For the first time, growth in China’s clean power generation has led to a decline in the nation’s carbon dioxide (CO2) emissions, even as power demand continues to rise rapidly.

According to a new analysis from Carbon Brief, China’s emissions fell by 1.6% year-on-year in the first quarter of 2025 and by 1% over the last 12 months since March 2025. Noteworthy is that power-sector emissions dropped 2% year-on-year in the same period.

This shift is not sudden.

Since President Xi Jinping announced the “dual-carbon” goal at the 75th UN General Assembly in September 2020, the government has prioritized peaking CO2 emissions before 2030 and achieving carbon neutrality by 2060.

Gong Jicheng, a researcher at Peking University’s College of Environmental Sciences and Engineering, explained to China Daily that “it is an important strategy for the country to reach its carbon neutrality goals by significantly curbing and reducing final energy consumption through higher efficiencies in many areas.”

Why This Matters

• Moving in the Right Direction, Not Quickly Enough: Despite progress, China remains off track for its 2030 carbon intensity reduction commitment, following slow progress during the pandemic.

• China Global Solar Deployment Leadership: China added 278 gigawatts (GW) of solar capacity in 2024, a 28% year-on-year increase, tripling the annual installation rate from 2022.

• China’s % Coal Generation Dropped: Coal’s share of electricity generation has dropped rapidly, from nearly 80% in the mid-2000s to 54.8% in 2024. If these trends continue, clean energy could meet all of China’s power demand growth before 2030.

The Role of Electrification

The term electrification refers to replacing fossil-fuel-based technologies or processes with electrically powered alternatives—such as swapping combustion engines for electric vehicle motors. These replacements are typically more efficient, reducing overall energy demand and, as the electricity grid becomes cleaner, have a growing impact on emissions. Countries making significant progress in this transition are sometimes called “electrostates.”

By the end of 2024, electricity accounted for 28% of China’s end-use energy consumption, with projections to reach 30% in 2025. This places China well ahead of the U.S. and EU, where electrification rates have plateaued at around 23% and 22%, respectively.

Electrification is especially critical in sectors like transportation and steel. China has led the world in developing and promoting electric vehicles (EVs), with adoption rates rising sharply. The government aims to increase the share of new energy vehicles—including EVs and plug-in hybrids—from 48% in 2024 to about 60% in 2025. In 2024 alone, this shift saved approximately 28 million tonnes of standard coal and reduced CO2 emissions by about 73 million tons.

In the steel sector, technologies like the electric arc furnace—powered by electricity—can significantly boost energy efficiency and cut major air pollutants, such as nitrogen dioxide, by over 80% by 2060.

Clean Energy Growth and Coal Decline

China added 278 gigawatts (GW) of solar capacity in 2024, a 28% year-on-year increase, tripling the annual installation rate from 2022. In the first three months of 2025, solar generation exceeded 200 terawatt-hours (TWh), nearly matching the total for all of 2020, just two years before.

Today, China generates more than 3,300 TWh of clean electricity annually—surpassing India’s total annual consumption of just over 2,000 TWh in 2024, the world’s third-largest electricity consumer.

Meanwhile, coal’s share of electricity generation has dropped rapidly, from nearly 80% in the mid-2000s to 54.8% in 2024. If these trends continue, clean energy could meet all of China’s power demand growth before 2030.

Trends and Policy Uncertainties

Carbon Brief’s analysis highlights that, for the first time, China’s CO2 emissions have fallen due to clean power growth, despite rising demand. After a 1.6% decline in early 2025, emissions have now been stable or falling for over a year. However, emissions remain just 1% below their recent peak, so a short-term increase could push them to new highs. This has occurred four times in the past two decades, but this is the first time the main driver is clean energy expansion.

With such a small fall, a new electricity pricing policy for renewables introduces uncertainty on whether China can keep the emission reduction monument. The policy removes price guarantees linked to coal, requiring new wind and solar projects to secure direct contracts with buyers. This may lower prices for new projects but also created a rush to complete installations before the June deadline for guaranteed prices.

In March alone, 23 GW of solar and 13 GW of wind were added—up 80% and 110% from previous monthly records. On the other hand, this could also mean a slowdown in the second half of the year.

Outlook

The momentum of emissions reductions may be influenced by external factors, such as U.S. trade tariffs and China’s countermeasures. Initial impacts included lower factory output in export-oriented provinces and potential effects on investment and consumer spending. As tariffs ease, a surge in orders from the U.S. could follow.

China’s response could also shape emissions. A People’s Daily commentary in April advocated boosting domestic consumption by increasing incomes and reducing financial burdens, creating new markets for products previously exported to the U.S. If realized, this could mean less energy-intensive growth for China.

Innovation and Economic Restructuring

As geopolitical tensions surface and solar and EVs mature, China is pivoting to next-generation technologies, including advanced energy storage, smart grids, industrial electrification, and negative-emissions solutions. These are critical for a resilient, reliable clean energy future, especially for managing renewable variability and electrifying hard-to-abate sectors like steelmaking and shipping.

Beyond environmental benefits, these technologies are engines of economic transformation. Breakthroughs in clean energy will unlock new high-value industries and drive China’s shift toward potential high-quality growth. Traditional growth engines like real estate and local government spending are losing steam—property investment fell 10.6% in 2024, and local governments can no longer rely on land sales.

Now, China is restructuring its economy around high-tech and clean industries, encapsulated in the idea of “New Quality Productive Forces.” These sectors made up over 18% of GDP in 2024.

Challenges Ahead

Despite progress, China remains off track for its 2030 carbon intensity reduction commitment, following slow progress during the pandemic.

Even with falling emissions, improvements in carbon intensity must accelerate sharply to meet Paris Agreement targets.

Ultimately, whether power-sector emissions have peaked will depend on the race between clean energy supply growth and rising power demand.