Solar farm in the Tengger Desert, China. (Photo: iStock)
Clean-energy growth helped China’s carbon dioxide (CO2) emissions fall by 1% year-on-year in the first half of 2025, extending a declining trend that started in March 2024.
The CO2 output of the nation’s power sector – its dominant source of emissions – fell by 3% in the first half of the year, as growth in solar power alone matched the rise in electricity demand.
The new analysis for Carbon Brief shows that record solar capacity additions are putting China’s CO2 emissions on track to fall across 2025 as a whole.
Even if its emissions fall in 2025 as expected, however, China is bound to miss multiple important climate targets this year.
This includes targets to reduce its carbon intensity – the emissions per unit of GDP – to strictly control coal consumption growth and new coal-power capacity, as well as to increase the share of cleaner electric-arc steelmaking in total steel output.
If policymakers want to make up for these shortfalls, then there will be additional pressure on China’s next “nationally determined contribution” (NDC, its international climate pledge for 2035) and its 15th five-year plan for 2026-30, both due to be finalised in the coming months.
The falling trend in CO2 emissions – and the clean-energy growth that is driving it – could give policymakers greater confidence that more ambitious targets are achievable.
Falling emissions from power, cement and steel
The reduction in emissions in the first half of 2025 was predominantly driven by the power sector, aided by the building materials, steel and heating industries.
Coal use in the power industry fell by 3.4% compared with the same period a year earlier, while gas use increased by 6%, resulting in a 3.2% drop in emissions for the sector overall.
The reduction in CO2 emissions from coal use in the power sector is shown at the bottom of the figure below, along with the small rise due to higher gas-fired electricity generation.
Other changes in CO2 emissions in the first half of 2025, compared with the same period in 2024, are broken down by source and sector in the rest of the figure.
Year-on-year change in China’s CO2 emissions from fossil fuels and cement, for the period January-June 2025, million tonnes of CO2. Source: Emissions are estimated from National Bureau of Statistics data on production of different fuels and cement, China Customs data on imports and exports and WIND Information data on changes in inventories, applying emissions factors from China’s latest national greenhouse gas emissions inventory and annual emissions factors per tonne of cement production until 2024. Sector breakdown of coal consumption is estimated using coal consumption data from WIND Information and electricity data from the National Energy Administration.
Emissions from the building materials sector fell by 3% and from the metals industry by 1%, with cement falling 4% and steel output 3%. The reason for these reductions is the ongoing contraction in the construction sector, with real estate investment falling 11% and the floor area of new construction starts by 20%. Traditional targets of government infrastructure investment, such as transportation, also showed relatively slow growth.
CO2 reductions resulting from the drop in steel output were limited by a fall in the share of electric arc furnace (EAF) steelmaking, a much less emissions- and energy-intensive process than the coal-based production of primary steel.
The share of electric-arc output in total production fell from 10.2% in 2024 to 9.8% in the first half of 2025, despite a government target of 15% for this year.
Excess coal-based capacity and a lack of incentives for shifting production mean that electric arc steelmakers, rather than coal-based steel mills, tend to absorb reductions in output, as their operating costs are higher and costs of shutting down and starting up production lines are lower.
Shifting to EAF steel is one of the largest emission reduction opportunities in China over the next decade, according to an analysis by the Centre for Research on Energy and Clean Air.
Elsewhere, consumption of oil products increased by 1%. However, this growth did not come from transport fuel demand. The production of petrol, diesel and jet fuel all continued to fall, with electric vehicles eating into road-fuel demand. Instead, growth was driven by demand for naphtha from petrochemicals producers, including newly commissioned plants.
Gas use outside the power sector – mainly heating – dropped by 1%, after a fall in the first quarter due to mild winter temperatures and a smaller increase in the second quarter.
Solar boom covers power demand growth
The first half of 2025 saw a new record for the growth of clean power generation excluding hydro, made up of solar, wind, nuclear and biomass.
Clean power generation from solar, wind and nuclear power grew by 270 terawatt hours (TWh), substantially exceeding the 170TWh (3.7%) increase in electricity consumption. Hydropower generation fell by 3% (16TWh), moderating the fall in fossil fuel-fired power generation.
The rise in power generation from solar panels, on its own, covered all of the growth in electricity demand, increasing by 170TWh – equivalent to the national power output of Mexico or Turkey over the same period. Wind power output grew by 80TWh and nuclear by 20TWh.
As a result, the share of low-carbon sources reached 40% of the nation’s electricity generation overall in the first half of the year, up from 36% in the same period of 2024.
The figure below shows how clean-energy sources excluding hydro (columns) have started matching the recent increases in China’s electricity demand (solid line), as well as the average amount of growth in recent years (dashed line).
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Columns: Year-on-year change in quarterly electricity generation from clean energy excluding hydro, terawatt hours. Solid and dashed line: Quarterly and average change in total electricity generation, TWh. Sources: China Electricity Council; Ember; analysis for Carbon Brief by Lauri Myllyvirta.
Strikingly, the record growth of solar and continued expansion of wind mean that both sources of electricity generation overtook hydropower for the first time in the first half of 2025, as shown in the figure below. Despite steady growth, nuclear power is a relatively distant fourth, at less than half of the power generation from each of the other three major non-fossil technologies.
Electricity generation from non-fossil fuels in the first half of each year, TWh. Source: Ember; analysis for Carbon Brief by Lauri Myllyvirta.
The growth in solar power generation was driven by record capacity growth. China added 212GW of new solar capacity in the first half of the year, double the amount installed in the first half of 2024, which itself had been a new record.
For comparison, the world’s second-largest nation for solar capacity – the US – had only installed 178GW, in total, by the end of 2024, while third-ranked India had 98GW.
Some 93GW of new solar capacity was added to China’s grid in May alone, as the rush to install before a change in pricing policy culminated. This rate of installations translates to approximately 100 solar panels installed every second of the month.
The acceleration was due to a change in the policy on tariffs paid to new wind and solar generators, which started in June. Previously, new plants were guaranteed to receive the benchmark price for coal-fired power output in each province, for each unit of electricity they generate. Under the new policy, new generators have to secure contracts directly with electricity buyers, causing uncertainty and likely putting downward pressure on revenue.
The resulting surge in new capacity means that solar is poised to overtake wind this year – and hydro this year or next – to become the largest source of clean power generation in China.
This is despite solar capacity additions slowing down in June and projections diverging widely on how much growth to expect for the remainder of 2025 and into 2026, under the new policy.
The consensus among forecasters has been one of a sharp slowdown in installations.
After the new pricing policy was announced, the China Electricity Council (CEC) and China Photovoltaic Industry Association (CPIA) projected 210GW and 215-235GW for 2025 as a whole, respectively, implying plummeting additions in the second half of the year. In contrast, the State Grid Energy Research Institute expects 380GW to be added to the grid this year.
After data for May installations became available, the CEC upgraded its forecast for the whole year to 310GW and the CPIA to 270-300GW, implying that 60-100GW would be added in the second half of the year. This would still be a sharp deceleration compared with the second half of 2024, when 173GW was added.
For wind, the State Grid researchers expect 140GW and CEC 110GW, while 51GW was added in the first half of the year. Both numbers indicate larger capacity additions in the second half of 2025 and an increase for the full year compared with 2024.
The State Grid should have detailed knowledge of projects seeking to connect to the electricity grid, so its projections carry extra weight compared with others. If its expectations for wind and solar growth are realised, this would result in around 850TWh of annual clean power generation being added to the grid in 2025, as shown in the figure below.
This new clean power capacity would be more than enough to meet the entire electricity demand of Brazil (760TWh), or Germany and the UK combined (817TWh).
With the State Grid also projecting demand to grow by 400-640TWh (4.0-6.5%), clean-energy growth should push down CO2 from China’s power sector this year – and well into next year.
Annual electricity generation from clean power capacity newly added each year, terawatt hours by source. Three alternative projections for 2025 are taken from a range of different organisations. Power generation from new capacity is projected using average capacity factors for each technology over 2015–2024. Sources: Historical data from China Electricity Council; projections from China Photovoltaic Industry Association, China Electricity Council, State Grid and analysis for Carbon Brief by Lauri Myllyvirta.
China’s top economic planner, the National Development and Reform Commission (NDRC), is also taking steps to spur demand for contracts with solar and wind producers.
A new policy – published in July – requires for the first time that steel, cement and polysilicon factories, as well as some new data centres, meet a certain percentage of their demand using renewable electricity.
Previously, such requirements were only applied to provinces, power distribution companies and the aluminum industry. Their mandated renewable energy shares have also now increased.
These changes boost demand for contracts with renewable electricity suppliers, just as new solar and wind plants are having to secure contracts directly with buyers, under their new pricing policy.
The increase in demand for renewable power resulting from these measures broadly matches the low end of the growth projected in solar and wind this year. The renewable quotas therefore offer a backstop of support for the continued growth of clean power, which will be required to meet China’s wider climate and energy targets.
The increase in solar power generation from rising installations could be even larger, but is being limited by issues around grid management and capacity.
The share of potential solar power output that was not utilised rose to 5.7% in the first half of 2025, from 3.2% a year earlier. While technical issues such as uncompleted grid connections could play a role amid the boom, this also implies a significant increase in curtailment.
The average utilisation rate of solar panels fell by 12% in the first quarter of this year, compared with the 2020–2023 average, according to China Electricity Council data accessed through Wind Information. This is a much larger reduction than indicated by the reported curtailment rates. The flipside of this dip in utilisation is that improvements to grid operation and infrastructure will unlock even more generation from existing solar capacity.
Coal power capacity is expected to surge this year, even as demand for power generation from coal contracts. The State Grid predicts 127GW of thermal power added. Some of this will be gas, but based on non-coal thermal power additions expected by the CEC, around 90-100GW is coal, while the CEC projects 80GW of coal power added.
Data from Global Energy Monitor shows 93-109GW of coal-power projects under construction that could be completed this year, assuming a 2.5 to 3-year lead time from issuance of permits to grid connection. The largest amount of coal-fired capacity China has ever connected to the grid in one year is 63GW in 2008, so 2025 seems likely to set a new record by a large margin.
A former senior official at one of China’s largest power firms stated in an interview in June 2025 that companies are building coal power capacity due to central government pressure.
There is little enthusiasm to invest and the target to expand coal-power capacity to 1,360GW in this five-year plan period, covering 2021-2025, is unlikely to be met. Operating coal-power capacity was 1,210GW at the end of June, up from 1,080GW at the end of 2020.
The influx of coal-fired capacity will result in falling utilisation and profitability.
However, oversupply of coal power could also weaken demand for contracts with solar and wind producers, undermining clean-energy growth. This makes measures that offer a backstop of demand for clean power, such as the sector quotas, all the more significant.
Author: Lauri Myllyvirta
This article was originally published on Carbon Brief under the Creative Commons BY NC ND licence. Read the original article.
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