The International Energy Authority has described China’s challenge to deliver a carbon-neutral economy by 2060 as the biggest climate undertaking ever made by any country and compared it to China’s successful challenge post-1978 to transform its rural economy into an industrial global powerhouse.

The scale and magnitude of the challenge facing the world’s largest CO2 emitter is daunting, given it accounts for about a third of all global emissions. Though it has been actively pursuing a sustainable energy policy for more than 20 years, coal still comprises more than 52% of the primary energy mix. This reflects a 14% reduction in the last decade and means the country remains the world’s largest producer and consumer of coal, which is used primarily to generate nearly 60% of its electricity needs.

China’s Energy Mix

China continues to invest in new coal-fired power and in 2025 was expected to add 80GW of capacity, the largest expansion for a decade.  A total of 25GW of future coal-fired power was approved for construction in the first half of 2025.

China’s renewable energy capacity is also expanding rapidly, with 268GW of new solar and wind added in the first half of 2025 – a figure similar to the total installed capacity in the United States. However, as reported by Reuters, utilisation of capacity is an increasing issue, with curtailment rates for wind and solar increasing in 2025 and reaching more than 30% in some provinces.

Electricity Sources

China's energy & climate goals in brief

  • 2060 target for carbon neutrality
  • World’s biggest CO2 emitter
  • Coal provides more than 60% of electricity
  • Global leader in renewable energy investment
  • Gas to supply 15% of primary energy by 2050

Natural Gas

Given the existing dominance of coal and the rising prevalence of renewables, natural gas has a niche but critical and growing role in China to help drive down air pollution and emissions where there has been heavy coal use. It is being prioritised for industry and for city heating to improve air quality in populated areas, as well as being linked to renewables as a complementary energy to build innovative distributed energy systems.

Though its share of the primary energy mix is around 9%, China’s natural gas consumption increased more than 220% between 2013 and 2023 and it is the third biggest user globally behind the US and Russia. By 2050, natural gas is expected to have about 15% of China’s primary energy share.

In the past 20 years, the Chinese government has built thousands of kilometres of domestic gas pipelines throughout the country, backed out coal for gas in cities and industry, started importing gas by pipeline from Russia and other central Asian countries and built 28 LNG regasification plants. Four import terminals were added in 2023 alone as China again overtook Japan to be the world’s largest LNG importer.

LNG demand from China is projected by Wood Mackenzie to continue growing into the 2030s, before gradually declining as new pipeline projects come online.

Domestic Natural Gas Production

China has also strongly focussed on increasing domestic gas production as part of its 14th Five-year Plan, with particular attention given to development of unconventional reserves such as shale, coalbed methane, tight gas and methyl hydrate.

China has committed to achieve net-zero carbon emissions by 2060 with carbon emissions peaking in 2030 – if not before – when carbon emission intensity will be at least 65% of the 2005 levels.

The updated Nationally Determined Contribution submitted by China ahead of COP30 pledges to reduce net greenhouse gas emissions by 7-10% on peak levels by 2035, while expanding the installed capacity of wind and solar power to more than six times 2020 levels within the same timeframe.

China’s decarbonisation aspirations to date have focussed on three main areas:

Going green

Adopting renewable and non-fossil fuels to cut emissions and reducing the role of fossil fuels though coal will remain a major contributor in the medium to long term.

Technology

Developing new technologies to reduce the carbon footprint, particularly to make coal cleaner and greener and renewables more efficient and affordable, as well as increasing the production of unconventional natural reserves such as shale, while establishing leading positions in new areas such as artificial intelligence and Electric Vehicles (EV).

Market reform

Liberalising the gas, power and oil sectors, developing power and environmental product trading while promoting foreign direct investment in multiple sectors including energy and transport.

Although China’s rate of economic growth is projected to decline over the next five years, it’s clear that gas will continue to play a significant and growing role in its economy. The size of that role over the next 30 years will depend on how quickly China moves toward renewables options, develops clean coal solutions and implements other technological solutions such as hydrogen.

China has plans to heavily invest in carbon capture, utilisation and storage over the next decade. According to the Global Carbon Capture and Storage Institute, 20 projects were already in operation in China in 2025 – including a large-scale demonstration factor at a cement plant. The 15th Five-Year Plan, set to be announced in March 2026, could contain key insights into the country’s future CCS plans.

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