A scenario that meets the “net-zero by 2050” goal would be the “cheapest” option for the UK, according to modelling by the National Energy System Operator (NESO).

In a new report, the organisation that manages the UK’s energy infrastructure says its “holistic transition” scenario would have the lowest cost over the next 25 years, saving £36bn a year – some 1% of GDP – compared to an alternative scenario that slows climate action.

These savings are from lower fuel costs and reduced climate damages, relative to a scenario where the UK fails to meet its climate goals, known as “falling behind”.

The UK will need to make significant investments to reach net-zero, NESO says, but this would cut fossil-fuel imports, support jobs and boost health, as well as contributing to a safer climate.

Slowing down these efforts would reduce the scale of investments needed, but overall costs would be higher unless the damages from worsening climate change are “ignored”, the report says.

In an illusory world where climate damages do not exist, slowing the UK’s efforts to cut emissions would generate “savings” of £14bn per year on average – some 0.4% of GDP.

NESO says that much of this £14bn could be avoided by reaching net-zero more cheaply and that it includes costs unrelated to climate action, such as a faster rollout of data centres.

Notably, the report appears to include efforts to avoid the widespread misreporting of a previous edition, including in the election manifesto of the hard-right, climate-sceptic Reform UK party.

Overall, NESO warns that, as well as ignoring climate damages, the £14bn figure “does not represent the cost of achieving net-zero” and cannot be compared with comprehensive estimates of this, such as the 0.2% of GDP total from the UK’s Climate Change Committee (CCC).

Net-zero is the ‘cheapest option’

Every year, NESO publishes its “future energy scenarios”, a set of four pathways designed to explore how the nation’s energy system might change over the coming decades.

(Technically the scenarios apply to the island of Great Britain, rather than the whole UK, as Northern Ireland’s electricity system is part of a separate network covering the island of Ireland.)

Published in July, the scenarios test a series of questions, such as what it would mean for the UK to meet its climate goals, whether it is possible to do so while relying heavily on hydrogen and what would happen if the nation was to slow down its efforts to cut emissions.

The scenarios have a broad focus and do not only consider the UK’s climate goals. In addition, they also explore the implications of a rapid growth in electricity demand from data centres, the potential for autonomous driving and many other issues.

With so many questions to explore, the scenarios are not designed to keep costs to a minimum. In fact, NESO does not publish related cost estimates in most years.

This year, however, NESO has published an “economics annex” to the future energy scenarios. It last published a similar exercise in 2020, with the results being widely misreported.

In the new annex, NESO says that the UK currently spends around 10% of GDP on its energy system. This includes investments in new infrastructure and equipment – such as cars, boilers or power plants – as well as fuel, running and maintenance costs.

This figure is expected to decline to around 5% of GDP by 2050 under all four scenarios, NESO says, whether they meet the UK’s net-zero target or not.

For each scenario, the annex adds up the total of all investments and ongoing costs in every year out to 2050. It then adds an estimate of the economic damages from the greenhouse gas emissions that primarily come from burning fossil fuels, using the Treasury’s “green book”.

When all of these costs are taken into account, NESO says that the “cheapest” option is a pathway that meets the UK’s climate goals, including all of the targets on the way to net-zero by 2050.

It says this pathway, known as “holistic transition”, would bring average savings of £36bn per year out to 2050, relative to a pathway where the UK slows its efforts on climate change.

The overall savings, illustrated by the dashed line in the figure below, stem primarily from lower fuel costs (orange bars) and reduced climate damages (white bars).

Note that the carbon pricing that is already applied to power plants and other heavy industry under the UK’s emissions trading system (ETS) is excluded from running costs in the annex, appearing instead within the wider “carbon costs” category.

This makes the running costs of fossil-fuel energy sources seem cheaper than they really are, when including the ETS price.

Net-zero requires significant investment

While NESO says that its net-zero compliant “holistic transition” pathway is the cheapest option for the UK, it does require significant upfront investments.

The scale of the additional investments needed to stay on track for the UK’s climate goals, beyond a pathway where those targets are not met, is illustrated in the figure below.

This shows that the largest extra investments would need to be made in the power sector, such as by building new windfarms (shown by the dark yellow bars). This is followed by investment needs for homes, such as to install electric heat pumps instead of gas boilers (dark red bars).

These additional investments would amount to around £30bn per year out to 2050, but with a peak of as much as £60bn over the next decade.

These investments would be offset by lower fuel bills, including reduced gas use in homes (pale red) and lower oil use in transport (mid green).

Notably, NESO says it expects EVs to be cheaper to buy than petrol cars from 2027, meaning there are also significant savings in transport capital expenditure (“CapEx”, dark green).

Again, the biggest savings in “holistic transition” relative to “falling behind” would come from avoided climate damages – described by NESO as “carbon costs”.

Net-zero cuts fossil-fuel imports

In addition to avoided climate damages, NESO says that reaching the UK’s net-zero target would bring wider benefits to the economy, including lower fuel imports.

Specifically, it says that climate efforts would “materially reduce” the UK’s dependency on overseas gas, with imports falling to 78% below current levels by 2050 in “holistic transition”. Under the “falling behind” scenario, imports rise by 35%”, despite higher domestic production.

This finding, shown in the figure below, is the opposite of what has been argued by many of those that oppose the UK’s net-zero target.

NESO goes on to argue that the shift to net-zero would have wider economic benefits. These include a shift from buying imported fossil fuels to investing money domestically instead, which “could bring local economic benefits and support future employment”.

The operator says that there is the “potential for more jobs to be created than lost in the transition to net-zero” and that there would be risks to UK trade if it fails to cut emissions, given exports to the EU – the UK’s main trading partner – would be subject to the bloc’s new carbon border tax.

Beyond the economy, NESO points to studies finding that the transition to net-zero would have other benefits, including for human health and the environment.

It does not attempt to quantify these benefits, but points to analysis from the CCC finding that health benefits alone could be worth £2.4-8.2bn per year by 2050.

Investment is higher for net-zero than for ‘not-zero’

It is clear from the NESO annex that its net-zero compliant “holistic transition” pathway would entail significantly more upfront investment than if climate action is slowed under “falling behind”.

This idea, in effect, is the launchpad for politicians arguing that the UK should walk away from its climate commitments and stop building new low-carbon infrastructure.

As already noted, the NESO analysis shows that this would increase costs to the UK overall.

Still, NESO’s new report adds that “falling behind” would “save” £14bn a year – relative to meeting the UK’s net-zero target – as long as carbon costs are “ignored”.

Specifically, it says that ignoring carbon costs, “holistic transition” would cost an average of £14bn a year more out to 2050 than “falling behind”, which misses the net-zero target. This is equivalent to 0.4% of the UK’s GDP and is illustrated by the solid pink line in the figure below.

Some politicians are indeed now willing to ignore the problem of climate change and the damages caused by ongoing greenhouse gas emissions. These politicians may therefore be tempted to argue that the UK could “save” £14bn a year by scrapping net-zero.

However, NESO’s report cautions against this, stating explicitly that the “costs discussed here do not represent the cost of achieving net-zero emissions”. It says:

“Our pathways cannot provide firm conclusions over the relative costs attached to the choices between pathways…We reiterate that the costs discussed here do not represent the cost of achieving net-zero emissions.”

It says that the scenarios have not been designed to minimise costs and that it would be possible to reach net-zero more cheaply, for example by focusing more heavily on EVs and renewables instead of hydrogen and nuclear.

Moreover, it says that some of the difference in costs between “holistic transitions” and “falling behind” is unrelated to climate action. Specifically, it says that electricity demand from data centres is around twice as high in “holistic transitions”, adding some £5bn a year in costs in 2050.

In addition, NESO says that most of the “saving” in “falling behind” would be wiped out if fossil fuel prices are higher than expected – falling from £14bn per year to just £5bn a year – even before considering climate damages and wider benefits, such as for health.

Finally, NESO says that failing to make the transition to net-zero would leave the UK more exposed to fossil-fuel price shocks, such as the global energy crisis that added 1.8% to the nation’s energy costs in 2022. It says a similar shock would only cost 0.3% of GDP in 2050 if the country has reached net-zero – as in “holistic transition” – whereas costs would remain high in “falling behind”.

The post Net-zero scenario is ‘cheapest option’ for UK, says energy system operator appeared first on Carbon Brief.

Net-zero scenario is ‘cheapest option’ for UK, says energy system operator

Welcome to Carbon Brief’s China Briefing.

China Briefing handpicks and explains the most important climate and energy stories from China over the past fortnight. Subscribe for free here.

Key developments

Record power and gas demand

DOMESTIC TURBINES: China’s top economic planning body, the National Development and Reform Commission (NDRC), expects both electricity demand and gas demand to hit the “highest level yet recorded in winter”, reported Reuters. Data from a sample of coal plants nevertheless showed a recent drop in output year-on-year. Meanwhile, China has developed a “high-efficiency” gas turbine which will “strengthen[ China’s] power grid with low-carbon electricity”, said state news agency Xinhua. According to Bloomberg, the turbine is the first to have been fully produced in China, helping the country to “reduce reliance on imported technology amid a global shortage of equipment”.

‘SUBDUED’ OIL GROWTH: Chinese oil demand is likely to “remain subdued” until at least the middle of 2026, reported Bloomberg. Next year will see “one of the lowest growth rates in China in quite some time”, said commodities trader Trafigura’s chief economist Saad Rahim, reported the Financial Times. Demand is set to plateau until 2030, according to research linked to “state oil major” CNPC, said Reuters. In the building materials industry, carbon dioxide (CO2) emissions are “projected to fall by 25%” in 2025 relative to pre-2021 levels, China Building Materials Federation president Yan Xiaofeng told state broadcaster CCTV.

FLAT EMISSIONS GROWTH: China’s CO2 emissions in 2024 grew by 0.6% year-on-year, reported Xinhua, citing the newly released China Greenhouse Gas Bulletin (2024). This represented a “significant narrowing from the 2023 increase and remains below the global average growth rate of 0.8%”, it added. (The bulletin confirms analysis for Carbon Brief published in January, which put China’s 2024 emissions growth at 0.8%.)

China-France climate statements

CLIMATE BONHOMIE: During a visit by French president Emmanuel Macron to China, the two countries signed a joint statement on climate change, reported Xinhua. It published the full text of the statement, which pledged more cooperation on “accelerating” renewables globally, as well as “enhancing communication” in carbon pricing, methane, adaptation and other areas. It also said China and France would support developing countries’ access to climate finance, adding that developed nations will “take the lead in providing and mobilising” this “before 2035”, while encouraging developing countries to “voluntarily contribute”.

MORE COOPERATION: China and France issued separate statements on “nuclear energy” cooperation, Xinhua reported, as well as on expanding cooperation on the “green economy”, according to the Hong Kong-based South China Morning Post.

EU’s new ‘economic security’ package

NEW PLANS, SAME TOOLS: Meanwhile, the EU has issued new plans to “boost EU resilience to threats like rare-earth shortages”, said Reuters, including an “economic security doctrine” that would encourage “new measures…designed to counter unfair trade and market distortions, including overcapacity”. A second plan on critical minerals will “restrict exports of [recyclable] rare-earth waste and battery scrap” to shore up supplies for “electric cars, wind turbines and semiconductors”, according to another Reuters article. Euractiv characterised the policy package as a “reframing of existing tools and plans”.

‘NOT VERY CREDIBLE’: EU climate commissioner Wopke Hoekstra told the Financial Times that the latest push against the bloc’s carbon border adjustment mechanism (CBAM), which the outlet said is “led by China, India and Saudi Arabia”, was “not very credible”. A “GT Voice” comment in the state-supporting Global Times said the CBAM exposed a dilemma around the “absence of a globally accepted, transparent and equitable standard for measuring carbon footprints”. It called CBAM a “pioneering step”, but said climate efforts needed “greater international coordination, not unilateral enforcement”.

FIRST REVIEW: The EU has undertaken its first “formal review” of the tariffs placed on Chinese-made electric vehicles (EVs), assessing a price undertaking offer submitted by Volkswagen’s Chinese joint venture, reported SCMP. Chinese EVs – including both hybrid and pure EVs – saw their “second-best month on record” in October, with sales coming down slightly from September’s peak, said Bloomberg.

More China news

• ECONOMIC SIGNALS: At the central economic work conference, held in Beijing on 10-11 December, President Xi Jinping said China would adhere to the “dual-carbon” goals and promote a “comprehensive green transition”, reported Xinhua.
• EFFORTS ‘INTENSIFIED’: Ahead of the meeting, premier Li Qiang also noted earlier that energy conservation and carbon reduction efforts must be “intensified”, according to the People’s Daily.
• JET FUEL: A major jet fuel distributor is being acquired by oil giant Sinopec, which could “risk slowing [China’s] push to decarbonise air travel”, reported Caixin.
• SLOW AND STEADY: An article in the People’s Daily said China’s energy transition is “not something that can be achieved overnight”.
• ‘ECO-POLICE’: China’s environment ministry published a draft grading system for “atmospheric environmental performance in key industries”, including assessment of “significant…carbon emission reduction effects”, noted International Energy Net. China will also set up an “eco-police” mechanism in 2027, China Daily said.
• INNOVATION INITIATIVE: The National Energy Administration issued a call for the “preliminary establishment of a new energy system that is clean, low-carbon, safe and efficient” in the next five years, reported BJX News. The plan also noted: “Those who take the lead in [energy technology] innovation will gain the initiative.”

Spotlight

Interview: How ‘mid-level bureaucrats’ are helping to shape Chinese climate policy

Local officials are viewed as relatively weak actors in China’s governance structure.

However, a new book – “Implementing a low-carbon future: climate leadership in Chinese cities” – argues that these officials play an important role in designing innovative and enduring climate policy.

Carbon Brief interviews author Weila Gong, non-resident scholar at the UC San Diego School of Global Policy and Strategy’s 21st Century China Center and visiting scholar at UC Davis, on her research.

Below are highlights from the conversation. The full interview is published on the Carbon Brief website.

Carbon Brief: You’ve just written a book about climate policy in Chinese cities. Could you explain why subnational governments are important for China’s climate policy in general?

Weila Gong: China is the world’s largest carbon emitter [and] over 85% of China’s carbon emissions come from cities.

We tend to think that officials at the provincial, city and township levels are barriers for environmental protection, because they are focused on promoting economic growth.

But I observed these actors participating in China’s low-carbon city pilot. I was surprised to see so many cities wanted to participate, even though there was no specific evaluation system that would reward their efforts.

CB: Could you help us understand the mindset of these bureaucrats? How do local-level officials design policies in China?

WG: We tend to focus on top political figures, such as mayors or [municipal] party secretaries. But mid-level bureaucrats [are usually the] ones implementing low-carbon policies.

Mid-level local officials saw [the low-carbon city pilot] as a way to help their bosses get promoted, which in turn would help them advance their own career. As such, they [aimed to] create unique, innovative and visible policy actions to help draw the attention [of their superiors].

They are also often more interested in climate issues if it is in the interest of their agency or local government.

Another motivation is accessing finance [by using] pilot programmes, if their ideas impress the central-level government.

CB: Could you give an example of what drives innovative local climate policies?

WG: National-level policies and pilot programme schemes provide openings for local governments to think about how and whether they should engage more in addressing climate change.

By experiment[ing] with policy at a local level, local governments help national-level officials develop responses to emerging policy challenges.

Local carbon emission trading systems (ETSs) are an example.

One element that made the Shenzhen ETS successful is “entrepreneurial bureaucrats” [who have the ability to design, push through and maintain new local-level climate policies].

Even though we might think local officials are constrained in terms of policy or financial resources, they often have the leverage and space to build coalitions…and know how to mobilise political support.

CB: What needs to be done to strengthen sub-national climate policy making?

WG: It’s very important to have groups of personnel trained on climate policy…[Often] climate change is only one of local officials’ day-to-day responsibilities. We need full-time staff to follow through on policies from the beginning right up to implementation.

Secondly, while almost all cities have made carbon-peaking plans, one area in which the government can make further progress is data.

Most Chinese cities haven’t yet established regular carbon accounting systems, [and only have access to] inadequate statistics. Local agencies can’t always access detailed data [held at the central level]…[while] much of the company-level data is self-reported.

Finally, China will always need local officials willing to try new policy instruments. Ensuring they have the conditions to do this is very important.

Watch, read, listen

BREAKNECK SPEED: In a conversation with the Zero podcast, tech analyst Dan Wang outlined how an “engineering mindset” may have given China the edge in developing clean-energy systems in comparison to the US.

QUESTION OF CURRENCY: Institute of Finance and Sustainability president Ma Jun and Climate Bonds Initiative CEO Sean Kidney examined how China’s yuan-denominated loans can “ease the climate financing crunch” in the South China Morning Post.

DRIVING CHANGE: Deutsche Welle broadcast a report on how affordable cleantech from China is accelerating the energy transition in global south countries.

EXPOSING LOOPHOLES: Economic news outlet Jiemian investigated how a scandal involving the main developer of pumped storage capacity in China revealed “regulatory loopholes” in constructing such projects.

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$180 billion

The amount of outward direct investment Chinese companies have committed to cleantech projects overseas since 2023, according to a new report by thinktank Climate Energy Finance.

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New science

• A new study looking at battery electric trucks across China, Europe and the US showed they “can reach 27-58% reductions in lifecycle CO2 emissions compared with diesel trucks” | Nature Reviews Clean Technology
• “Shortcomings remain” in China’s legal approach to offshore carbon capture, utilisation and storage, such as a lack of “specialised” legal frameworks | Climate Policy

China Briefing is written by Anika Patel and edited by Simon Evans. Please send tips and feedback to china@carbonbrief.org 

The post China Briefing 11 December 2025: Winter record looms; Joint climate statement with France; How ‘mid-level bureaucrats’ help shape policy  appeared first on Carbon Brief.

China Briefing 11 December 2025: Winter record looms; Joint climate statement with France; How ‘mid-level bureaucrats’ help shape policy 

China’s central and local governments, as well as state-owned enterprises, are busy preparing for the next five-year planning period, spanning 2026-30.

The top-level 15th five-year plan, due to be published in March 2026, will shape greenhouse gas emissions in China – and globally – for the rest of this decade and beyond.

The targets set under the plan will determine whether China is able to get back on track for its 2030 climate commitments, which were made personally by President Xi Jinping in 2021.

This would require energy sector carbon dioxide (CO2) emissions to fall by 2-6% by 2030, much more than implied by the 2035 target of a 7-10% cut from “peak levels”.

The next five-year plan will set the timing and the level of this emissions peak, as well as whether emissions will be allowed to rebound in the short term.

The plan will also affect the pace of clean-energy growth, which has repeatedly beaten previous targets and has become a key driver of the nation’s economy.

Some 250-350 gigawatts (GW) of new wind and solar would be needed each year to meet China’s 2030 commitments, far above the 200GW being targeted.

Finally, the plans will shape China’s transition away from fossil fuels, with key sectors now openly discussing peak years for coal and oil demand, but with 330GW of new coal capacity in the works and more than 500 new chemical industry projects due in the next five years.

These issues come together in five key questions for climate and energy that Chinese policymakers will need to answer in the final five-year plan documents next year.

Five-year plans and their role in China

1. Will the plan put China back on track for its 2030 Paris pledge?

2. Will the plan upgrade clean-energy targets or pave the way to exceed them?

3. Will the plan set an absolute cap on coal consumption?

4. Will ‘dual control’ of carbon prevent an emission rebound?

5. Will it limit coal-power and chemical-industry growth?

Conclusions

Five-year plans and their role in China

Five-year plans are an essential part of China’s policymaking, guiding decision-making at government bodies, enterprises and banks. The upcoming 15th five-year plan will cover the years 2026-30, set targets for 2030 and use 2025 as its base year.

The top-level five-year plan will be published in March 2026 and is known as the five-year plan on economic and social development. This overarching document will be followed by dozens of sectoral plans, as well as province- and company-level plans.

The sectoral plans are usually published in the second year of the five-year period, meaning they would be expected in 2027.

There will be five-year plans for the energy sector, the electricity sector, for renewable energy, nuclear, coal and many other sub-sectors, as well as plans for major industrial sectors such as steel, construction materials and chemicals.

It is likely that there will also be a plan for carbon emissions or carbon peaking and a five-year plan for the environment.

During the previous five-year period, the plans of provinces and state-owned enterprises for very large-scale solar and wind projects were particularly important, far exceeding the central government’s targets.

The five-year plans create incentives for provincial governments and ministries by setting quantified targets that they are responsible for meeting. These targets influence the performance evaluations of governors, CEOs and party secretaries.

The plans also designate favoured sectors and projects, directing bank lending, easing permitting and providing an implicit government guarantee for the project developers.

Each plan lists numerous things that should be “promoted”, banned or controlled, leaving the precise implementation to different state organs and state-owned enterprises.

Five-year plans can introduce and coordinate national mega-projects, such as the gigantic clean-energy “bases” and associated electricity transmission infrastructure, which were outlined in the previous five-year plan in 2021.

The plans also function as a policy roadmap, assigning the tasks to develop new policies and providing stakeholders with visibility to expected policy developments.

1. Will the plan put China back on track for its 2030 Paris pledge?

Reducing carbon intensity – the energy-sector carbon dioxide (CO2) emissions per unit of GDP – has been the cornerstone of China’s climate commitments since the 2020 target announced at the 2009 Copenhagen climate conference.

Consequently, the last three five-year plans have included a carbon-intensity target. The next 15th one is highly likely to set a carbon-intensity target too, given that this is the centerpiece of China’s 2030 climate targets.

Moreover, it was president Xi himself who pledged in 2021 that China would reduce its carbon intensity to 65% below 2005 levels by 2030. This was later formalised in China’s 2030 “nationally determined contribution” (NDC) under the Paris Agreement.

Xi also pledged that China would gradually reduce coal consumption during the five-year period up to 2030. However, China is significantly off track to these targets.

China’s CO2 emissions grew more quickly in the early 2020s than they had been before the Coronavirus pandemic, as shown in the figure below. This stems from a surge in energy consumption during and after the “zero-Covid” period, together with a rapid expansion of coal-fired power and the fossil-fuel based chemical industry. as shown in the figure below.

As a result, meeting the 2030 intensity target would require a reduction in CO2 emissions from current levels, with the level of the drop depending on the rate of economic growth.

Xi’s personal imprimatur would make missing these 2030 targets awkward for China, particularly given the country’s carefully cultivated reputation for delivery. On the other hand, meeting them would require much stronger action than initially anticipated.

Recent policy documents and statements, in particular the recommendations of the Central Committee of the Communist Party for the next five-year plan, and the government’s work report for 2025, have put the emphasis on China’s target to peak emissions before 2030 and the new 2035 emission target, which would still allow emissions to increase over the next five-year period. The earlier 2030 commitments risk being buried as inconvenient.

Still, the State Council’s plan for controlling carbon emissions, published in 2024, says that carbon intensity will be a “binding indicator” for the next five-year period, meaning that a target will be included in the top-level plan published in March 2026.

China is only set to achieve a reduction of about 12% in carbon intensity from 2020 to 2025 – a marked slowdown relative to previous periods, as shown in the figure below.

(This is based on reductions reported annually by the National Bureau of Statistics until 2024 and a projected small increase in energy-sector CO2 emissions in 2025. Total CO2 emissions could still fall this year, when the fall in process emissions from cement production is factored in.)

A 12% fall would be far less than the 18% reduction targeted under the 14th five-year plan, as well as falling short of what would be needed to stay on track to the 2030 target.

To make up the shortfall and meet the 2030 intensity target, China would need to set a goal of around 23% in the next five-year plan. As such, this target will be a key test of China’s determination to honour its climate commitments.

A carbon-intensity target of 23% is likely to receive pushback from some policymakers, as it is much higher than achieved in previous periods. No government or thinktank documents have yet been published with estimates of what the 2030 intensity target would need to be.

In practice, meeting the 2030 carbon intensity target would require reducing CO2 emissions by 2-6% in absolute terms from 2025, assuming a GDP growth rate of 4.2-5.0%.

China needs 4.2% GDP growth over the next decade to achieve Xi’s target of doubling the country’s GDP per capita from 2020 to 2035, a key part of his vision of achieving “socialist modernisation” by 2035, with the target for the next five years likely to be set higher.

Recent high-level policy documents have avoided even mentioning the 2030 intensity target. It is omitted in recommendations of the Central Committee of the Communist Party for the next five-year plan, the foundation on which the plan will be formulated.

Instead, the recommendations emphasised “achieving the carbon peak as scheduled” and “promoting the peaking of coal and oil consumption”, which are less demanding.

The environment ministry, in contrast, continues to pledge efforts to meet the carbon intensity target. However, they are not the ones writing the top-level five-year plan.

The failure to meet the 2025 intensity target has been scarcely mentioned in top-level policy discussions. There was no discernible effort to close the gap to the target, even after the midway review of the five-year plan recognised the shortfall.

The State Council published an action plan to get back on track, including a target for reducing carbon intensity in 2024 – albeit one not sufficient to close the shortfall. Yet this plan, in turn, was not followed up with an annual target for 2025.

The government could also devise ways to narrow the gap to the target on paper, through statistical revisions or tweaks to the definition of carbon intensity, as the term has not been defined in China’s NDCs.

Notably, unlike China’s previous NDC, its latest pledge did not include a progress update for carbon intensity. The latest official update sent to the UN only covers the years to 2020.

This leaves some more leeway for revisions, even though China’s domestic “statistical communiques”, published every year, have included official numbers up to 2024.

Coal consumption growth around 2022 was likely over-reported, so statistical revisions could reduce reported emissions and narrow the gap to the target. Including process emissions from cement, which have been falling rapidly in recent years, and changing how emissions from fossil fuels used as raw materials in the chemicals industry are accounted for, so-called non-energy use, which has been growing rapidly, could make the target easier to meet.

2. Will the plan upgrade clean-energy targets or pave the way to exceed them?

The need to accelerate carbon-intensity reductions also has implications for clean-energy targets.

The current goal is for non-fossil fuels to make up 25% of energy supplies in 2030, up from the 21% expected to be reached this year.

This expansion would be sufficient to achieve the reduction in carbon intensity needed in the next five years, but only if energy consumption growth slows down very sharply. Growth would need to slow to around 1% per year, from 4.1% in the past five years 2019-2024 and from 3.7% in the first three quarters of 2025.

The emphasis on manufacturing in the Central Committee’s recommendations for the next five-year plan is hard to reconcile with such a sharp slowdown, even if electrification will help reduce primary energy demand. During the current five-year period, China abolished the system of controlling total energy consumption and energy intensity, removing the incentive for local governments to curtail energy-intensive projects and industries.

Even if the ratio of total energy demand growth to GDP growth returned to pre-Covid levels, implying total energy demand growth of 2.5% per year, then the share of non-fossil energy would need to reach 31% by 2030 to deliver the required reduction in carbon intensity.

However, China recently set the target for non-fossil energy in 2035 at just 30%. This risks cementing a level of ambition that is likely too low to enable the 2030 carbon-intensity target to be met, whereas meeting it would require non-fossil energy to reach 30% by 2030.

There is ample scope for China to beat its targets for non-fossil energy.

However, given that the construction of new nuclear and hydropower plants generally takes five years or more in China, only those that are already underway have the chance to be completed by 2030. This leaves wind and solar as the quick-to-deploy power generation options that can deliver more non-fossil energy during this five-year period.

Reaching a much higher share of non-fossil energy in 2030, in turn, would therefore require much faster growth in solar and wind than currently targeted. Both the NDRC power-sector plan for 2025-27 and China’s new NDC aim for the addition of about 200 gigawatts (GW) per year of solar and wind capacity, much lower than the 360GW achieved in 2024.

If China continued to add capacity at similar rates, going beyond the government’s targets and instead installing 250-350GW of new solar and wind in each of the next five years, then this would be sufficient to meet the 2030 intensity target, assuming energy demand rising by 2.5-3.0% per year.

All previous wind and solar targets have been exceeded by a wide margin, as shown in the figure below, so there is a good chance that the current one will be, too.

While the new pricing policy for wind and solar has created a much more uncertain and less supportive policy environment for the development of clean energy, provinces have substantial power to create a more supportive environment.

For example, they can include clean-energy projects and downstream projects using clean electricity and green hydrogen in their five-year plans, as well as developing their local electricity markets in a direction that enables new solar and wind projects.

3. Will the plan set an absolute cap on coal consumption?

In 2020, Xi pledged that China would “gradually reduce coal consumption” during the 2026-30 period. The commitment is somewhat ambiguous.

It could be interpreted as requiring a reduction starting in 2026, or a reduction below 2025 levels by 2030, which in practice would mean coal consumption peaking around the midway point of the five-year period, in other words 2027-28.

In either case, if Xi’s pledge were to be cemented in the 15th five-year plan then it would need to include an absolute reduction in coal consumption during 2026-30. An illustration of what this might look like is shown in the figure below.

However, the commitment to reduce coal consumption was missing from China’s new NDC for 2035 and from the Central Committee’s recommendations for the next five-year plan.

The Central Committee called for “promoting a peak in coal and oil consumption”, which is a looser goal as it could still allow an increase in consumption during the period, if the growth in the first years towards 2030 exceeds the reduction after the peak.

The difference between “peaking” and “reducing” is even larger because China has not defined what “peaking” means, even though peaking carbon emissions is the central goal of China’s climate policy for this decade.

Peaking could be defined as achieving a certain reduction from peak before the deadline, or having policies in place that constrain emissions or coal use. It could be seen as reaching a plateau or as an absolute reduction.

While the commitment to “gradually reduce” coal consumption has seemed to fade from discussion, there have been several publications discussing the peak years for different fossil fuels, which could pave the way for more specific peaking targets.

State news agency Xinhua published an article – only in English – saying that coal consumption would peak around 2027 and oil consumption around 2026, while also mentioning the pledge to reduce coal consumption.

The energy research arm of the National Development and Reform Council had said earlier that coal and oil consumption would peak halfway through the next five-year period, in other words 2027-28, while the China Coal Association advocated a slightly later target of 2028.

Setting a targeted peak year for coal consumption before the half-way point of the five-year period could be a way to implement the coal reduction commitment.

With the fall in oil use in transportation driven by EVs, railways and other low-carbon transportation, oil consumption is expected to peak soon or to have peaked already.

State-owned oil firm CNPC projects that China’s oil consumption will peak in 2025 at 770m tonnes, while Sinopec thinks that continued demand for petrochemical feedstocks will keep oil consumption growing until 2027 and it will then peak at 790-800m tonnes.

4. Will ‘dual control’ of carbon prevent an emission rebound?

With the focus on realising a peak in emissions before 2030, there could be a strong incentive for provincial governments and industries to increase emissions in the early years of the five-year period to lock in a higher level of baseline emissions.

This approach is known as “storming the peak” (碳冲锋) in Chinese and there have been warnings about it ever since Xi announced the current CO2 peaking target in 2020.

Yet, the emphasis on peaking has only increased, with the recent announcement on promoting peaks in coal consumption and oil consumption, as well as the 2035 emission-reduction target being based on “peak levels”.

The policy answer to this is creating a system to control carbon intensity and total CO2 emissions – known as “dual control of carbon” – building on the earlier system for the “dual control of energy” consumption.

Both the State Council and the Central Committee have set the aim of operationalising the “dual control of carbon” system in the 15th five-year plan period.

However, policy documents speak of building the carbon dual-control system during the five-year period rather than it becoming operational at the start of the period.

For example, an authoritative analysis of the Central Committee’s recommendations by China Daily says that “solid progress” is needed in five areas to actually establish the system, including assessment of carbon targets for local governments as well as carbon management for industries and enterprises.

The government set an annual target for reducing carbon intensity for the first time in 2024, but did not set one for 2025, also signaling that there was no preparedness to begin controlling carbon intensity, let alone total carbon emissions, yet.

If the system is not in place at the start of the five-year period, with firm targets, there could be an opportunity for local governments to push for early increases in emissions – and potentially even an incentive for such emission increases, if they expect strict control later.

Another question is how the “dual” element of controlling both carbon intensity and absolute CO2 emissions is realised. While carbon intensity is meant to be the main focus during the next five years, with the priority shifting to reducing absolute emissions after the peak, having the “dual control” in place requires some kind of absolute cap on CO2 emissions.

The State Council has said that China will begin introducing “absolute emissions caps in some industries for the first time” from 2027 under its national carbon market. It is possible that the control of absolute carbon emissions will only apply to these sectors.

The State Council also said that the market would cover all “major emitting sectors” by 2027, but absolute caps would only apply to sectors where emissions have “stabilised”.

5. Will it limit coal-power and chemical-industry growth?

During the current five-year period, China’s leadership went from pledging to “strictly control” new coal-fired power projects to actively promoting them.

If clean-energy growth continues at the rates achieved in recent years, there will be no more space for coal- and gas-fired power generation to expand, even if new capacity is built. Stable or falling demand for power generation from fossil fuels would mean a sharp decline in the number of hours each plant is able to run, eroding its economic viability.

Showing the scale of the planned expansion, researchers from China Energy Investment Corporation, the second-largest coal-power plant operator in China, project that China’s coal-fired power capacity could expand by 300GW from the end of 2024 to 2030 and then plateau at that level for a decade. The projection relies on continued growth of power generation from coal until 2030 and a very slow decline thereafter.

The completion of the 325GW projects already under construction and permitted at the end of 2024, as well as an additional 42GW permitted in the first three quarters of 2025, could in fact lead to a significantly larger increase, if the retirement of existing capacity remains slow.

In effect, China’s policymakers face a choice between slowing down the clean-energy boom, which has been a major driver of economic growth in recent years, upsetting coal project developers, who expect to operate their coal-fired power plants at a high utilisation, or retiring older coal-power plants en masse.

Their response to these choices may not become clear for some time. The top-level five-year plan that will be published in March 2026 will likely provide general guidelines, but the details of capacity development will be relegated to the sectoral plans for energy.

The other sector where fossil fuel-based capacity is rapidly increasing is the chemical industry, both oil and coal-based. In this sector, capacity growth has led directly to increases in output, making the sector the only major driver of emissions increases after early 2024.

The expansion is bound to continue. There are more than 500 petrochemical projects planned by 2030 in China, of which three quarters are already under construction, according to data provider GlobalData.

As such, the emissions growth in the chemical sector is poised to continue in the next few years, whereas meeting China’s 2030 targets and commitments would require either reining it in and bringing emissions back down before 2030, or achieving emission reductions in other sectors that offset the increases.

The expansion of the coal-to-chemicals industry is largely driven by projects producing gas and liquid fuels from coal, which make up 70% of the capacity under construction and in planning, according to a mapping by Anychem Coalchem.

These projects are a way of reducing reliance on imported oil and gas. In these areas, electrification and clean energy offer another solution that can replace imports.

Conclusions

The five-year plans being prepared now will largely determine the peak year and level of China’s emissions, with a major impact on China’s subsequent emission trajectory and on the global climate effort.

The targets in the plan will also be a key test of the determination of China’s leadership to respect previous commitments, despite setbacks.

The country has cultivated a reputation for reliably implementing its commitments. For example, senior officials have said that China’s policy targets represent a “bottom line”, which the policymakers are “definitely certain” about meeting, while contrasting this with other countries’ loftier approach to target-setting.

Depending on how the key questions outlined in this article are answered in the plans for the next five years, however, there is the possibility of a rebound in emissions.

There are several factors contributing to such a possibility: solar- and wind-power deployment could slow down under the new pricing policy, weak targets and a deluge of new coal- and gas-power capacity coming onto the market.

In addition, unfettered expansion of the chemical industry could drive up emissions. And climate targets that limit emissions only after a peak is reached could create an incentive to increase emissions in the short term, unless counteracted by effective policies.

On the other hand, there is also the possibility of the clean-energy boom continuing so that the sector beats the targets it has been set. Policymakers could also prioritise carbon-intensity reductions early in the period to meet China’s 2030 commitments.

Given the major role that clean-energy industries have played in driving China’s economic growth and meeting GDP targets, local governments have a strong incentive to keep the expansion going, even if the central government plans for a slowdown.

During the current five-year period, provinces and state-owned enterprises have been more ambitious than the central government. Provinces can and already have found ways to support clean-energy development beyond central government targets.

Such an outcome would continue a well-established pattern, given all previous wind and solar targets have been exceeded by a wide margin.

The difference now is that a significant exceedance of clean-energy targets would make a much bigger difference, due to the much larger absolute size of the industry.

To date, China’s approach to peaking emissions and pursuing carbon neutrality has focused on expanding the supply and driving down the cost of clean technology, emphasising economic expansion rather than restrictions on fossil-fuel use and emissions, with curbing overcapacity an afterthought.

This suggests that if China’s 2030 targets are to be met, it is more likely to be through the over-delivery of clean energy than as a result of determined regulatory effort.

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Q&A: Five key climate questions for China’s next ‘five-year plan’