change with the development of the LNG industry, where gas is super-chilled to turn it into a liquid that can be transported globally by ship.
Russia’s invasion of Ukraine gave further impetus to the already-rapid expansion of LNG capacity around the world, as importing countries scrambled to secure supplies.
An “unprecedented surge” in LNG projects coming online around the world from 2025 is set to add more than 250bn cubic metres (bcm) of new annual “liquefaction” capacity by 2030, according to the International Energy Agency (IEA).
This is equivalent to increasing existing global LNG export capacity by roughly half, the IEA notes.
The US is the biggest driver of this trend, largely thanks to new projects in Texas and Louisiana that will nearly double its LNG export capacity by 2028, according to the Institute for Energy Economics and Financial Analysis (IEEFA). The nation has capitalised on its “shale boom”, which propelled it to become the world’s largest producer of oil and gas.
According to figures compiled by Global Energy Monitor (GEM), the US is responsible for 102bcm of the LNG export capacity currently under construction – 38% of the global total.
The US pulled ahead of Australia and Qatar to become the world’s largest exporter of LNG in the first half of 2023, according to the US Energy Information Administration (EIA). It is expected to remain in this top spot through to 2030. (See this extensive timeline of how the US became the world’s top LNG exporter from Bloomberg reporter Stephen Stapczynski.)
Qatar and Russia are the other major LNG players, both accounting for around 17% of the capacity currently under construction, according to GEM data. Further contributors are set to come from Canada, Mexico, Iran and a handful of African nations.
(There are question marks over Russia’s LNG expansion plans, which have been hit by US sanctions linked to Russia’s ongoing occupation of Ukraine.)
On top of projects that are already underway, an additional 999bcm of LNG export capacity has been “proposed” by companies and governments worldwide, GEM data shows. If this is all given government approval and built, it would double existing capacity.
Again, the US dominates, accounting for 36% of this proposed capacity with 58 projects out of 156, according to GEM data. (The Biden administration’s pause only covers some of these proposed projects and does not cover projects that are already under construction.)
“On average it’s more likely than not that a proposed project won’t get built, but it depends on the country,” Robert Rozansky, an LNG expert at GEM, tells Carbon Brief. He notes that in some nations, such as Qatar, anything that is proposed is likely to be built, while elsewhere they face “slimmer odds”.
Does the world need US LNG following Russia’s invasion of Ukraine?
Russia’s decision to invade Ukraine in early 2022 had far-reaching implications for the global energy system. As of that year, Russia was the world’s second-largest gas producer behind the US and the third-largest oil producer behind the US and Saudi Arabia.
Before the invasion, more than a third of Europe’s gas supplies came from Russia.
But afterwards, the EU brought in new sanctions against Russian fossil fuels, while Moscow restricted supplies, fuelling an energy crisis.
In a report in October, the European Commission said the EU expected imports of Russian gas to drop to 40-45bcm in 2023, compared with 155bcm in 2021, the year before the Ukraine war, according to Reuters.
The drop in supplies from Russia left Europe scrambling for new sources of fossil fuels, with LNG exports from the US helping to make up some of the shortfall.
In December 2023, Europe received 61% of US LNG exports, according to Reuters.
But analysts have noted that Europe’s need for US LNG might be rapidly diminishing.
After Russia’s invasion of Ukraine, a rapid rise of renewables and a drop in energy demand also helped to make up the shortfall left by falling supplies from Russia.
Energy analyst Pavel Molchanov told trade publication S&P Global that “[energy] conservation and increased renewable power may wean Europe off Russian natural gas permanently” in coming years.
Wind and solar supplied more of the EU’s electricity than any other power source for the first time ever in 2022, according to Carbon Brief analysis of figures from the thinktank Ember. Molchanov told S&P Global that he “expected this trend to continue”.
Lars Nitter Havro, a senior analyst for clean technology at energy consultancy Rystad Energy, agreed, saying that the transition to renewable power offered “an unparalleled opportunity for the EU to flip the switch and secure its energy sovereignty”, according to S&P Global.
The European Commission is currently drawing up a proposal to reduce EU emissions by an expected 90% by 2040, on the way to net-zero by 2050. Under the proposals, EU fossil-fuel use could drop 80% on 1990 levels by 2040, according to Reuters.
On Twitter, Dan Byers, vice president of climate and technology at the US Chamber of Commerce’s Global Energy Institute, acknowledged that there would be no EU demand for further LNG expansion, if the bloc meets its 1.5C-aligned climate plans, according to scenarios compiled by Rystad.
Elsewhere on Twitter, Prof Jesse Jenkins, an energy researcher at Princeton University, noted that the scale of US LNG exports is on track to be large enough to “replace peak Russian gas exports to Europe 2.5-times over”.
On 25 January, a group of 60 members of the European parliament wrote to Biden arguing that “big oil” is trying to make Europe “the excuse” for surging LNG exports, the Hill reported. According to the publication, the letter said:
“Europe should not be used as an excuse to expand LNG exports that threaten our shared climate and have dire impacts on US communities.”
According to Reuters, Asia was the second-largest receiver of US LNG in December 2023, with the region taking 27% of exports.
On Twitter, Bloomberg reporter Stephen Stapczynski argued that much of future US LNG exports could go to Asia over Europe – with Asia’s shift away from coal and rapid economic growth potentially boosting the region’s demand for gas.
However, exports to Asia are currently being “depressed” by delays at the Panama canal, which have increased the cost of shipping to the region from the US, analysts told S&P Global.
The IEA has stated that the wave of new LNG projects on the horizon “raises the risk of significant oversupply” as the world heads towards net-zero.
Citing Rystad Energy analysis, Semafor’s climate and energy editor Tim McDonnell noted that the world is heading towards an LNG “supply glut”, potentially rendering new US export terminals unnecessary. He said:
“If every global LNG project under consideration now were to be built, the market would be oversupplied by 2028 and for the foreseeable future after that.”
He added that, if the world does not manage to ramp up renewable energy production to the level required to tackle climate change in the coming years, the world could be undersupplied with LNG by 2030, based on currently planned projects.
How will the supply of US LNG affect global greenhouse gas emissions?
The pause on new LNG infrastructure was widely framed as a boost for US climate policy. (Many outlets said “climate activists” were the chief beneficiaries.)
Indeed, the Biden administration cited “the climate crisis” as a key factor motivating its decision.
Nevertheless, some commentators and business groups have argued that pausing the construction of new LNG terminals will, in fact, lead to higher emissions.
“The US should not undercut our allies or fund our enemies with a policy that will increase global emissions,” said Karen Harbert, chief executive of fossil-fuel lobby group the American Gas Association, in a statement.
When it is burned, the gas that could be exported each year via US LNG terminals that are currently under construction would result in emissions of 198m tonnes of carbon dioxide (MtCO2), according to Carbon Brief analysis of GEM data.
This would be equivalent to around 4% of annual US emissions – or the total amount emitted by Ethiopia.
If all the other US LNG terminals under consideration were built, these potential emissions would increase to 704MtCO2 – equivalent to roughly 17% of US annual emissions.
Crucially, however, stopping this new export capacity from being built would not automatically cut emissions by the same amount.
The final impact on emissions would depend on how the move affects gas prices in the US and in importing countries, how this affects the amount of gas being produced and consumer demand – and what would be used instead if less LNG is exported .
The Washington Post summarised much of the opposition to Biden’s policy in an editorial that stated the effect on overall emissions would be “likely marginal”. It said:
“You cannot change demand for energy by destroying supply: If the US did indeed curtail LNG exports, it would just drive customers into the arms of competitors such as Australia, Qatar, Algeria and, yes, Russia. Quite possibly, some potential customers would choose to meet their needs with coal instead.”
The fossil-fuel industry often argues against policies that curb supply on this basis – stating that consumers ultimately determine how much of their carbon-emitting products are used.
However, many studies indicate that despite “leakage” – where cuts in fossil-fuel supply lead to more being pumped elsewhere – curbing supply still reduces overall emissions.
At the same time, the UK government’s Climate Change Committee (CCC) noted in 2022 that increases in North Sea oil and gas production would raise global emissions, even if UK production was cleaner – and even if higher supply only boosted global demand fractionally.
A 2023 paper from the thinktank Resources for the Future concluded that removing a barrel of oil from global supplies resulted in emissions cuts equivalent to 40-50% of the total lifecycle emissions of that barrel.
The IEA says focusing climate policy efforts exclusively on supply or demand alone is “unhelpful and risks postponing – perhaps indefinitely – the changes that are needed”.
In order to achieve both existing climate pledges and the 1.5C target, the IEA therefore emphasises the need for “a wide range of different policies…to scale up both the demand and supply of clean energy and to reduce the demand and supply of fossil fuels and emissions in an equitable manner”.
(In a separate report, the IEA finds that onshore wind and solar power are now cheaper to build than both gas and coal power in virtually all circumstances, globally.)
One key pro-LNG argument is that US gas produces fewer emissions overall than other fossil fuels. Therefore, if it displaces Russian gas – supplied by pipelines that leak large amounts of methane – or high-emitting coal, then it will lead to lower global emissions.
This ties into a wider debate about whether gas can and should serve as a “bridge” or “transition” fuel between coal and low-carbon electricity. The US itself has reduced CO2 emissions from its own power sector by switching from coal to gas.
However, US LNG’s environmental impacts compared to other fossil fuels is contested. Emissions from methane leaks and the energy used to liquify, ship and “regasify” gas traded around the world can add up, dampening – or even outweighing – the emissions savings of switching from coal.
A US government-commissioned study by the National Energy Technology Laboratory (NETL) showed that US LNG “will not increase greenhouse gas emissions from a lifecycle perspective” when replacing coal in Asian and European power systems.
However, it also showed that depending on how and where the gas was used, there was a large range of potential emissions outcomes. For example, if US LNG is used to heat German or UK homes, it will not be replacing coal, just other sources of gas.
At the upper end of the range, LNG resulted in roughly 50% less emissions than coal in both European and Asian settings. However, at the lower end, US LNG resulted in roughly the same lifecycle emissions as coal, the study found.
Other studies have concluded that, in fact, gas can match coal in terms of emissions, given gas infrastructure can leak the powerful greenhouse gas methane. Research affiliated with NGO the Rocky Mountain Institute found that a methane leakage rate of just 0.2% puts gas “on par with coal”.
(It is worth mentioning that the Biden administration launched a suite of new standards and monitoring for the oil and gas industry at the end of 2023, which it says will prevent 58m tonnes of methane leaking from oil-and-gas infrastructure over the next four years.)
A study by Cornell University biogeochemist Prof Robert Howarth, frequently cited by climate activists, goes even further, stating that emissions from LNG are “27% to two‐fold greater” than using coal. However, this research – which has yet to be published in a scientific journal – remains contentious.
Even assuming that gas has significantly lower emissions than coal, given the limited remaining carbon budget, researchers have demonstrated repeatedly that all fossil fuels need to be cut rapidly in order to meet the global Paris Agreement temperature goals.
In the IEA’s net-zero scenario, which aligns with the Paris Agreement 1.5C target, new LNG infrastructure that is currently under construction is “not necessary”, according to the agency’s recent oil-and-gas report. (This is even before considering the additional capacity subject to the Biden administration “pause”.)
This can be seen in the chart below, with LNG needs in the net-zero pathway (green line) met by existing capacity. Even if countries meet – but do not improve on – current climate pledges (yellow line), much of the LNG capacity currently being built would not be needed.
In effect, permits for further new LNG export capacity – in the US or elsewhere – would only be required to meet global gas demand if international climate goals are missed by a wide margin. This is shown by the blue line in the figure below, with the IEA’s “STEPS” pathway – representing current government policies – linked to warming of 2.4C this century.
This conclusion is echoed in a paper from 2022 led by Dr Shuting Yang of the Harrisburg University of Science and Technology, which concluded that “long-term planned LNG expansion is not compatible with the Paris climate targets of 1.5C and 2C”.
The analysis suggests that LNG could help to keep emissions in line with a 3C warming scenario, as it would somewhat curb the use of coal.
The researchers therefore describe LNG infrastructure as “insurance against the potential lack of global climate action to limit temperatures to 1.5C or 2C”.
On the flip side, there are concerns that building such infrastructure could “lock in” the long-term use of gas, at levels incompatible with the 1.5C or 2C targets.
Moreover, there are question marks over the extent to which additional gas exports would, in fact, be used to displace coal, given demand for the fuel is already falling rapidly in many of the countries taking US LNG imports.
In a post on LinkedIn, gas scholar Anne-Sophie Corbeau at the Columbia University Center on Global Energy Policy noted that it would be harder for LNG to displace coal in Asia than it has been for domestic gas to do the same in the US, as it is more expensive:
“As for LNG displacing existing coal in south-east Asia, unless it’s very cheap or you have a mandatory closure of coal plants or high CO2 prices, this won’t be as easy as gas displacing coal in the US. Not the same price levels.”
NRDC analysis concluded that, even among Asian nations, “only a small amount of US LNG exports is contractually obligated to countries that currently have a large amount of current coal electricity generation or are rapidly expanding”. (This analysis did not account for the wider market impact of US LNG sales, which could have knock-on effects on coal use.)
How will the move affect US politics in the coming months?
The pause on new LNG approvals is expected to be in place for months, possibly until after the November US presidential election. During this time, the Department of Energy will conduct a review of the pending applications and this will then be open to public comment.
The move has already attracted criticism from Republicans and could emerge as a talking point as Biden gears up to face his likely rival for the presidency – Donald Trump.
Responding to the decision, Reuters quoted Karoline Leavitt, a campaign spokesperson for Trump, who called it:
“One more disastrous self-inflicted wound that will further undermine America’s economic and national security.”
(Restricting LNG export capacity would tend to keep a lid on US gas prices and boost its energy security. Nevertheless, if Trump wins the election, he can be expected to reverse the decision of his predecessor. After winning the recent Iowa caucuses, he told the crowd: “We’re going to drill, baby drill, right away.”)
The response from climate campaigners has been largely positive. Veteran activist Bill McKibben wrote on his blog:
“This is the biggest check any president has ever applied to the fossil fuel industry, and the strongest move against dirty energy in American history.”
Commentators noted that the Biden administration had likely made the decision in order to appeal to young people and members of the Democrat base who prioritise climate action.
This comes as polling suggests that many young voters are turning against Biden, a trend partly attributed to his stance on the conflict in Gaza. Writing in Heatmap, editor Robinson Meyer noted that “the administration seems to be hoping a pause on LNG approvals will help reverse that dismal momentum”.
After signing up to “transition away from fossil fuels” at the COP28 summit in Dubai, the decision also sends an international message that the world’s largest oil-and-gas producer is taking action. “The pledge…was given actual meaning by Biden’s move,” McKibben wrote.
The post Q&A: What does Biden’s LNG ‘pause’ mean for global emissions? appeared first on Carbon Brief.
Q&A: What does Biden’s LNG ‘pause’ mean for global emissions?
Andy Burnham, the UK’s latest prime minister, has suggested reducing the amount the British government gives as climate finance grants and providing some of its climate finance through loans instead, in a move it anticipates will save £400 million.
The government plans to use the savings to fund a cap on bus fares in the UK, triggering accusations from the development sector that Burnham’s proposal “throws Global South countries under the bus”. One likely destination for these new loans is the Tropical Forest Forever Facility (TFFF).
Will new UK PM’s green measures at home cause climate finance pain overseas?
The TFFF is a new initiative designed to provide payments to countries that protect their rainforests by raising money from governments and private investors, channeling that money into riskier and therefore higher return assets, and using the returns it earns to fund forest protection. But there is a catch.
The UK has committed to provide around £6 billion in climate finance funded through aid (or official development assistance, ODA) over the next three years. If switching from grants to a loan to the TFFF reduces government spending, it will likely reduce the amount that counts as ODA as well.
In other words, the government can make the £400 million saving, or meet its £6 billion aid budget-funded climate finance commitment, but it probably cannot do both. The UK cannot have its cake and eat it.
How will it score as ODA?
Whether any loan to the TFFF scores as ODA depends on the OECD’s Development Assistance Committee (DAC) which is currently deliberating on this topic.
A plain reading of the DAC’s current reporting rules suggests that the TFFF would count as a multilateral organisation: the independent investment arm, the Tropical Forest Investment Fund, would ultimately be a global, official entity (with sovereign governments appointing the board and being sole equity holders), which pools capital from sponsor governments. This would mean that to count as ODA, any loan to it would have to charge less than 5% interest.
Tropical forest protection fund at risk after UK stalls on pledge
The current concept note suggests a return for sponsor capital equivalent to US borrowing costs of a similar duration: currently around 5.2%, which would make any such loans ineligible. The UK could choose to charge less, but if the UK charges less than it borrows (also above 5%), the difference will add to the deficit in future years. And ODA accounting is not binary: if the UK charges just under 5%, only a small fraction of the loan would count.
At the same time, the risk profile of TFFF is not the same as your average multilateral, and there is speculation that the DAC could allow higher interest loans to TFFF to partially count (by changing the ‘discount rate’ used to measure how concessional the loan is). The TFFF’s own modelling suggests that the risk of the UK losing money on the loan would be fairly limited: roughly a 1% chance of some capital impairment in the riskiest scenario. But some analysts doubt the accuracy of this model and view the risk as much greater.
Would it really save money?
If the risk really is higher, then it might justify counting more ODA on a loan to the TFFF, but it also undermines the arguments that this would create savings for the government. Loans generally don’t count towards the deficit because they create an asset. But that only works if the loan is expected to be fully repaid. If there is a material risk of losing money, then at least some of the transaction will also count towards the deficit.
One possibility is that the loan will be ‘partitioned’ into a financial asset (the part which is expected to be repaid and wouldn’t count towards the deficit) and a ‘capital transfer’ (the part not expected to be repaid). The greater the risk, the larger that second component, and the bigger the impact on the deficit.
This would be the ODA and public accounting rules working as intended. ODA is a measure of ‘donor effort’, usually taken to mean fiscal impact. If it counts as ODA, it should have an impact on the deficit. And the fiscal treatment itself is governed by numerous international accounting standards, a key purpose of which is preventing politically motivated obfuscation of how governments spend their money. If it costs money, there should be an impact on the deficit even if it is a loan. If it doesn’t, it shouldn’t count as ODA (even if there have been exceptions in the past).
UK halves Green Climate Fund contribution, as it spends more on security
Base funding on need, not accounting
We still know too little about the details to be sure how a loan to the TFFF (or a more exotic transaction) would count towards either ODA or the UK’s headline measures of debt and deficit. The key parameter for each is risk: the lower risk, the more likely it is that the transaction will save money, but the greater the chance that the government would have to spend more ODA elsewhere to meet its climate finance target.
If the UK believes in the TFFF business model and wants to preserve tropical forests, then it should invest. But this decision should not be driven by optimistic accounting tricks. The government cannot expect to reduce the real value of climate finance to partner countries by giving less in grant money, without this having an impact on commitments to spend that money.
The post UK’s budget juggling trick with rainforest loan for bus-fare cap needs transparency appeared first on Climate Home News.
UK’s budget juggling trick with rainforest loan for bus-fare cap needs transparency
Climate Change
Coal mine approval as Albanese meets Pacific leaders undermines Pacific partnership, as UN warns of 1.5C overshoot
SYDNEY, Thursday 3 September 2026 — Greenpeace Australia Pacific has branded the Albanese government’s approval of BHP’s coal mine extension in Central Queensland an affront to Pacific leaders and communities grappling with climate disasters, and a reckless move that undermines Australia’s partnership with the Pacific as the PM meets regional leaders at the Pacific Islands Forum.
The approval of BHP’s coal Saraji Mine Grevillea Pit Continuation Project, an extension of one of Australia’s largest coal mines, would allow mining to continue for another 30 years, locking in the production and export of polluting coal and fuelling dangerous extreme weather disasters and sea level rise in Australia and across the Pacific. It will be the 10th fossil fuel project approved during this term of government and the 37th new fossil fuel project approved since the Albanese government was elected in 2022.
The announcement comes as a UN report warns of dangerous climate overshoot, and just two months before Federal Climate and Energy Minister Chris Bowen is due to take the reins of UN climate negotiations at COP31 — a moment that will test the government’s climate credibility and bring global attention to Australia’s fossil fuel exports. It also comes as fracked gas from the Beetaloo Basin climate bomb started flowing.
Speaking from Palau, Dr Simon Bradshaw, COP31 Lead at Greenpeace Australia Pacific, said: “It is deeply insincere for Prime Minister Albanese to meet Pacific leaders here in Palau to discuss security, the energy crisis, and regional threats, while his government fast-tracks the biggest security threat to the Pacific, the climate crisis.
“As leaders meet, thousands remain missing or dead in the Nepal-Tibet floods. Parts of Australia are bracing for a heatwave that will see temperatures approach 40 degrees, just days out of winter, and a new report finds 2,000 kilometres of coral reefs along the WA coast experienced the worst coral bleaching on record.
“We are witnessing dangerous climate change driven by the production, export and burning of fossil fuels, wreaking havoc across the world. Continuing down the path of fossil fuels and approving new coal is an act of recklessness at a pivotal moment in the world’s energy transition and response to the climate crisis. Communities must not pay the price for fossil fuel greed.
“No more double talk. Australia must get squarely behind longstanding Pacific leadership on climate change, fight to protect the all-important goal of limiting warming to 1.5°C, and ensure that COP31 builds further momentum in the global transition away from fossil fuels.
“A pathway back to 1.5°C is possible. The Pacific Pre-COP and COP31 in Türkiye are critical moments for Australia to work with Pacific leaders to better align energy, climate and trade policies towards a prosperous shared future beyond fossil fuels.”
-ENDS-
Media contact
Kate O’Callaghan on 0406 231 892 or kate.ocallaghan@greenpeace.org
China’s carbon dioxide (CO2) emissions fell by 1% in the second quarter of 2026, as oil consumption plummeted amid the strait of Hormuz crisis.
The country’s use of oil fell by 9% overall and by 16% for transport, after the disruptions to supply from the Gulf through the strait.
This guest post is by:
Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air
China’s total CO2 emissions fell despite a continued rebound in coal-fired power generation.
This is the first time that reductions in oil consumption have been responsible for a fall in CO2 emissions overall – in all previous cases, coal consumption has been the main driver.
Other key findings for the second quarter of 2026 include:
- Electric vehicles (EVs) and public transport have become key factors in China’s oil demand, enabling transportation levels to increase even as fuel use fell sharply.
- The effect of EVs on oil consumption was almost twice as large as would be expected based on the increase in the number of EVs on the road alone, as the usage of existing EVs surged.
- Oil consumption displaced by EVs in China in the first half of 2026 exceeded the UK’s total oil consumption over a six-month period.
- These structural factors are not sufficient to account for the size of the fall in oil consumption, leaving behaviour changes as the other explanation.
- “Curtailment” of solar and wind output caused coal power to rise, despite strong hydro output, solar and wind capacity growth, as well as slower demand growth.
- Major increases in coal-power capacity and a power market that continues to favour coal limited the amount of coal generation displaced by new wind and solar capacity.
- Defying expectations of a boom, annual growth in coal use for chemicals production slowed down to 8%, from 15% in 2025 and 19% in the first quarter.
The second quarter of 2026 was a busy time for China’s government planners, with numerous energy-related five-year plan documents being released.
These plans list new measures to address solar and wind curtailment, as well as signalling a higher bar for the approval of new coal-power plants, but add few new quantitative targets.
After a 2% increase in the first quarter of 2026 and a 1% decline in the second, emissions are up marginally across the first half of the year, but they remain below their peak in 2023-24.
In addition, China is on track to add enough wind, solar, nuclear and hydropower this year to cover electricity demand growth, despite a slowdown in new capacity.
Given the structural pressures on oil demand, continued declines in real-estate construction and slower growth for coal-chemicals, China’s emissions could still fall this year. The emission trend remains a race between energy demand growth and clean-energy growth, both of which have slowed down this year.
Emissions still flat
There has now been a plateau in China’s CO2 emissions from fossil fuels and cement for more than two years, following a peak in March 2024.
Previous analysis for Carbon Brief described this as a “flat or falling” trend, which extended until the end of 2025. There was then a 2% increase in emissions year-on-year in the first quarter of 2026, resulting from a rise in the amount of “wasted” wind and solar power.
The latest analysis shows that this was followed by another decline in the second quarter of this year, when China’s emissions fell by 1%, as shown in the figure below.
For further details see: About the data.
Notably, China’s emissions fell in the second quarter despite an increase in coal use. For the first time ever, a drop in oil use was sufficient to drive a decline in emissions overall.
Oil use plummeted while coal grew
Within the overall 1% decline in China’s emissions in the second quarter of 2026, there were divergent trends when looking sector by sector and fuel by fuel.
The largest fall in CO2 emissions came from the consumption of petrol, diesel and jet fuel, with oil consumption in industry also falling, as shown in the figure below.
For further details see: About the data.
Crude oil processing volumes fell 11% in the second quarter, but some of the fall was absorbed by drawing down oil product inventories, with Sinopec sales down 9%.
In total, China cut back oil imports by 32% in the second quarter. The million–barrel question has been how much of this was enabled by genuine reductions in oil consumption and how much by the drawdown of the country’s vast oil stockpile.
Energy mix numbers reported by the National Bureau of Statistics indicate that oil consumption fell by 3% in the first half of the year and around 9% in the second quarter. This shows that reduced consumption played a substantial role, while still leaving 60% of the fall in imports to be covered by the swing from building stockpiles to using them.
The sector with the largest increase in emissions during the second quarter of the year was power, where coal use grew 2.4% while gas-fired generation fell 1.2%. This was despite strong growth in wind and solar capacity over the preceding year, a significant rebound in hydropower generation, a small increase in nuclear power output and a slowdown in electricity consumption growth.
The explanation for the rise in emissions was – similar to the first quarter of 2026 – an increased amount of solar and wind generation being “wasted” due to the power market and grid not being adapted to increasing shares of variable renewable generation.
In other sectors, there was a fall in cement production, driven by falling construction volumes, which accelerated to 9% in the second quarter, from 8% in the first quarter. Crude steel output fell by 1% and pig-iron production by 3% in the second quarter.
Growth of coal use for chemical production slowed down in the second quarter, both compared with the previous quarter and the last year.
The rate of utilisation of installed coal processing capacity was already high before the current oil shock, so there was no headroom for production to increase even though rising oil prices made coal-chemicals more profitable. Oil-based chemical production also kept growing, with ethylene output up 17% and primary plastics production flat.
Coal use for heating continued to increase, with the sector’s coal consumption in the second quarter dominated by industrial heat, as there is little need for space heating at this time of year. Growth has continued despite the prominent drive for “zero-carbon industrial parks”, demonstrating the importance of the initiative for tackling industrial coal use.
What drove the fall in oil consumption?
The dramatic fall in China’s demand for oil imports during the Hormuz crisis has been widely hailed as the most important price stabilising factor for the global oil market.
To understand the implications for China’s oil consumption and CO2 emissions going forward, it is important to unpack what enabled this reduction in imports.
A significant contribution comes from ongoing, structural reductions in transport oil demand driven by electrification. Sinopec had forecast 6% and 5% drops in diesel and petrol consumption this year, respectively, already before the start of the war on Iran. Actual sales fell 9% in the first half of the year.
Transportation levels show a slowdown in growth, but no outright decline. Cross-regional passenger trips were 0.1% higher year-on-year in the second quarter, while urban passenger trips were 2.9% higher. Commercial freight tonnage increased 2.4%.
The exception is air travel, where passenger numbers fell 7% in May-June, after 7% growth in the first quarter. However, this sector plays a minor role in overall transport oil consumption in China.
The stable or growing transportation levels show that the shift to electric vehicles, rail, public transport and other clean transportation, rather than a fall in mobility, played the key role in reducing oil consumption.
The rise in fuel prices that accompanied the Hormuz crisis only accelerated the structural shifts in transportation that were already underway.
Electric heavy-truck sales rose about 77% in the second quarter, year-on-year, with June sales more than doubling and the market share of electric trucks exceeding 45% of all new sales.
The total number of EVs on the road at the end of the quarter grew 33% year-on-year. Some 12.1m EVs were added, of which 8.1m were electric-only battery EVs.
EV usage saw even more of a shift. Charging volumes increased 60% in the second quarter, indicating that EVs already on the road were utilised much more than before, at the expense of petrol and diesel vehicles, with plug-in hybrid drivers likely favouring electricity over fuel.
One factor enabling EV utilisation to grow was the increased use of electric taxis. Intense competition in the sector has pushed prices down at the same time as the use of private petrol vehicles has become more expensive.
Stronger subway and rail use also made a contribution. Rail-passenger traffic increased 5% in the first half of the year.
The fall in diesel demand has been particularly pronounced in the construction and mining sectors. The heavy machinery in the sectors is well-suited for electrification, in addition to which construction levels are also falling.
Based on reported growth in charging volumes, EVs helped avoid an estimated 19m tonnes of oil consumption (Mtoe) in the second quarter, up 50% year-on-year.
This took the total amount of oil displaced by EVs to 36 Mtoe in the first half of the year, as shown in the figure below, well exceeding, say, the total oil consumption of the UK over six months. Notably, trucks are the fastest-growing source of oil displacement, with avoided fuel use up 90% year-on-year in the first half of 2026.
For further details see: About the data.
The increase in avoided oil consumption due to EVs is equal to 4.5% of China’s oil imports in the same period in 2025. If EV sales and charging volumes continue their growth at the same rates in the second half of the year, avoided oil consumption will reach 80 mn tonnes, equal to the consumption of Mexico.
Estimated emissions avoided are 35 MtCO2, or 1.3% of China’s total CO2 emissions in the second quarter, after taking into account emissions from power generation for vehicle charging.
While the amount of oil displaced by the shift to EVs is significant – and is rising fast – the year-on-year increase in displaced oil still only accounts for a third of the drop in China’s oil consumption in the first half of the year, with the fall in consumption only accounting for half of the drop in imports. The remaining reduction is due to the shift from building to drawing down stockpiles, slower growth in chemical industry output, as well as behavioral adaptations by consumers and operational adaptations by businesses.
Coal power continued to rise despite clean-capacity growth
China saw record increases in solar and wind capacity over the past year. In addition, hydropower generation increased 9% in the second quarter of the year, compared with the same period in 2025, and there was a small 2% increase in nuclear-power output.
At the same time, the rate of power demand growth slowed down from 5.9% in the second quarter of 2025 to 5.2% in the same period in 2026.
Yet, power-sector emissions increased 3.0% in the first half of 2026, after falling 3.2% in the first half of 2025. Power generation from fossil fuels rose because of an increase in the amount of potential solar and wind generation that was wasted, as well as exceptionally poor wind conditions. Without those factors, coal-fired power generation and power-sector emissions would also have fallen in 2026.
Wind-power capacity has continued strong growth in 2026, with capacity additions in both the first and the second quarter of the year comfortably exceeding those in any year other than the record-setting 2025.
Solar power additions have slowed sharply from the rates seen in 2025, even falling behind 2024. Yet, they are in line with 2023, when more than 200 gigawatts (GW) was added by year-end.
Nuclear power development continues at pace, with eight new reactors approved in July and five reactors with 4.5GW total capacity expected to enter commercial operation this year. This includes China’s second commercial small modular reactor, Linglong One, with new policies paving the way for further development.
Reactor commissioning will pick up further next year: the government has approved 10 new reactor projects every year since 2022 and those projects will begin to come online. Meanwhile, 3GW of conventional hydropower was added, with a total of 6GW of projects targeting operation in 2026.
Taken together, this clean-energy growth puts China on track to add enough non-fossil generating capacity in 2026 to cover electricity demand growth of up to 5%, despite the slowdown in solar.
Power demand grew 5.3% in the first six months of 2026 and the energy regulator projects 5-6% for the whole year. This means that the increase in power-sector emissions seen in the first half would be reversed, once the obstacles to solar and wind sending their output to the grid are addressed – and once wind conditions revert to average levels.
Moreover, total energy demand growth has slowed down much more sharply than electricity demand, making it more feasible for clean-power generation growth to significantly exceed the increase in total energy consumption and to drive down fossil-fuel consumption.
For further details see: About the data.
The key reason for solar and wind curtailment in China is that neither the power-grid operating model nor the electricity market model require – or encourage – the flexible operation of coal-power plants, hydropower plants and inter-provincial transmission lines.
This situation has been exacerbated by a wave of new coal-power plants entering operation, with newly added capacity reaching 30GW in the first half of 2026, the highest level since 2016. Another 25GW started construction, while less than 3GW was retired.
The electricity prices paid to coal-fired generators are fixed months in advance, as are the volumes of electricity that will be transmitted through long-distance power lines.
This removes the incentive for plants to adjust their output in response to conditions. This could include variations in solar and wind supply, or changes in power demand.
As a result, there is limited ability for the grid to absorb variable renewable power. Furthermore, coal plants are entitled to “capacity payments”, which require them to be available to generate, but do not reward them for operating flexibly.
One solution to integrate more solar and wind into the grid is increasing energy storage capacity. Battery storage capacity continued to grow, with 17GW added in the first half of 2026, bringing total installed capacity to 153GW. This represents a slowdown in storage additions, however, down from 23GW in the first half of 2025.
Outlook for China’s CO2 emissions
The key developments affecting the outlook for China’s emissions in the second quarter include the effects of the Hormuz oil-and-gas crisis, the release of a long list of sectoral five-year plans and a slowdown in energy consumption growth.
The rise in oil prices has caused a stronger shift in China’s transportation sector than anyone anticipated, with EV deployment and use accelerating from an already high base. This trend is unlikely to be reversed. It has also proven the value of electrification to China’s energy security strategy.
The government is targeting a slight acceleration in the pace of electrification, aiming for electricity to make up 35% of energy end-use by 2030, up from 30% in 2025. This is a larger increase than achieved over the past five years, when the share of electricity rose from 26.5% in 2020 to 30% by 2025. The transportation sector plays a significant role in this, with a target for EVs to make up 30% of the vehicle fleet, up from 12% in 2025, and 25% of commercial vehicles.
Electrification both reduces emissions immediately and sets different sectors up for deep decarbonisation as electricity is much easier to produce without CO2 emissions than fuels. Faster transport sector electrification lowers the outlook for oil demand, increases the role of the sector in peaking and reducing emissions, plus means that more of China’s clean energy growth ends up displacing oil.
While transport emissions fell, power-sector emissions continued to rebound for the second quarter in a row. The increased coal-fired power generation and emissions can be attributed to increased solar and wind curtailment. Curtailment has emerged as the key obstacle to both continued rapid solar and wind capacity growth and full utilisation of existing capacity.
Several sectoral five-year plans published in recent months have laid out measures to improve solar and wind utilisation.
Long-distance transmission will continue to expand, helping to move wind and solar generation from remote “energy bases” to centres of demand. There is also a growing emphasis on local consumption of clean power. The power sector five-year plan, published in August, promotes direct purchases of clean electricity, smart microgrids, zero-carbon industrial parks and closer coordination between renewable resources and AI computing infrastructure
Yet the same plan further loosened the limits on the amount of wind and solar that can be curtailed.
The limit for curtailment was 5%, until it was relaxed to 10% in 2024 in provinces with good wind and solar resources. The new plan allows the limit to be increased further to 15% for some provinces, while keeping it at 5% and 10% for others.
Looking at the 2025 data on reported curtailment, very few provinces had higher rates than 15% – only Tibet for wind and Qinghai and Tibet for solar.
Unless the most lenient limit is only applied to those two provinces, it means the plan would allow for higher levels of curtailment.
This is also true of the national average target of “around” 10% curtailment, given reported rates in 2025 were 94% and 95% for wind and solar, respectively.
Notably, monthly data on curtailment has not been published in recent months, raising the possibility that the indicator is being revised. Reported data has understated actual curtailment by a wide margin, compared to implied curtailment.
If the curtailment indicator is revised, such that it captures more of the actual curtailment, then this could make the headline targets stronger than they appear, in comparison to previously reported numbers.
The new five-year plans also lowered the overall level of ambition on coal use. Chinese president Xi Jinping announced in 2021 that China would “gradually reduce coal consumption during the 15th five-year period”, covering 2026-30. However, the target now is for coal consumption to “enter a plateau” during those five years.
The five-year plans call for “reasonably controlling coal-power capacity and generation”, signaling a higher bar for the approval for new coal-power projects, after the government’s active promotion of new coal power in recent years. This could also imply more retirements of older coal plants. However, there is 204GW of coal-power capacity under construction, even after the wave of new coal-power plants starting operation in 2025 and in the first half of 2026, making the implementation of the “reasonable control” more challenging.
It is the first time that the government has vowed to control “coal-power generation” and not just “generation growth”, as the energy regulator did in 2021, but the significance of that distinction is unclear.
The renewable energy five-year plan also broadens the concept of system reliability, which was a key justification for new coal power during the previous five years. Rather than relying primarily on coal-fired power for system stability, it increasingly looks to other options.
Alternatives include storage, flexible demand, EVs, “virtual power plants” and smarter system operation to provide balancing services. The plan also puts an emphasis on increasing the contribution of renewable energy to meeting demand peaks.
Therefore, while coal remains an important backup resource in the plan, reliability is no longer framed as something that can only be provided by coal.
The Chinese government has published numerous other sectoral five-year plans since its overarching plan came out in March. These include plans for the energy sector (“new-type energy system”), power system, renewable energy, carbon peaking, coal, climate-change mitigation, and the environment (“Beautiful China”). Some clear priorities emerge from these plans: electrification, electric vehicles, energy storage, offshore wind and “green”” fuels.
The energy plan also substantially increased ambition on the development of conventional hydropower, despite ecological and social risks and potential for tensions with neighbouring countries. The capacity additions will largely only materialise after 2030, however.
At the same time, energy consumption growth has slowed down markedly after the surge during and immediately after the “zero-Covid” period, making it more feasible for clean energy to meet all incremental demand.
If this trend continues, then total CO2 emissions will begin to fall even as power-sector emissions continue to plateau.
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, as well as from industry data provider WIND Information and from Sinopec, China’s largest oil refiner.
Electricity generation from wind and solar, along with 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 were taken from National Bureau of Statistics monthly releases.
Total primary energy consumption is converted to the electricity equivalent using the substitution method.
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. The CO2 emissions factor for cement is based on annual estimates up to 2024.
For oil, total oil consumption is calculated based on energy mix data for the first quarter and first half of the year released by the National Bureau of Statistics. Consumption of transport fuels – diesel, petrol and jet fuel – is estimated based on the sales growth reported by Sinopec for the first quarter and the first half of the year, 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 as the residual.
Estimated non-energy use of fossil fuels is subtracted from total chemical industry fossil fuel consumption, and process emissions are calculated based on fossil fuel consumption with carbon retained in products subtracted. Emissions from the incineration of plastics are based on a peer-reviewed estimate of plastics incineration in 2022, combined with growth rates in the overall power generation from waste-to-energy plants. Metals industry process emissions are calculated using industrial output data and IPCC default emission factors.
Oil consumption displaced by EVs is estimated using China Association of Automobile Manufacturers’ sales data, via Wind Financial Terminal. The data breaks down vehicle sales by type and powertrain: passenger cars, buses, vans, semis and trucks of different sizes, each split into battery-electric and plug-in hybrid, with assumptions about how far each vehicle type is driven per year and the fuel economy of the conventional vehicle it replaces.
Annual mileage and fuel-consumption assumptions are compiled from different sources, including the International Council on Clean Transportation. Each electric vehicle sold is credited with avoiding the fuel a comparable internal-combustion vehicle would have burned; plug-in hybrids are credited only with the portion of driving done on electricity (a utility factor of 64%).
The electricity and oil figures are calibrated to figures from China’s National Energy Administration, which put new-energy-vehicle charging at 142.3 TWh in 2025 and reported 56.9% year-on-year growth in the first half of 2026. The second half of 2026 is a projection: each vehicle segment’s actual second-half-2025 displacement is grown by its first-half-2026 year-on-year rate.
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