China plans to cut its carbon emissions per unit of GDP 17 per cent by 2030, according to its draft five-year economic plan.
The target, down slightly from the 18 per cent of the previous plan, offers insight into the policy trade-offs behind China’s development strategy. It also highlights potential focus areas for the country’s energy transition over the next five years.
The 15th Five Year Plan, for 2026-2030, did not set a cap on total carbon emissions, sparking discussion among observers. They note that China’s emissions trajectory will depend on the balance between economic growth and carbon-intensity reductions.
Meanwhile, rising electricity demand, shifts in industrial structure and the energy-consumption changes driven by electric vehicles may become key variables shaping China’s decarbonisation process.
How difficult will the new target be to achieve?
Among the agenda items at this year’s Two Sessions, which took place in Beijing 4-12 March, the climate content in the draft five-year plan attracted particular attention.
The plan’s new 17 per cent carbon-intensity target will not be easy to achieve judging from recent performance. The last five-year plan, China’s 14th, had set two major goals to drive green and low-carbon development: reducing energy intensity (energy consumption per unit of GDP) by 13.5 per cent and carbon intensity by 18 per cent.
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The most surprising aspect of the 14th Five Year Plan period was how quickly electric vehicles developed – almost beyond everyone’s expectations. One direct result is that after oil consumption peaks, it could decline more rapidly during the 15th Five Year Plan period.
Teng Fei, deputy director, Institute of Energy, Environment and Economy Tsinghua University
Neither target was fully achieved according to data from the National Bureau of Statistics. Energy intensity declined by 12.2 per cent, while carbon intensity fell by 13 per cent, a Dialogue Earth review of annual statistics reports found.
Recently however, the official methodology for measuring carbon intensity has quietly changed. As such, the new five-year plan states that carbon intensity has fallen by 17.7 per cent.
The data previously released by the bureau had included only emissions related to energy combustion, explains Teng Fei, deputy director of the Institute of Energy, Environment and Economy at Tsinghua University. In the latest statistics reports released in February, emissions from industrial processes have become part of the equation too.
Although the 17 per cent target for the 15th Five Year Plan period appears similar to the previous 18 per cent target, it may in fact be more difficult to achieve, Teng believes, because the drivers behind carbon-intensity reductions could change.
Key uncertainties include GDP growth, the real-estate market and electricity demand. In the later years of the 14th Five Year Plan period, a sharp decline in real-estate investment reduced demand for steel and cement, lowering carbon intensity. It remains uncertain if in the coming five years China’s property market will recover or continue to decline.
It will be difficult to reduce energy intensity if future economic growth mainly comes from heavy industry or other energy-intensive sectors driven by central government investment, such as data centres, says Zhang Shuwei, chief economist at the Draworld Environment Research Center in Beijing. In that case, carbon-intensity cuts would rely more on the “dilution effect” of economic growth than falls in fossil-fuel use.
Why isn’t there a total emissions cap?
In 2024, China announced that from 2026 it would shift away from controlling energy consumption and towards controlling carbon emissions. This year’s Two Sessions confirmed that China will implement a “dual-control system” for both total emissions and emissions intensity.
However, the targets associated with the 15th Five Year Plan currently include only the carbon-intensity reduction goal, with no cap put on total carbon emissions.
A major reason for this is the significant uncertainty surrounding the economies of both China and the world, says Teng.
In theory, changes in total carbon emissions depend on economic growth and the rate of carbon-intensity decline. If China’s GDP grows by about 5 per cent annually while carbon intensity falls by 17 per cent over the next five years, total emissions could still increase slightly by 2030, says Teng, although the growth rate would slow significantly and gradually enter a plateau.
However, the two figures cannot simply be multiplied to estimate emissions changes. GDP growth of around 5 per cent is often considered the upper-bound expectation, while a 17 per cent carbon-intensity fall is more like the minimum requirement for emissions reductions – the actual decline could be larger.
Teng notes that even a one-percentage-point difference in GDP growth could lead to a roughly 5 per cent difference in total economic output over five years, corresponding to 600-700 million tonnes of carbon emissions. Under such uncertainty, setting a strict cap on total emissions becomes difficult.
By comparison, many developed economies typically grow at 2-3 per cent annually, with less economic volatility, making it easier to establish clear caps on total emissions.
Yang Muyi, senior Asia energy analyst at Ember, a UK-based climate think-tank, believes that given the current domestic economic pressures and tightening geopolitical tensions globally, it is already notable that China has not changed course and continues to pursue a green and low-carbon development pathway.
Controlling power demand: an overlooked lever
Many experts believe that rapid growth in electricity demand will be a critical challenge to China meeting its energy targets.
Since 2020, power consumption has grown faster than GDP for five consecutive years, and the trend is continuing. In 2025, it surpassed 10 trillion kilowatt-hours for the first time, reaching more than double the consumption of the United States.
Teng Fei says that in 2021-2025, more than 10 per cent of newly added electricity demand came from unanticipated sources such as artificial intelligence, data centres and the ‘new three’, meaning solar cell, lithium battery and EV manufacturing.
“If this portion continues to grow during the 15th Five Year Plan period, achieving the 17 per cent target will be quite difficult.”
If electricity consumption and generation were in balance, a 5 per cent growth in demand would mean an additional 500-600 billion kWh of consumption each year, says Teng. China currently adds less than 400 billion kWh of renewable capacity annually.
“What happens to the remaining 200 billion kWh gap?” Teng asks. “If extreme climate events occur – for example droughts that reduce hydropower output – the gap becomes even larger.”
In practice, peak load is growing even faster than total electricity consumption, Teng explains. The fundamental solution, he argues, is to limit demand growth to below 4 per cent per year, or roughly under 400 billion kWh, which newly added renewable generation could largely offset.
“This means we need to both expand renewable capacity and control the rapid growth of electricity demand,” Teng says. “At present, people focus much more on the former, while discussions about controlling demand are relatively rare. As a result, attention is often directed only at coal power. But the increase in coal power is a result, not the cause.”
Zhang Shuwei shares this view. He notes that if wind and solar capacity continue to expand by about 200 gigawatts per year, while electricity demand grows at below 5 per cent, non-fossil electricity could gradually shrink the share of coal power until it accounts for 50 per cent of generation by 2030. Its share is currently 38 per cent, as stated by Jiemian News.
With China’s population beginning to decline, rapid power growth often accompanies expanding industrial investment and energy-intensive sectors, explains Zhang. Slower growth, by contrast, may signal a shift toward less power-hungry services and consumer sectors.
“In China’s current situation, that could actually indicate a healthier economic structure and stronger long-term sustainability,” he says.
When will China reach peak emissions?
Ahead of the Two Sessions, new policy signals had emerged regarding the timeline for China’s carbon-emissions peak.
Coal and oil consumption are expected to peak in the next five years, according to information disclosed by Qiushi, a Party-affiliated website.
By 2030, the share of fossil fuels in total energy consumption is projected to fall to below 75 per cent. Coal consumption is expected to peak in around 2027 and then enter a plateau phase. Coal demand from the power and chemical industries is likely to continue rising, while demand from steel, building materials and some household uses may gradually decline, suggests Qiushi.
“This means that coal-fired power – the largest coal-consuming sector – will most likely peak around 2027 as well,” Yang Muyi says.
The trajectory of oil consumption is somewhat different. Demand for fuel-type refined oil, mainly used in transportation, has essentially already peaked. However, petrochemical demand for oil as an industrial feedstock is still expected to grow moderately. Overall, China’s total oil consumption is projected to peak around 2026, added Qiushi.
In Yang’s view, China’s emissions-reduction efforts are entering “deep water.” If the coal-power sector fails to peak on schedule, other industries would have to reduce coal use even earlier, particularly industrial sectors where emissions reductions are more difficult.
Close to half of the power generated in China is used in manufacturing. If the emissions from that power are attributed to manufacturing, then the sector accounts for about 60 per cent of China’s emissions.
Industrial transformation and EVs are key
As energy consumption gradually reaches its peak, transforming industry is widely regarded as the key to achieving deeper emissions reductions.
“The growth of the ‘new three’ sectors is rapid, but their scale remains limited,” Yang says. “The foundation of the Chinese economy is still its massive industrial system. This also means that industrial carbon reduction is particularly important,” he adds.
He believes China is already ahead of many countries on industrial transformation. While many nations are still discussing how to expand wind and solar energy at scale, China began building a more systematic new energy system two years ago.
So the focus of the transition is increasingly extending to the industrial system itself. Policy tools such as “zero-carbon [industrial] parks” and the national carbon market aim to gradually reshape an industrial production system designed around fossil fuels.
Yang believes that once the “foundation” of the industrial economy changes, the strategic position of fossil fuels will naturally weaken.
Meanwhile, the rapid growth of electric vehicles (EVs) is already transforming China’s energy landscape.
The country has ranked first in the world in EV production and sales for 11 consecutive years. In 2025, both production and sales exceeded 16 million vehicles, and EVs accounted for over 50 per cent of new car sales for the first time.
“The most surprising aspect of the 14th Five Year Plan period was how quickly electric vehicles developed – almost beyond everyone’s expectations,” Teng Fei says. “One direct result is that after oil consumption peaks, it could decline more rapidly during the 15th Five Year Plan period.”
“Human society has never seen a major country go through large-scale EV adoption before,” Teng says. “Some forecasts suggest the share could reach 60 per cent, 70 per cent, or even higher, but the exact level remains uncertain.”
The International Energy Agency, in its Global EV Outlook 2025, predicts that EVs could account for around 80 per cent of new car sales in China by 2030.
If this trend continues, changes in China’s transportation energy structure could become a major force pushing oil demand to peak earlier than expected.
This article was originally published on Dialogue Earth under a Creative Commons licence.
