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China’s Energy Future: Stagnation and Growth
- BRANDi
- May 13
- 2 min read
According to the International Energy Agency (IEA), though China has contributed nearly 60% of the global growth in primary energy demand, it has emitted over 80% of the worldwide CO2 level increase since 2010. That is one of the reasons why the world's second-largest economy's 14th Five-Year Plan includes ambitious climate goals, namely retrofitting 350 million square meters of buildings, ensuring that 20% of new vehicles are electric by 2025, and targeting 1,200 daily GW of wind and solar by 2030. To put this in perspective, the entire contiguous US (mainland USA) consumes around 438 GW of power daily, as per the US Department of Energy. While IEA forecasts that this clean energy target could be reached five years early, fossil fuels are still expected to supply about 80% of China's primary energy in 2030 under current policy scenarios.
THE SYSTEMIC FACTORS SLOWING DOWN THE CHINESE ENERGY TRANSITION
A report entitled "Global Energy Outlook 2024: Peaks or Plateaus?" from Resources for the Future, an America-based energy policy think tank, indicates that this dissonance between policy intent and energy outcomes reflects the complexity of China's domestic sectorial inertia. China's real estate sector—historically the country's main GDP growth driver—has entered a deep and prolonged downturn since even before the pandemic years. The collapse of major developers such as Evergrande and widespread defaults across the property market have stalled new construction and weakened investment confidence. These trends threaten to curb demand for construction materials and energy, creating a drag on emissions growth. Simultaneously, China's aging population is shrinking its labor force, likely reducing long-term energy demand even as policymakers try to pivot toward high-tech manufacturing and EVs as new engines of growth.
THE CURRENT TRENDS OF TRANSFORMATION
Still, hope remains. At a sectoral level, structural changes are already reshaping China's energy use. The power sector is moving from coal-fired baseload capacity toward flexible, renewable-integrated systems; for example, data from Yale University shows that now, the country produces more than 80% of the world's entire solar energy. Industrial coal use is also projected to decline as steelmakers shift from blast furnaces to electric arc technologies using scrap. Meanwhile, policy-led retrofitting of buildings and aggressive EV adoption are set to suppress oil and gas demand. Still, even with accelerated renewables deployment—driven largely by wind and solar—the transformation is partial. China remains the world's largest coal consumer, and the IEA expects fossil fuels to dominate China's energy mix in the medium term until 2030.
Ultimately, whether China can align its energy transition with its climate targets depends on its ability to balance economic restructuring with environmental resolve. The current slowdown may paradoxically support emissions peaking before 2030, but for the Chinese to achieve net zero by 2060, more needs to be done. Stronger implementation of existing policies, breakthroughs in storage and grid flexibility, and a robust phase-down of fossil fuel subsidies need to be put in place. Anyhow, despite its challenges, China’s track record of meeting and sometimes exceeding its Five-Year Plan goals provides some reasons for optimism—but only if the momentum toward long-term transformation is not lost amid short-term economic turbulence.
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