3 October 2024

China’s clean energy trends could cut

emissions by 30% in 2035 if sustained
A scorecard for China’s new climate targets

Key findings
● In a period of global volatility, China could reaffirm its leadership in multilateralism
and help drive global climate action by setting a strong but achievable target of
reducing emissions by at least 30% by 2035.
● If current rates of clean energy deployment continue, and growth in power demand
eases as expected, China may already be witnessing a structural decline in
emissions.
● Continuing and extending current trends and policy targets would enable China to
achieve the emissions reduction from 2023 to 2035 required to align the country’s
emissions pathway with the Paris Agreement.
● Emissions from electricity must drop by at least 30% with an expected capacity of
5,000 GW of renewables by 2035; emissions from industry should decrease by more
than 25%, mostly driven by emission reductions from the steel sector; emissions
from the transport sector will reach 2020 levels if uptake of electric vehicles (EVs)
continues to increase; emissions from the building sector have significant potential
to drop by 40%.
● Beyond CO2 emissions, a target for emission reductions of more than 35% from
greenhouse gases other than CO2 will be critical, as they make up one sixth of
China’s total climate footprint.
● While there are currently no indications of what targets policymakers in Beijing are
considering, they would benefit from capitalising on recent positive developments
and establishing clear policies for China’s decarbonisation pathway to ensure
China’s credibility as a responsible major power.

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China’s path to 2035
By February 2025, China must publish its new climate targets for 2035, otherwise known as
its nationally determined contributions (NDCs), as required under the Paris Agreement.
These targets could determine whether or not the world can achieve the goals of the Paris
Agreement. They also come at a time when Beijing is setting the tone for its overall
national policy planning with the 15th Five-Year Plan.

As China remains the largest emitter in the world, the ambition in its climate agenda is
decisive for keeping the international community on track for a 1.5C or 2C pathway. The
country is responsible for 30% of global greenhouse gas (GHG) emissions and 90% of the
growth in CO2 emissions since the signing of the Paris Agreement in 2015.

This is the first time that China will set actual emission reduction targets after it pledged to
peak emissions before 2030 and will determine China’s trajectory towards carbon
neutrality in 2060. The credibility of China's carbon neutrality goal requires substantive
emission reductions towards the goal over the next decade.

This scorecard lays out the emission reductions and policy milestones needed in China by
2035 to keep the Paris Agreement and the 1.5-degree target alive globally and to put China
on track to credibly meet its carbon neutrality commitment.

Comparing these milestones to actual trends in China’s energy sector provides some
reason for optimism. If current rates of clean energy deployment continue, and growth in
power demand remains constrained, we may already be witnessing a structural decline in
China’s emissions.

Why China’s NDC targets are crucial for the

country and the world
Driven by industrial activities, China’s emissions surged between 2021 and 2023. In recent
months, though, emissions started to stabilise. Coupled with the clean energy boom, this
calls for cautious optimism that the emissions peak is within reach.

Clean energy industries have played a key role in China’s economic recovery from the
Covid-19 pandemic. Strong targets for clean energy growth and a cleaner energy sector

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would support the country’s drive for high-quality growth and ‘new quality productive
forces’, as well as improve environmental quality. In a pivotal shift, clean energy has
become a key economic driver, contributing a record CNY 11.4tn (USD 1.6tn) to China’s
economy in 2023, accounting for all of the investment growth and 40% of GDP growth,
thereby compensating for the downturn in real estate.

Strong climate targets would also help allay the concerns of trading partners about
excessive and underpriced exports of clean technology, threatening manufacturers in
other countries, making it clear that the clean energy manufacturing expansion is
underpinned by strong domestic demand. In contrast, unambitious targets that postpone
emissions reductions would risk undercutting the vast investments made in clean energy
manufacturing in the past few years.

Since China is highly likely to miss its 2025 climate targets, the credibility of the country's
long-term goals requires demonstrable progress towards the carbon neutrality target
during the following years.

In a volatile period for international climate politics, ambitious targets from China could be
a crucial signal to demonstrate commitment to climate multilateralism. China has
provided leadership before — its CO2 peaking target in 2014 paved the way for the Paris
Agreement, and its carbon neutrality announcement in 2020 helped unlock long-term
ambition from numerous other countries — and the geopolitical benefit of positive climate
signals can help the country again on the global stage.

Benchmarking China’s climate targets

Analysis of a large range of 1.5-degree aligned emission pathways shows the minimum
emissions reductions required overall and in different sectors. We have suggested policy
targets and commitments that could be included in the NDC and would put China on track
to realise the outlined emission reductions in each sector.

China can achieve at least 30% CO2 emission reductions overall by 2035 compared to 2023.
An absolute emission reduction target set by the central government would be critical to
achieving this reduction, which is needed to align with the Paris Agreement.

Reducing emissions of other greenhouse gases besides CO2 will also be critical over the
coming decade, as they make up a sixth of China’s total climate footprint. By including a

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target on the reduction of non-CO2 emissions in its NDC or a separate policy document,
China could achieve a reduction of at least 35% of these gases by 2035.

Clean power generation growth has been the main driver in bringing down domestic
emissions over the past months. In fact, clean electricity is now growing fast enough to
meet the expected incremental increase in power demand for the first time. Continuing
the current rate of solar and wind expansion would enable China to install an impressive
3,500 gigawatts (GW) of renewables by 2030 and 5,000 GW by 2035. This could increase the
share of non-fossil energy in total energy consumption to above 40% and the share of
non-fossil power generation to at least 65% by 2035. As a result, China could cut 30% of
emissions from the electricity sector in a Paris-aligned pathway.

Industrial decarbonisation will be another critical cornerstone to achieving ambitious

emission reductions by 2035. Industrial emissions will have to decline by at least 25% by
2035, driven in particular by more than 45% emission cuts from the steel sector and more
than 20% from the cement sector. The recently announced expansion of the emission
trading scheme (ETS) to include steel, cement, and aluminium sectors is a welcome
development. However, to make the ETS an effective instrument, it will need to expand to
further industrial sectors such as the chemicals sector and introduce an annually declining
cap on emissions.

The rapid increase in new sales of electric vehicles (EVs) is also a central opportunity for
China to reduce emissions. Bringing transport emissions down to 2020 levels by 2035
would put the sector on track for the Paris Agreement goals. This would require EV sales to
increase to 60% of all vehicle sales, which is not far off from the more than 50% of EVs and
plug-in hybrid sales recently seen in China. In addition, rail freight should increase to 25%
with an additional target set for rail passengers.

The building sector has one of the largest potentials for emission cuts, where emissions
could decline by 40% by 2035 due to strong policies to eliminate household coal use. This
will require: new buildings to meet low-carbon standards; 25% of existing buildings to be
retrofitted; and the share of heat pumps and other renewable heating to reach 40% by
2035.

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 Table 1. Benchmarking China’s climate targets for 2035

Paris-aligned CO2
emission reduction
Sector Policy steps
in 2035 compared
to 2023
Peak immediately; Set an absolute emission reduction target from
reduce 10% by 2030 2020 or 2025 level for 2035; set an absolute
CO2 emissions and at least 30% emission reduction target for 2030 or reaffirm and
from the peak by strengthen existing 2030 commitments (carbon
2035 intensity, non-fossil energy).
Non-CO2 At least 35%;
greenhouse gas include in 2060 Include non-CO2 GHGs in 2035 emission reduction
(GHG) carbon neutrality commitment or set a separate absolute target.
emissions target
Share of non-fossil energy in total energy
consumption above 40% by 2035; share of
non-fossil power generation at least 65% by 2035.
Triple renewable energy capacity from 2022 to
2030 and continue the same rate of additions in
2031-35. This would mean 5,000 GW of renewable
Electricity At least 30% capacity, including hydropower, and 4,500 GW of
solar and wind capacity in 2035.

Set an annually declining cap on emissions. Stop

approvals of new unabated coal plants and set
capacity reduction targets for coal power to reach
950 GW.
Include a broader set of industrial sectors,
especially the chemical and coal-to-chemicals
Industry At least 25% industries, in the ETS and shift from the
intensity-based approach to an annually declining
cap on emissions.
Industry, of Increase the share of non-coal-based steelmaking
which: At least 45% (electric arc furnace (EAF) and hydrogen-based) to
- Steel above 30%.
Industry, of
Include cement process emissions in the total CO2
which: At least 20%
reduction target.
- Cement

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 Raise the share of EVs out of new vehicle sales to
Return emissions
60% and the share of rail to 25% in freight tonnage
Transportation to 2020 levels by
by 2035. Additionally, set a target for the share of
2035
rail in passenger transport kilometres.
All new buildings meet low-carbon standards and
25% of existing buildings are retrofitted. Increase
Buildings At least 40% the share of heat pumps and other renewable
heating methods to 40% by 2035, up from the
current 20% (IEA).
Increase the forest
Forest Increase land cover of afforestation and
sink by at least
coverage/ reforestation by at least 15% by 2035, compared to
20% from 2020 to
natural sinks 2025.
2035 (ICCSD)

The benchmarks are derived from the climate transition pathways compiled for CREA’s
China Climate Transition Outlook, including pathways proposed by Chinese researchers in
the literature and the pathways incorporated in the IPCC AR6 report.

Comparison of benchmarks to current trends

Current trends in energy and industrial sectors’ CO2 emissions are promising. China can
achieve very meaningful emission reductions by 2035 if the current rate of clean energy
additions is maintained and energy demand growth returns to pre-Covid trends. The
slowdown in new coal power permits and the halting of new steel plant permits, together
with the general decline in emission-intensive industries related to the real estate sector,
further indicate a potential turning point and opportunity for China to shift towards a
greener economic model.

We assess that continuing and extending current trends and policy targets would enable
China to achieve the minimum 30% emissions reduction from 2023 to 2035 required to
align the country’s emissions pathway with the Paris Agreement. Continuing these trends,
however, requires overcoming significant obstacles, including grid bottlenecks and
opposition from vested interests. Setting targets that ensure the continuation or
acceleration of clean energy deployment, electrification, the shift to clean steelmaking,
and other key trends is essential to provide a basis for the transition.

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In other areas, such as non-CO2 greenhouse gas emissions and building energy efficiency,
current trends are not aligned with the Paris Agreement and stronger targets and policies
are needed.

Table 2. Comparing benchmarks to current trends

Sector Current trends

Started falling in March but not fast or consistently enough. No targets

CO2 emissions
set that would ensure a falling trend.

Non-CO2
Fossil fuel methane emissions keep increasing.
greenhouse gas
emissions
Alarming increases in perfluorocarbons.
(GHG)

Emissions fell in the second quarter of 2024. Solar and wind additions
are growing and on track to triple total renewable capacity.
Electricity

Steel output has stabilised and is expected to start falling. As China's

steel demand peaks and much more scrap steel becomes available,
there is great potential to replace coal-based primary steelmaking
with much less emissions-intensive steel production from scrap. The
China Iron and Steel Industry Association projects that by 2035, the
Steel share of electric arc steelmaking could exceed 30%. Combined with
the fall in output projected by 2035, this would enable a 40%
reduction in CO2 emissions from the sector by 2035.

However, the shift to electric arc steelmaking using scrap is currently

lagging behind targets and requires stronger policies.

Cement output and emissions fell 15% from 2020 to 2023. The China
Building Materials Federation projects that demand will fall further, by
Cement more than 10% by 2030. Extending this trend suggests that cement
output and thereby emissions could fall by 20% from 2025 to 2035, or
by almost 30% compared with 2020.

Electrification has been happening faster than in climate transition

Other
pathways, enabling rapid emission reductions if growth in clean
industries
electricity generation is maintained. As a result, industrial

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 electrification increased rapidly from 2015 to 2020 and increased
again in 2023.

Coal use in the coal-to-chemicals industry is increasing rapidly.

Oil consumption has begun to fall; the share of electric vehicles is

Transportation
increasing rapidly and ahead of 1.5-degree pathways.

Coal consumption in buildings has been falling rapidly, significantly

faster than in most transition pathways. However, much of the coal
Buildings use has been replaced by fossil gas, representing a lock-in in
CO2-emitting heating. Progress on building energy efficiency is weak,
resulting in rapid increases in electricity and fossil gas consumption.

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Methodology
The benchmarks are derived from the climate transition pathways compiled for CREA’s
China Climate Transition Outlook, including pathways proposed by Chinese researchers in
the literature and the pathways incorporated in IPCC AR6. The pathway database is filtered
to exclude those scenarios that assume modest rates of electrification, identified as those
in which emissions outside of the power sector fall more slowly than total emissions.
These pathways don’t correspond with China’s current policy approach or trends over the
past decade. The pathways for steel and cement are based on industry projections, as the
model pathways don’t incorporate the recent changes in the outlook for the demand for
construction materials.

As most pathways achieve an overall emission reduction of much more than 30% by 2035,
the sectoral emission reductions in each pathway are normalised to an economy-wide
emission reduction of 30% from 2023 levels by 2035. This captures the relative magnitude
of emission reductions from different sectors in the pathways optimised according to
different models and assessments.

The China Climate Transition Outlook survey of transition pathways covers the following
public studies: IPCC, Climate Action Tracker (CAT), International Energy Agency (IEA),
Institute of Climate Change and Sustainable Development, Tsinghua University (ICCSD),
School of Environment & Natural Resources, Renmin University, Network for Greening the
Financial System (NGFS), Energy Foundation China & University of Maryland, Lawrence
Berkeley National Laboratory.

Table 3. Compilation of emission reductions by 2035 in different 1.5 and 2-degree

pathways

Reduction
from peak
Sector Product Institute Scenario
to 2035
[min, max]
Kyoto gases
1.5C scenarios
(CO2,
included in IPCC -66%
All methane, IPCC
Sixth Assessment [-83%, -30%]
nitrous oxide,
Report
HFCs, PFCs,

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 sulphur
hexafluoride)
All Kyoto gases Climate Action Tracker 1.5C -54%
All Kyoto gases (CAT) 2C -33%
International Energy Announced Pledges
Energy CO2 -26%
Agency (IEA) Scenario

Institute of Climate
All CO2 Change and 1.5C -35%
Sustainable
Development,
All CO2 Tsinghua University 2C -20%
(ICCSD)

All CO2 1.5C -31%

School of Environment
& Natural Resources,
Renmin University
All CO2 2C -23%

-73%
All Kyoto gases 1.5C
Network for Greening [-74%, -61%]
the Financial System
(NGFS) -38%
All Kyoto gases 2C
[-63%, -26%]

Updated Nationally
Energy Foundation
Determined -35%
All Kyoto gases China & University of
Contribution to [-67%, -21%]
Maryland
Carbon Neutrality

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