Published

1 year ago

December 25, 2024

Alice Rush

UK chancellor Rachel Reeves has delivered Labour’s first budget since 2009, promising to “fix the foundations” of the economy through increased investment in areas including clean energy.

Announcing the budget in parliament, Reeves became the UK’s first-ever female chancellor to lift the “red box”.

The “historic” budget confirms new “fiscal rules” that Reeves says will enable increased government investment, to support priorities including making the UK a “clean-energy superpower”.

Despite speculation ahead of the budget, Reeves extended a 14-year freeze in fuel-duty that has cost the exchequer a cumulative total of £100bn and left overall UK carbon dioxide (CO2) emissions as much as 7% higher than they would have been.

Elsewhere, the budget hiked taxes on private jets, extended incentives for electric vehicles, confirmed an increase in the rate of windfall tax on oil and gas companies and pledged investment in technologies including “green hydrogen” and carbon capture and storage.

Below, Carbon Brief runs through the key announcements.

‘Fixing the foundations’
Transport and fuel duty
Electric-vehicle incentives
Clean-energy investment
North Sea tax
Other announcements

‘Fixing the foundations’

Reeves presented Labour’s first autumn budget in 14 years, following its sweep to victory in the general election in July.

Much of the framing in the run-up focused on how the Labour government would go about tackling the “slow growth, stagnant living standards and crumbling public services” they put down to 14 years of Conservative rule.

A few days before the budget, a government release stated that prime minister Keir Starmer would “reject austerity, chaos and decline in favour of economic stability, investment and reform”. The release said the budget would look to “fix the foundations” of the UK.

One key announcement trailed before the budget was a change to the government’s self-imposed “fiscal rules”, which are supposed to ensure that the balance of public revenue, spending and borrowing remains on a stable footing.

This change in the way public debt is measured will allow the government to fund extra investment in infrastructure and public services.

The budget “red book” says that the government’s new “investment rule” is to reduce “public-sector net financial liabilities” as a proportion of the overall size of the UK economy, within three years of each budget forecast. It explains: “This rule keeps debt on a sustainable path while allowing the step change needed in investment.”

In an interview with BBC News in the week before the budget, Reeves had said the change was being done “so that we can grow our economy and bring jobs and growth to Britain”.

The International Monetary Fund (IMF) warned last week that public investment in new technologies and the energy transition is “badly needed”, in order to drive growth in the UK.

Speaking in Washington at the IMF annual meeting earlier in October, Reeves had said she would target investment to drive innovation in the transition to clean energy and upgraded infrastructure as part of the budget.

She reiterated this message in her budget speech, saying that her plans would help in “delivering our [government’s] mission to make Britain a clean energy superpower”.

Back to top

Transport and fuel duty

Reeves announced a bundle of measures concerning transport, ranging from a tax hike on private jets to the confirmation of improved regional train lines.

One of the chancellor’s most high-profile and controversial moves was maintaining the freeze on fuel duty paid by motorists on petrol and diesel.

Successive Conservative-led governments have cancelled planned inflation-linked fuel duty increases every year since 2010, meaning rates have been slashed in real terms.

In 2022, fuel duty was also cut by 5p per litre in response to the global energy crisis – a temporary measure that was subsequently extended in the spring budget in 2023.

As such, thinktank the Institute for Fiscal Studies (IFS) found that fuel duty was already 37% lower in real terms in 2023 than the rate planned in 2010.

Successive cuts and freezes in fuel duty have increased the UK’s CO2 emissions by as much as 7%, according to Carbon Brief analysis in 2023.

Moreover, the fuel-duty cuts and freezes have cost the Treasury a cumulative total of some £100bn since 2010, according to the official Office for Budget Responsibility (OBR).

Fuel duty is the “only major tax that persistently fell” in recent years, the OBR says. It adds that if fuel duty remains frozen, it would cost the Treasury a further £5bn a year by 2030.

In the lead-up to the autumn statement, speculation had grown that Reeves might end the temporary 5p cut in fuel duty and reinstate inflation-linked increases, which could have seen an overall hike of 8p per litre, from the current rate of 53p

However, in the end, the government decided to once again freeze fuel duty and extend the “temporary” 5p cut “for one year, at a cost of £3bn next year”. It justifies this as a measure to support “hard-working families and businesses”.

Increasing fuel duty is very unpopular and there has been a strong lobbying effort to block it. The Sun, which is the UK’s most widely read newspaper, has sustained a “14-year campaign”, promoted by climate-sceptic motoring lobbyists and applauded by senior Conservatives, to keep fuel duty frozen.

As Carbon Brief analysis shows, the newspaper has significantly ramped up its efforts under the new Labour government – more than doubling the number of editorials urging the government not to end the freeze. The newspaper describes the idea as “unthinkable” and a “masterpiece of self-harm” that would harm “working people”.

Number of editorials in the Sun newspaper mentioning the fuel duty freeze, between 2020 and October 2024. Source: Carbon Brief analysis.

Despite the framing by both the government and the Sun, analysis by thinktank the Social Market Foundation shows that the poorest households benefit far less from lower fuel duty than the richest, who tend to drive more and own more vehicles.

Ahead of the budget, Starmer announced that the single bus fare cap in England will be raised to £3. This is an increase from the current limit of £2, introduced under the Conservative government and set to expire in December.

The government says this higher price will allow it to “develop a more sustainable model of government support for the bus sector that is better value for taxpayers and bus passengers”.

However, the choice came under fire from Green MPs and climate NGOs, particularly in light of the fuel-duty freeze. They noted that the cost of low-carbon transport, such as buses, has increased by far more than the cost of driving cars in recent years. It would have cost £300m per year to extend the £2 bus fare cap, according to the New Economics Foundation.

The budget also commits to investing in a handful of new rail lines and upgrades, including the Transpennine Route Upgrade between York and Manchester and East West Rail to connect Oxford, Milton Keynes and Cambridge. There is also money for electrifying some lines.

Notably, the government also confirmed plans to fund the tunnelling of the HS2 line to central London. (The previous Conservative government significantly scaled back the HS2 project and said the final section going into central London would be dependent on private investment.)

The budget also includes adjustments to taxes on flights, with air passenger duty increased to “correct for below-inflation uprating in recent years” – equating to an extra £2 on short-haul flights in economy class. (In 2021, the Conservative government cut air passenger duty in half for domestic flights.)

A more dramatic change was a 50% increase in duty for “larger private jets”, which Reeves said would amount to £450 per passenger. The budget documents note that the government “will consult on extending this rate to all private jets within the air passenger duty regime”.

Finally, the government commits to extending the “advanced fuels fund” for an extra year to support the production of “sustainable aviation fuels”.

Back to top

Electric-vehicle incentives

The budget contains a number of commitments to support the rollout of electric vehicles, in line with the government’s target of ending the sale of pure petrol and diesel cars by 2030, and extending this target to vans by 2035.

Among these measures are tax incentives to encourage people to purchase electric vehicles.

The rapid growth in UK electric cars sales in recent years has been driven partly by company-car purchases, which have benefited from generous tax breaks for low-carbon models.

The budget confirms that benefit-in-kind (BIK) tax rates for company cars will continue to favour electric cars, increasing by 2% per year out to 2029-20.

However, plug-in hybrid vehicles will no longer benefit, with rates increasing far more “to align more closely with rates for internal combustion engine vehicles”.

Another change in the budget involves increasing the gap between the rate of vehicle excise duty paid in the first year by electric vehicles relative to other cars. (First-year vehicle excise duty payments are based on a new car’s CO2 emissions.)

The first-year rate will remain frozen until 2029-30 for zero-carbon vehicles, while hybrids and internal combustion engine vehicles will see increases. Cars emitting more than 76g of CO2 per km will see their first-year rates doubling from 1 April 2025.

The budget also confirms that the government will extend, for a further year, “green” first-year allowances – which can be deducted from the full cost of profits before tax – for “qualifying expenditure” on zero-emission cars and plants or machinery for electric vehicle charging points.

Other measures in the budget include investing over £200m in 2025-26 to accelerate the rollout of electric vehicles charging points. There is also £120m to support people in purchasing electric vans through the plug-in vehicle grant scheme, and to support the manufacture of wheelchair accessible electric vans.

Looking more broadly at electric vehicle manufacture, the government has also committed £2bn in support for the automotive sector, “including the zero-emissions vehicle manufacturing sector and supply chain”.

Back to top

Clean-energy investment

Measures in the budget supporting clean energy and net-zero include funding for investment in carbon capture and storage (CCS), nuclear and “green hydrogen” made with renewable electricity.

In addition, the budget documents tout the government’s “national wealth fund” as a route to supporting private-sector investment in clean energy:

“[T]he government will take further measures to catalyse private investment in the economy. This includes creating the national wealth fund to catalyse over £70bn of private investment in the UK’s clean energy and growth industries.”

In her speech, Reeves said the budget confirmed plans to capitalise the national wealth fund, which would “invest in the industries of the future, from gigafactories [for batteries or electric vehicles] to ports to green hydrogen”.

Responding to the budget, Ed Matthew, campaigns director for thinktank E3G, said in a statement:

“After years of flatlining investment, the government must now seize the opportunity of the ‘investment rule’ to make the UK a clean-energy superpower and boost green homes investment further. It is clean technology where our future prosperity lies, boosting productivity, making us competitive and weaning us off expensive and volatile fossil fuels. It’s the economic opportunity of the century.”

Funding announcements include £3.9bn for CCS projects between 2025-2026. These will help “decarbonise industry, support flexible power generation, and capitalise on the UK’s geographic and technical strengths”, the budget notes.

This follows the government pledging up to £21.7bn to support getting the UK’s first CCS projects up and running over the next 25 years, in an announcement at the beginning of October. The nearly £22bn funding is designed to support the development of two undersea carbon storage sites and pipelines, with the capacity to store more than 8.5m tonnes of CO2 per year.

The budget also includes support for the “first round of electrolytic [green] hydrogen production contracts, harnessing renewable energy to decarbonise industry across the length and breadth of the UK”. This will support 11 green hydrogen producers across the country.

Other key technologies to win support in the budget include nuclear, with a £2.7bn settlement announced to continue the development of Sizewell C through 2025-26.

In August, the government announced it would provide up to £.5bn, as part of a new subsidy scheme for the planned new nuclear power plant in Suffolk.

The equity and debt-raise process for Sizewell C is set to move into its final stages and conclude in spring 2025. Following this, a final investment decision will be made.

Separately, the budget announces “significant support” for UK fusion energy research, “to build on the UK’s position as a global leader in sustainable nuclear energy”.

Great British Energy will receive £125m in funding for 2025-26, the budget notes. This follows news in July that the publicly owned energy company would receive an initial capitalisation of £8.3bn of new money over this parliament.

The budget also confirms £163m in funding to continue the “industrial energy transformation fund” from 2025-26 to 2027-28.

The budget states that the government will help accelerate grid connections and build new network infrastructure. The government is working with the new National Energy System Operator (NESO) and energy regulator Ofgem to develop a “robust grid connection” process.

As part of the commitment to “securing the UK’s place as a global leader in clean energy, protecting consumers and driving economic growth” the budget also notes that the government has commissioned advice from NESO on reaching net-zero electricity by 2030. This will feed into the government’s own “clean-power 2030 action plan”.

Other key upcoming documents, noted in the budget and expected over the coming year, include a response to the annual progress report from the government’s advisory Climate Change Committee, an updated “carbon budget delivery plan” setting out how it will meet legally-binding climate goals and a new industrial strategy.

Back to top

North Sea tax

The budget also confirms an increase in the windfall tax on oil and gas companies. The energy profits levy (EPL) will rise by three percentage points to 38% from 1 November.

Established in May 2022 in response to record profits enjoyed by oil and gas companies during the global energy crisis, the government announced the increase to 38% in July.

The budget confirms that an “investment allowance” of 29% will be abolished, but the rate of the “decarbonisation allowance” will be set at 66%. No additional changes to the tax relief available through the EPL will be made, which has also been extended by a year to 31 March 2030.

Further to this, the budget says the government will publish a consultation in early 2025 on how the taxation of oil and gas profits will respond to price shocks in the future.

Oil and gas company shares rose in response to the budget, according to the Financial Times, which says the changes to the EPL were “less tough than feared”. For example, Harbour Energy’s stock climbed 4.5% to 277p, according to the newspaper.

At the same time as the budget, the government announced a consultation into “scope 3” emissions from offshore oil and gas production, meaning the emissions associated with burning resulting fuels.

This follows a “landmark” Supreme Court ruling earlier this year, which found that Surrey County Council had acted unlawfully by granting planning permission to the Horse Hill oil project without considering the environmental impact of burning the oil it would produce.

The consultation will be part of efforts to develop new guidance for assessing the end-use emissions of oil and gas projects, as well as help “provide stability for the oil and gas industry, support investment, protect jobs and ensure a fair, orderly and prosperous transition”, the budget document says.

Back to top

Other announcements

The budget includes a number of other announcements relating to climate and energy.

One such measure is £3.4bn in investment towards a “warm homes plan” for heat decarbonisation and household energy efficiency over the next three years.

In its manifesto, Labour committed to £13.2bn of funding for these issues over the course of this parliament and the budget describes the £3.4bn investment as “the first step”.

The government says this money includes £1.8bn to support fuel-poverty schemes. It adds that it will increase funding for the “boiler upgrade scheme” – which supports the rollout of heat pumps in England and Wales – this year and next.

The budget also confirms £5bn over two years to support a “more productive and environmentally sustainable agricultural sector in England” and more than £400m for tree-planting and peatland restoration.

It adds that the government is “facing significant funding pressures” of almost £600m in 2024-25 for flood defences and farm schemes. The budget states that, “while the government is meeting those commitments this year, it is necessary to review these plans from 2025-26 to ensure they are affordable”.

The government also states that the Foreign, Commonwealth and Development Office (FCDO) is forecast to spend more than £2bn on international climate action in 2024-25. (The previous Conservative government had forecast a total international climate finance spend of £2.5-2.8bn in that year.)

The post UK autumn budget 2024: Key climate and energy announcements appeared first on Carbon Brief.

UK autumn budget 2024: Key climate and energy announcements

Greenhouse Gases

DeBriefed 6 February 2026: US secret climate panel ‘unlawful’ | China’s clean energy boon | Can humans reverse nature loss?

Published

3 days ago

February 6, 2026

Alice Rush

Welcome to Carbon Brief’s DeBriefed.
An essential guide to the week’s key developments relating to climate change.

This week

Secrets and layoffs

UNLAWFUL PANEL: A federal judge ruled that the US energy department “violated the law when secretary Chris Wright handpicked five researchers who rejected the scientific consensus on climate change to work in secret on a sweeping government report on global warming”, reported the New York Times. The newspaper explained that a 1972 law “does not allow agencies to recruit or rely on secret groups for the purposes of policymaking”. A Carbon Brief factcheck found more than 100 false or misleading claims in the report.

DARKNESS DESCENDS: The Washington Post reportedly sent layoff notices to “at least 14” of its climate journalists, as part of a wider move from the newspaper’s billionaire owner, Jeff Bezos, to eliminate 300 jobs at the publication, claimed Climate Colored Goggles. After the layoffs, the newspaper will have five journalists left on its award-winning climate desk, according to the substack run by a former climate reporter at the Los Angeles Times. It comes after CBS News laid off most of its climate team in October, it added.

WIND UNBLOCKED: Elsewhere, a separate federal ruling said that a wind project off the coast of New York state can continue, which now means that “all five offshore wind projects halted by the Trump administration in December can resume construction”, said Reuters. Bloomberg added that “Ørsted said it has spent $7bn on the development, which is 45% complete”.

Around the world

CHANGING TIDES: The EU is “mulling a new strategy” in climate diplomacy after struggling to gather support for “faster, more ambitious action to cut planet-heating emissions” at last year’s UN climate summit COP30, reported Reuters.
FINANCE ‘CUT’: The UK government is planning to cut climate finance by more than a fifth, from £11.6bn over the past five years to £9bn in the next five, according to the Guardian.
BIG PLANS: India’s 2026 budget included a new $2.2bn funding push for carbon capture technologies, reported Carbon Brief. The budget also outlined support for renewables and the mining and processing of critical minerals.
MOROCCO FLOODS: More than 140,000 people have been evacuated in Morocco as “heavy rainfall and water releases from overfilled dams led to flooding”, reported the Associated Press.
CASHFLOW: “Flawed” economic models used by governments and financial bodies “ignor[e] shocks from extreme weather and climate tipping points”, posing the risk of a “global financial crash”, according to a Carbon Tracker report covered by the Guardian.
HEATING UP: The International Olympic Committee is discussing options to hold future winter games earlier in the year “because of the effects of warmer temperatures”, said the Associated Press.

54%

The increase in new solar capacity installed in Africa over 2024-25 – the continent’s fastest growth on record, according to a Global Solar Council report covered by Bloomberg.

Latest climate research

Arctic warming significantly postpones the retreat of the Afro-Asian summer monsoon, worsening autumn rainfall | Environmental Research Letters
“Positive” images of heatwaves reduce the impact of messages about extreme heat, according to a survey of 4,000 US adults | Environmental Communication
Greenland’s “peripheral” glaciers are projected to lose nearly one-fifth of their total area and almost one-third of their total volume by 2100 under a low-emissions scenario | The Cryosphere

(For more, see Carbon Brief’s in-depth daily summaries of the top climate news stories on Monday, Tuesday, Wednesday, Thursday and Friday.)

Captured

Solar power, electric vehicles and other clean-energy technologies drove more than a third of the growth in China’s economy in 2025 – and more than 90% of the rise in investment, according to new analysis for Carbon Brief (shown in blue above). Clean-energy sectors contributed a record 15.4tn yuan ($2.1tn) in 2025, some 11.4% of China’s gross domestic product (GDP) – comparable to the economies of Brazil or Canada, the analysis said.

Spotlight

Can humans reverse nature decline?

This week, Carbon Brief travelled to a UN event in Manchester, UK to speak to biodiversity scientists about the chances of reversing nature loss.

Officials from more than 150 countries arrived in Manchester this week to approve a new UN report on how nature underpins economic prosperity.

The meeting comes just four years before nations are due to meet a global target to halt and reverse biodiversity loss, agreed in 2022 under the landmark “Kunming-Montreal Global Biodiversity Framework” (GBF).

At the sidelines of the meeting, Carbon Brief spoke to a range of scientists about humanity’s chances of meeting the 2030 goal. Their answers have been edited for length and clarity.

Dr David Obura, ecologist and chair of Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES)

We can’t halt and reverse the decline of every ecosystem. But we can try to “bend the curve” or halt and reverse the drivers of decline. That’s the economic drivers, the indirect drivers and the values shifts we need to have. What the GBF aspires to do, in terms of halting and reversing biodiversity loss, we can put in place the enabling drivers for that by 2030, but we won’t be able to do it fast enough at this point to halt [the loss] of all ecosystems.

Dr Luthando Dziba, executive secretary of IPBES

Countries are due to report on progress by the end of February this year on their national strategies to the Convention on Biological Diversity [CBD]. Once we get that, coupled with a process that is ongoing within the CBD, which is called the global stocktake, I think that’s going to give insights on progress as to whether this is possible to achieve by 2030…Are we on the right trajectory? I think we are and hopefully we will continue to move towards the final destination of having halted biodiversity loss, but also of living in harmony with nature.

Prof Laura Pereira, scientist at the Global Change Institute at Wits University, South Africa

At the global level, I think it’s very unlikely that we’re going to achieve the overall goal of halting biodiversity loss by 2030. That being said, I think we will make substantial inroads towards achieving our longer term targets. There is a lot of hope, but we’ve also got to be very aware that we have not necessarily seen the transformative changes that are going to be needed to really reverse the impacts on biodiversity.

Dr David Cooper, chair of the UK’s Joint Nature Conservation Committee and former executive secretary of the Convention on Biological Diversity

It’s important to look at the GBF as a whole…I think it is possible to achieve those targets, or at least most of them, and to make substantial progress towards them. It is possible, still, to take action to put nature on a path to recovery. We’ll have to increasingly look at the drivers.

Prof Andrew Gonzalez, McGill University professor and co-chair of an IPBES biodiversity monitoring assessment

I think for many of the 23 targets across the GBF, it’s going to be challenging to hit those by 2030. I think we’re looking at a process that’s starting now in earnest as countries [implement steps and measure progress]…You have to align efforts for conserving nature, the economics of protecting nature [and] the social dimensions of that, and who benefits, whose rights are preserved and protected.

Neville Ash, director of the UN Environment Programme World Conservation Monitoring Centre

The ambitions in the 2030 targets are very high, so it’s going to be a stretch for many governments to make the actions necessary to achieve those targets, but even if we make all the actions in the next four years, it doesn’t mean we halt and reverse biodiversity loss by 2030. It means we put the action in place to enable that to happen in the future…The important thing at this stage is the urgent action to address the loss of biodiversity, with the result of that finding its way through by the ambition of 2050 of living in harmony with nature.

Prof Pam McElwee, Rutgers University professor and co-chair of an IPBES “nexus assessment” report

If you look at all of the available evidence, it’s pretty clear that we’re going to keep experiencing biodiversity decline. I mean, it’s fairly similar to the 1.5C climate target. We are not going to meet that either. But that doesn’t mean that you slow down the ambition…even though you recognise that we probably won’t meet that specific timebound target, that’s all the more reason to continue to do what we’re doing and, in fact, accelerate action.

Watch, read, listen

OIL IMPACTS: Gas flaring has risen in the Niger Delta since oil and gas major Shell sold its assets in the Nigerian “oil hub”, a Climate Home News investigation found.

LOW SNOW: The Washington Post explored how “climate change is making the Winter Olympics harder to host”.

CULTURE WARS: A Media Confidential podcast examined when climate coverage in the UK became “part of the culture wars”.

Coming up

2-8 February: 12th session of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), Manchester, UK
8 February: Japanese general election
8 February: Portugal presidential election
11 February: Barbados general election
11-12 February: UN climate chief Simon Stiell due to speak in Istanbul, Turkey

Pick of the jobs

UK Met Office, senior climate science communicator | Salary: £43,081-£46,728. Location: Exeter, UK
Canadian Red Cross, programme officer, Indigenous operations – disaster risk reduction and climate change adaptation | Salary: $56,520-$60,053. Location: Manitoba, Canada
Aldersgate Group, policy officer | Salary: £33,949-£39,253. Location: London (hybrid)

DeBriefed is edited by Daisy Dunne. Please send any tips or feedback to debriefed@carbonbrief.org.

This is an online version of Carbon Brief’s weekly DeBriefed email newsletter. Subscribe for free here.

The post DeBriefed 6 February 2026: US secret climate panel ‘unlawful’ | China’s clean energy boon | Can humans reverse nature loss? appeared first on Carbon Brief.

DeBriefed 6 February 2026: US secret climate panel ‘unlawful’ | China’s clean energy boon | Can humans reverse nature loss?

Greenhouse Gases

China Briefing 5 February 2026: Clean energy’s share of economy | Record renewables | Thawing relations with UK

Published

4 days ago

February 5, 2026

Alice Rush

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

Solar and wind eclipsed coal

‘FIRST TIME IN HISTORY’: China’s total power capacity reached 3,890 gigawatts (GW) in 2025, according to a National Energy Administration (NEA) data release covered by industry news outlet International Energy Net. Of this, it said, solar capacity rose 35% to 1,200GW and wind capacity was up 23% to 640GW, while thermal capacity – which is mostly coal – grew 6% to just over 1,500GW. This marks the “first time in history” that wind and solar capacity has outranked coal capacity in China’s power mix, reported the state-run newspaper China Daily. China’s grid-related energy storage capacity exceeded 213GW in 2025, said state news agency Xinhua. Meanwhile, clean-energy industries “drove more than 90%” of investment growth and more than half of GDP growth last year, said the Guardian in its coverage of new analysis for Carbon Brief. (See more in the spotlight below.)

上微信关注《碳简报》

DAWN FOR SOLAR: Solar power capacity alone may outpace coal in 2026, according to projections by the China Electricity Council (CEC), reported business news outlet 21st Century Business Herald. It added that non-fossil sources could account for 63% of the power mix this year, with coal falling to 31%. Separately, the China Renewable Energy Society said that annual wind-power additions could grow by between 600-980GW over the next five years, with annual additions of 120GW expected until 2028, said industry news outlet China Energy Net. China Energy Net also published the full CEC report.

STATE MEDIA VOICE: Xinhua published several energy- and climate-related articles in a series on the 15th five-year plan. One said that becoming a low-carbon energy “powerhouse” will support decarbonisation efforts, strengthen industrial innovation and improve China’s “global competitive edge and standing”. Another stated that coal consumption is “expected” to peak around 2027, with continued “growth” in the power and chemicals sector, while oil has already peaked. A third noted that distributed energy systems better matched the “characteristics of renewable energy” than centralised ones, but warned against “blind” expansion and insufficient supporting infrastructure. Others in the series discussed biodiversity and environmental protection and recycling of clean-energy technology. Meanwhile, the communist party-affiliated People’s Daily said that oil will continue to play a “vital role” in China, even after demand peaks.

Starmer and Xi endorsed clean-energy cooperation

CLIMATE PARTNERSHIP: UK prime minister Keir Starmer and Chinese president Xi Jinping pledged in Beijing to deepen cooperation on “green energy”, reported finance news outlet Caixin. They also agreed to establish a “China-UK high-level climate and nature partnership”, said China Daily. Xi told Starmer that the two countries should “carry out joint research and industrial transformation” in new energy and low-carbon technologies, according to Xinhua. It also cited Xi as saying China “hopes” the UK will provide a “fair” business environment for Chinese companies.

Sign up to Carbon Brief’s free “China Briefing” email newsletter. All you need to know about the latest developments relating to China and climate change. Sent to your inbox every Thursday.

OCTOPUS OVERSEAS: During the visit, UK power-trading company Octopus Energy and Chinese energy services firm PCG Power announced they would be starting a new joint venture in China, named Bitong Energy, reported industry news outlet PV Magazine. The move “marks a notable direct entry” of a foreign company into China’s “tightly regulated electricity market”, said Caixin.

PUSH AND PULL: UK policymakers also visited Chinese clean-energy technology manufacturer Envision in Shanghai, reported finance news outlet Yicai. It quoted UK business secretary Peter Kyle emphasising that partnering with companies “like Envision” on sustainability is a “really important part of our future”, particularly in terms of job creation in the UK. Trade minister Chris Bryant told Radio Scotland Breakfast that the government will decide on Chinese wind turbine manufacturer Mingyang’s plans for a Scotland factory “soon”. Researchers at the thinktank Oxford Institute for Energy Studies wrote in a guest post for Carbon Brief that greater Chinese competition in Europe’s wind market could “help spur competition in Europe”, if localisation rules and “other guardrails” are applied.

More China news

LIFE SUPPORT: China will update its coal capacity payment mechanism, which will raise thresholds for coal-fired power plants and expand to cover gas-fired power and pumped and new-energy storage, reported current affairs outlet China News.
FRONTIER TECH: The world’s “largest compressed-air power storage plant” has begun operating in China, said Bloomberg.
PARTNERSHIP A ‘MISTAKE’: The EU launched a “foreign subsidies” probe into Chinese wind turbine company Goldwind, said the Hong Kong-based South China Morning Post. EU climate chief Wopke Hoekstra said the bloc must resist China’s pull in clean technologies, according to Bloomberg.
TRADE SPAT: The World Trade Organization “backed a complaint by China” that the US Inflation Reduction Act “discriminated against” Chinese cleantech exports, said Reuters.
NEW RULES: China has set “new regulations” for the Waliguan Baseline Observatory, which provides “key scientific references for the United Nations Framework Convention on Climate Change”, said the People’s Daily.

Captured

New or reactivated proposals for coal-fired power plants in China totalled 161GW in 2025, according to a new report covered by Carbon Brief.

Spotlight

Clean energy drove China’s economic growth in 2025

New analysis for Carbon Brief finds that clean-energy sectors contributed the equivalent of $2.1tn to China’s economy last year, making it a key driver of growth. However, headwinds in 2026 could restrict growth going forward – especially for the solar sector.

Below is an excerpt from the article, which can be read in full on Carbon Brief’s website.

Solar power, electric vehicles (EVs) and other clean-energy technologies drove more than a third of the growth in China’s economy in 2025 – and more than 90% of the rise in investment.

Clean-energy sectors contributed a record 15.4tn yuan ($2.1tn) in 2025, some 11.4% of China’s gross domestic product (GDP)

Analysis shows that China’s clean-energy sectors nearly doubled in real value between 2022-25 and – if they were a country – would now be the 8th-largest economy in the world.

These investments in clean-energy manufacturing represent a large bet on the energy transition in China and overseas, creating an incentive for the government and enterprises to keep the boom going.

However, there is uncertainty about what will happen this year and beyond, particularly due to a new pricing system, worsening industrial “overcapacity” and trade tensions.

Outperforming the wider economy

China’s clean-energy economy continues to grow far more quickly than the wider economy, making an outsized contribution to annual growth.

Without these sectors, China’s GDP would have expanded by 3.5% in 2025 instead of the reported 5.0%, missing the target of “around 5%” growth by a wide margin.

Clean energy made a crucial contribution during a challenging year, when promoting economic growth was the foremost aim for policymakers.

In 2024, EVs and solar had been the largest growth drivers. In 2025, it was EVs and batteries, which delivered 44% of the economic impact and more than half of the growth of the clean-energy industries.

The next largest subsector was clean-power generation, transmission and storage, which made up 40% of the contribution to GDP and 30% of the growth in 2025.

Within the electricity sector, the largest drivers were growth in investment in wind and solar power generation capacity, along with growth in power output from solar and wind, followed by the exports of solar-power equipment and materials.

But investment in solar-panel supply chains, a major growth driver in 2022-23, continued to fall for the second year, as the government made efforts to rein in overcapacity and “irrational” price competition.

Headwinds for solar

Ongoing investment of hundreds of billions of dollars represents a gigantic bet on a continuing global energy transition.

However, developments next year and beyond are unclear, particularly for solar. A new pricing system for renewable power is creating uncertainty, while central government targets have been set far below current rates of clean-electricity additions.

Investment in solar-power generation and solar manufacturing declined in the second half of the year.

The reduction in the prices of clean-energy technology has been so dramatic that when the prices for GDP statistics are updated, the sectors’ contribution to real GDP – adjusted for inflation or, in this case deflation – will be revised down.

Nevertheless, the key economic role of the industry creates a strong motivation to keep the clean-energy boom going. A slowdown in the domestic market could also undermine efforts to stem overcapacity and inflame trade tensions by increasing pressure on exports to absorb supply.

Local governments and state-owned enterprises will also influence the outlook for the sector.

Provincial governments have a lot of leeway in implementing the new electricity markets and contracting systems for renewable power generation. The new five-year plans, to be published this year, will, therefore, be of major importance.

This spotlight was written for Carbon Brief by Lauri Myllyvirta, lead analyst at Centre for Research on Energy and Clean Air (CREA), and Belinda Schaepe, China policy analyst at CREA. CREA China analysts Qi Qin and Chengcheng Qiu contributed research.

Watch, read, listen

PROVINCE INFLUENCE: The Institute for Global Decarbonization Progress, a Beijing-based thinktank, published a report examining the climate-related statements in provincial recommendations for the 15th five-year plan.

‘PIVOT’?: The Outrage + Optimism podcast spoke with the University of Bath’s Dr Yixian Sun about whether China sees itself as a climate leader and what its role in climate negotiations could be going forward.

COOKING FOR CLEAN-TECH: Caixin covered rising demand for China’s “gutter oil” as companies “scramble” to decarbonise.

DON’T GO IT ALONE: China News broadcast the Chinese foreign ministry’s response to the withdrawal of the US from the Paris Agreement, with spokeswoman Mao Ning saying “no country can remain unaffected” by climate change.

$6.8tn

The current size of China’s green-finance economy, including loans, bonds and equity, according to Dr Ma Jun, the Institute of Finance and Sustainability’s president,in a report launch event attended by Carbon Brief. Dr Ma added that “green loans” make up 16% of all loans in China, with some areas seeing them take a 34% share.

New science

China’s official emissions inventories have overestimated its hydrofluorocarbon emissions by an average of 117m tonnes of carbon dioxide equivalent (mtCO2e) every year since 2017 | Nature Geoscience
“Intensified forest management efforts” in China from 2010 onwards have been linked to an acceleration in carbon absorption by plants and soils | Communications Earth and Environment

Recently published on WeChat

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 5 February 2026: Clean energy’s share of economy | Record renewables | Thawing relations with UK appeared first on Carbon Brief.

China Briefing 5 February 2026: Clean energy’s share of economy | Record renewables | Thawing relations with UK

Greenhouse Gases

Analysis: Clean energy drove more than a third of China’s GDP growth in 2025

Published

5 days ago

February 4, 2026

Alice Rush

Solar power, electric vehicles (EVs) and other clean-energy technologies drove more than a third of the growth in China’s economy in 2025 – and more than 90% of the rise in investment.

Clean-energy sectors contributed a record 15.4tn yuan ($2.1tn) in 2025, some 11.4% of China’s gross domestic product (GDP) – comparable to the economies of Brazil or Canada.

The new analysis for Carbon Brief, based on official figures, industry data and analyst reports, shows that China’s clean-energy sectors nearly doubled in real value between 2022-25 and – if they were a country – would now be the 8th-largest economy in the world.

Other key findings from the analysis include:

Without clean-energy sectors, China would have missed its target for GDP growth of “around 5%”, expanding by 3.5% in 2025 instead of the reported 5.0%.
Clean-energy industries are expanding much more quickly than China’s economy overall, with their annual growth rate accelerating from 12% in 2024 to 18% in 2025.
The “new three” of EVs, batteries and solar continue to dominate the economic contribution of clean energy in China, generating two-thirds of the value added and attracting more than half of all investment in the sectors.
China’s investments in clean energy reached 7.2tn yuan ($1.0tn) in 2025, roughly four times the still sizable $260bn put into fossil-fuel extraction and coal power.
Exports of clean-energy technologies grew rapidly in 2025, but China’s domestic market still far exceeds the export market in value for Chinese firms.

These investments in clean-energy manufacturing represent a large bet on the energy transition in China and overseas, creating an incentive for the government and enterprises to keep the boom going.

However, there is uncertainty about what will happen this year and beyond, particularly for solar power, where growth has slowed in response to a new pricing system and where central government targets have been set far below the recent rate of expansion.

An ongoing slowdown could turn the sectors into a drag on GDP, while worsening industrial “overcapacity” and exacerbating trade tensions.

Yet, even if central government targets in the next five-year plan are modest, those from local governments and state-owned enterprises could still drive significant growth in clean energy.

This article updates analysis previously reported for 2023 and 2024.

Clean-energy sectors outperform wider economy

China’s clean-energy economy continues to grow far more quickly than the wider economy. This means that it is making an outsize contribution to annual economic growth.

The figure below shows that clean-energy technologies drove more than a third of the growth in China’s economy overall in 2025 and more than 90% of the net rise in investment.

Contributions to the growth in Chinese investment (left) and GDP overall (right) in 2025 by sector, trillion yuan. Source: Centre for Research on Energy and Clean Air (CREA) analysis for Carbon Brief.

In 2022, China’s clean-energy economy was worth an estimated 8.4tn yuan ($1.2tn). By 2025, the sectors had nearly doubled in value to 15.4tn yuan ($2.1tn).

This is comparable to the entire output of Brazil or Canada and positions the Chinese clean-energy industry as the 8th-largest economy in the world. Its value is roughly half the size of the economy of India – the world’s fourth largest – or of the US state of California.

The outperformance of the clean-energy sectors means that they are also claiming a rising share of China’s economy overall, as shown in the figure below.

Share of China’s GDP contributed by clean-energy sectors, %. Source: CREA analysis for Carbon Brief.

This share has risen from 7.3% of China’s GDP in 2022 to 11.4% in 2025.

Without clean-energy sectors, China’s GDP would have expanded by 3.5% in 2025 instead of the reported 5.0%, missing the target of “around 5%” growth by a wide margin.

Clean energy thus made a crucial contribution during a challenging year, when promoting economic growth was the foremost aim for policymakers.

The table below includes a detailed breakdown by sector and activity.

Sector	Activity	Value in 2025, CNY bln	Value in 2025, USD bln	Year-on-year growth	Growth contribution	Value contribution	Value in 2025, CNY trn	Value in 2024, CNY trn	Value in 2023, CNY trn	Value in 2022, CNY trn
EVs	Investment: manufacturing capacity	1,643	228	18%	10.4%	10.7%	1.6	1.4	1.2	0.9
EVs	Investment: charging infrastructure	192	27	58%	2.9%	1.2%	0.192	0.122	0.1	0.08
EVs	Production of vehicles	3,940	548	29%	36.4%	25.6%	3.94	3.065	2.26	1.65
Batteries	Investment: battery manufacturing	277	38	35%	3.0%	1.8%	0.277	0.205	0.32	0.15
Batteries	Exports: batteries	724	101	51%	10.1%	4.7%	0.724	0.48	0.46	0.34
Solar power	Investment: power generation capacity	1,182	164	15%	6.3%	7.7%	1.182	1.031	0.808	0.34
Solar power	Investment: manufacturing capacity	506	70	-23%	-6.5%	3.3%	0.506	0.662	0.95	0.51
Solar power	Electricity generation	491	68	33%	5.1%	3.2%	0.491	0.369	0.26	0.19
Solar power	Exports of components	681	95	21%	4.9%	4.4%	0.681	0.562	0.5	0.35
Wind power	Investment: power generation capacity, onshore	612	85	47%	8.1%	4.0%	0.612	0.417	0.397	0.21
Wind power	Investment: power generation capacity, offshore	96	13	98%	2.0%	0.6%	0.096	0.048	0.086	0.06
Wind power	Electricity generation	510	71	13%	2.4%	3.3%	0.51	0.453	0.4	0.34
Nuclear power	Investment: power generation capacity	173	24	18%	1.1%	1.1%	0.17	0.15	0.09	0.07
Nuclear power	Electricity generation	216	30	8%	0.7%	1.4%	0.216	0.2	0.19	0.19
Hydropower	Investment: power generation capacity	54	7	-7%	-0.2%	0.3%	0.05	0.06	0.06	0.06
Hydropower	Electricity generation	582	81	3%	0.6%	3.8%	0.582	0.567	0.51	0.51
Rail transportation	Investment	902	125	6%	2.1%	5.8%	0.902	0.851	0.764	0.714
Rail transportation	Transport of passengers and goods	1,020	142	3%	1.3%	6.6%	1.02	0.99	0.964	0.694
Electricity transmission	Investment: transmission capacity	644	90	6%	1.5%	4.2%	0.64	0.61	0.53	0.5
Electricity transmission	Transmission of clean power	52	7	14%	0.3%	0.3%	0.052	0.046	0.04	0.04
Energy storage	Investment: Pumped hydro	53	7	5%	0.1%	0.3%	0.05	0.05	0.04	0.03
Energy storage	Investment: Grid-connected batteries	232	32	52%	3.3%	1.5%	0.232	0.152	0.08	0.02
Energy storage	Investment: Electrolysers	11	2	29%	0.1%	0.1%	0.011	0.009	0	0
Energy efficiency	Revenue: Energy service companies	620	86	17%	3.8%	4.0%	0.62	0.528003	0.52	0.45
Total	Investments	7,198	1001	15%	38.2%	46.7%	7.20	6.28	6.00	4.11
Total	Production of goods and services	8,216	1,143	22%	61.8%	53.3%	8.22	6.73	5.58	4.32
Total	Total GDP contribution	15,414	2144	18%	100.0%	100.0%	15.41	13.01	11.58	8.42

EVs and batteries were the largest drivers of GDP growth

The contribution to nominal GDP growth – unadjusted for inflation – was even larger, as EV prices held up year-on-year while the economy as a whole suffered from deflation. Investment in battery manufacturing rebounded after a fall in 2024.

The major contribution of EVs and batteries is illustrated in the figure below, which shows both the overall size of the clean-energy economy and the sectors that added the most to the rise from year to year.

Contribution of clean-energy sectors to China’s GDP and GDP growth, trillion yuan, 2022-2025. Source: CREA analysis for Carbon Brief.

The next largest subsector was clean-power generation, transmission and storage, which made up 40% of the contribution to GDP and 30% of the growth in 2025.

Investment in solar-panel supply chains, a major growth driver in 2022-23, continued to fall for the second year. This was in line with the government’s efforts to rein in overcapacity and “irrational” price competition in the sector.

Finally, rail transportation was responsible for 12% of the total economic output of the clean-energy sectors, but saw relatively muted growth year-on-year, with revenue up 3% and investment by 6%.

Note that the International Energy Agency (IEA) world energy investment report projected that China invested $627bn in clean energy in 2025, against $257bn in fossil fuels.

For the same sectors as the IEA report, this analysis puts the value of clean-energy investment in 2025 at a significantly more conservative $430bn. The higher figures in this analysis overall are therefore the result of wider sectoral coverage.

Electric vehicles and batteries

EVs and vehicle batteries were again the largest contributors to China’s clean-energy economy in 2025, making up an estimated 44% of value overall.

Of this total, the largest share of both total value and growth came from the production of battery EVs and plug-in hybrids, which expanded 29% year-on-year. This was followed by investment into EV manufacturing, which grew 18%, after slower growth rates in 2024.

Investment in battery manufacturing also rebounded after a drop in 2024, driven by new battery technology and strong demand from both domestic and international markets. Battery manufacturing investment grew by 35% year-on-year to 277bn yuan.

The share of electric vehicles (EVs) will have reached 12% of all vehicles on the road by the end of 2025, up from 9% a year earlier and less than 2% just five years ago.

The share of EVs in the sales of all new vehicles increased to 48%, from 41% in 2024, with passenger cars crossing the 50% threshold. In November, EV sales crossed the 60% mark in total sales and they continue to drive overall automotive sales growth, as shown below.

Production of combustion-engine vehicles and EVs in China, million units. EVs include battery electric vehicles and plug-in hybrids. Source: China Association of Automobile Manufacturers data via Wind Financial Terminal.

Electric trucks experienced a breakthrough as their market share rose from 8% in the first nine months of 2024 to 23% in the same period in 2025.

Policy support for EVs continues, for example, with a new policy aiming to nearly double charging infrastructure in the next three years.

Exports grew even faster than the domestic market, but the vast majority of EVs continue to be sold domestically. In 2025, China produced 16.6m EVs, rising 29% year-on-year. While exports accounted for only 21% or 3.4m EVs, they grew by 86% year-on-year. Top export destinations for Chinese EVs were western Europe, the Middle East and Latin America.

The value of batteries exported also grew rapidly by 41% year-on-year, becoming the third largest growth driver of the GDP. Battery exports largely went to western Europe, north America and south-east Asia.

In contrast with deflationary trends in the price of many clean-energy technologies, average EV prices have held up in 2025, with a slight increase in average price of new models, after discounts. This also means that the contribution of the EV industry to nominal GDP growth was even more significant, given that overall producer prices across the economy fell by 2.6%. Battery prices continued to drop.

Clean-power generation

The solar power sector generated 19% of the total value of the clean-energy industries in 2025, adding 2.9tn yuan ($41bn) to the national economy.

Within this, investment in new solar power plants, at 1.2tn yuan ($160bn), was the largest driver, followed by the value of solar technology exports and by the value of the power generated from solar. Investment in manufacturing continued to fall after the wave of capacity additions in 2023, reaching 0.5tn yuan ($72bn), down 23% year-on-year.

In 2025, China achieved another new record of wind and solar capacity additions. The country installed a total of 315GW solar and 119GW wind capacity, adding more solar and two times as much wind as the rest of the world combined.

Clean energy accounted for 90% of investment in power generation, with solar alone covering 50% of that. As a result, non-fossil power made up 42% of total power generation, up from 39% in 2024.

However, a new pricing policy for new solar and wind projects and modest targets for capacity growth have created uncertainty about whether the boom will continue.

Under the new policy, new clean-power generation has to compete on price against existing coal power in markets that place it at a disadvantage in some key ways.

At the same time, the electricity markets themselves are still being introduced and developed, creating investment uncertainty.

Investment in solar power generation increased year-on-year by 15%, but experienced a strong stop-and-go cycle. Developers rushed to finish projects ahead of the new pricing policy coming into force in June and then again towards the end of the year to finalise projects ahead of the end of the current 14th five-year plan.

Investment in the solar sector as a whole was stable year-on-year, with the decline in manufacturing capacity investment balanced by continued growth in power generation capacity additions. This helped shore up the utilisation of manufacturing plants, in line with the government’s aim to reduce “disorderly” price competition.

By late 2025, China’s solar manufacturing capacity reached an estimated 1,200GW per year, well ahead of the global capacity additions of around 650GW in 2025. Manufacturers can now produce far more solar panels than the global market can absorb, with fierce competition leading to historically low profitability.

China’s policymakers have sought to address the issue since mid-2024, warning against “involution”, passing regulations and convening a sector-wide meeting to put pressure on the industry. This is starting to yield results, with losses narrowing in the third quarter of 2025.

The volume of exports of solar panels and components reached a record high in 2025, growing 19% year-on-year. In particular, exports of cells and wafers increased rapidly by 94% and 52%, while panel exports grew only by 4%.

This reflects the growing diversification of solar-supply chains in the face of tariffs and with more countries around the world building out solar panel manufacturing capacity. The nominal value of exports fell 8%, however, due to a fall in average prices and a shift to exporting upstream intermediate products instead of finished panels.

Hydropower, wind and nuclear were responsible for 15% of the total value of the clean-energy sectors in 2025, adding some 2.2tn yuan ($310bn) to China’s GDP in 2025.

Nearly two-thirds of this (1.3tn yuan, $180bn) came from the value of power generation from hydropower, wind and nuclear, with investment in new power generation projects contributing the rest.

Power generation grew 33% from solar, 13% from wind, 3% from hydropower and 8% from nuclear.

Within power generation investment, solar remained the largest segment by value – as shown in the figure below – but wind-power generation projects were the largest contributor to growth, overtaking solar for the first time since 2020.

Value of new clean-power generation capacity, billion yuan, by year added. Source: CREA analysis for Carbon Brief.

In particular, offshore wind power capacity investment rebounded as expected, doubling in 2025 after a sharp drop in 2024.

Investment in nuclear projects continued to grow but remains smaller in total terms, at 17bn yuan. Investment in conventional hydropower continued to decline by 7%.

Electricity storage and grids

Electricity transmission and storage were responsible for 6% of the total value of the clean-energy sectors in 2025, accounting for 1.0 tn yuan ($140bn).

The most valuable sub-segment was investment in power grids, growing 6% in 2025 and reaching $90bn. This was followed by investment in energy storage, including pumped hydropower, grid-connected battery storage and hydrogen production.

Investment in grid-connected batteries saw the largest year-on-year growth, increasing by 50%, while investments in electrolysers also grew by 30%. The transmission of clean power increased an estimated 13%, due to rapid growth in clean-power generation.

China’s total electricity storage capacity reached more than 213GW, with battery storage capacity crossing 145GW and pumped hydro storage at 69GW. Some 66GW of battery storage capacity was added in 2025, up 52% year-on-year and accounting for more than 40% of global capacity additions.

Notably, capacity additions accelerated in the second half of the year, with 43GW added, compared with the first half, which saw 23GW of new capacity.

The battery storage market initially slowed after the renewable power pricing policy, which banned storage mandates after May, but this was quickly replaced by a “market-driven boom”. Provincial electricity spot markets, time-of-day tariffs and increasing curtailment of solar power all improved the economics of adding storage.

By the end of 2025, China’s top five solar manufacturers had all entered the battery storage market, making a shift in industry strategy.

Investment in pumped hydropower continued to increase, with 15GW of new capacity permitted in the first half of 2025 alone and 3GW entering operation.

Railways

Rail transportation made up 12% of the GDP contribution of the clean-energy sectors, with revenue from passenger and goods rail transportation the largest source of value. Most growth came from investment in rail infrastructure, which increased 6% year-on-year

The electrification of transport is not limited to EVs, as rail passenger, freight and investment volumes saw continued growth. The total length of China’s high-speed railway network reached 50,000km in 2025, making up more than 70% of the global high-speed total.

Energy efficiency

Investment in energy efficiency rebounded strongly in 2025. Measured by the aggregate turnover of large energy service companies (ESCOs), the market expanded by 17% year-on-year, returning to growth rates last seen during 2016-2020.

Total industry turnover has also recovered to its previous peak in 2021, signalling a clear turnaround after three years of weakness.

Industry projections now anticipate annual turnover reaching 1tn yuan in annual turnover by 2030, a target that had previously been expected to be met by 2025.

China’s ESCO market has evolved into the world’s largest. Investment within China’s ESCO market remains heavily concentrated in the buildings sector, which accounts for around 50% of total activity. Industrial applications make up a further 21%, while energy supply, demand-side flexibility and energy storage together account for approximately 16%.

Implications of China’s clean-energy bet

Ongoing investment of hundreds of billions of dollars into clean-energy manufacturing represents a gigantic economic and financial bet on a continuing global energy transition.

In addition to the domestic investment covered in this article, Chinese firms are making major investments in overseas manufacturing.

The clean-energy industries have played a crucial role in meeting China’s economic targets during the five-year period ending this year, delivering an estimated 40%, 25% and 37% of all GDP growth in 2023, 2024 and 2025, respectively.

However, the developments next year and beyond are unclear, particularly for solar power generation, with the new pricing system for renewable power generation leading to a short-term slowdown and creating major uncertainty, while central government targets have been set far below current rates of clean-electricity additions.

Investment in solar-power generation and solar manufacturing declined in the second half of the year, while investment in generation clocked growth for the full year, showing the risk to the industries under the current power market set-ups that favour coal-fired power.

A recent CREA survey of experts working on climate and energy issues in China found that the majority believe that economic and geopolitical challenges will make the “dual carbon” goals – and with that, clean-energy industries – only more important.

Local governments and state-owned enterprises will also influence the outlook for the sector. Their previous five-year plans played a key role in creating the gigantic wind and solar power “bases” that substantially exceeded the central government’s level of ambition.

Provincial governments also have a lot of leeway in implementing the new electricity markets and contracting systems for renewable power generation. The new five-year plans, to be published this year, will therefore be of major importance.

About the data

Reported investment expenditure and sales revenue has been used where available. When this is not available, estimates are based on physical volumes – gigawatts of capacity installed, number of vehicles sold – and unit costs or prices.

The contribution to real growth is tracked by adjusting for inflation using 2022-2023 prices.

All calculations and data sources are given in a worksheet.

Estimates include the contribution of clean-energy technologies to the demand for upstream inputs such as metals and chemicals.

This approach shows the contribution of the clean-energy sectors to driving economic activity, also outside the sectors themselves, and is appropriate for estimating how much lower economic growth would have been without growth in these sectors.

Double counting is avoided by only including non-overlapping points in value chains. For example, the value of EV production and investment in battery storage of electricity is included, but not the value of battery production for the domestic market, which is predominantly an input to these activities.

Similarly, the value of solar panels produced for the domestic market is not included, as it makes up a part of the value of solar power generating capacity installed in China. However, the value of solar panel and battery exports is included.

In 2025, there was a major divergence between two different measures of investment. The first, fixed asset investment, reportedly fell by 3.8%, the first drop in 35 years. In contrast, gross capital formation saw the slowest growth in that period but still inched up by 2%.

This analysis uses gross capital formation as the measure of investment, as it is the data point used for GDP accounting. However, the analysis is unable to account for changes in inventories, so the estimate of clean-energy investment is for fixed asset investment in the sectors.

The analysis does not explicitly account for the small and declining role of imports in producing clean-energy goods and services. This means that the results slightly overstate the contribution to GDP but understate the contribution to growth.

For example, one of the most important import dependencies that China has is for advanced computing chips for EVs. The value of the chips in a typical EV is $1,000 and China’s import dependency for these chips is 90%, which suggests that imported chips represent less than 3% of the value of EV production.

The estimates are likely to be conservative in some key respects. For example, Bloomberg New Energy Finance estimates “investment in the energy transition” in China in 2024 at $800bn. This estimate covers a nearly identical list of sectors to ours, but excludes manufacturing – the comparable number from our data is $600bn.

China’s National Bureau of Statistics says that the total value generated by automobile production and sales in 2023 was 11tn yuan. The estimate in this analysis for the value of EV sales in 2023 is 2.3tn yuan, or 20% of the total value of the industry, when EVs already made up 31% of vehicle production and the average selling prices for EVs was slightly higher than for internal combustion engine vehicles.