China’s road to net zero: reshape the country and the world

Since September 2020, when China’s president, Xi Jinping, made the pledge to reach net zero by 2060, the country’s ministries and locales have been mobilised to devise decarbonisation roadmaps for their jurisdictions. Pragmatic progress across power, transport and industrial sectors is having ripple effects across global trade and geopolitics.

Balancing transition and stability of the electricity mix

The power sector—China’s largest emitter due to its dependence on coal—is undergoing a transformation. We forecast coal consumption to peak as soon as 2026, although it will fall only slowly after, to the benefit of coal exporters like Australia. Coal power, as the most economically and politically viable reserve option (for example, peak load), remains indispensable in the short term. More environmentally friendly solutions are either too import-dependent (natural gas) and expensive (battery storage), or take too long to build (pumped hydro). Official support for coal-fired generation has, in fact, seen an uptick in response to energy security concerns from the Russia-Ukraine war to domestic power outages, reflecting China’s pragmatism toward climate change mitigation.

Learn more: Economist Intelligence