China has no clear coal exit strategy as new projects hit decade high

China is failing to set out a coherent plan to phase out coal despite record growth in renewable energy and the approach of key climate deadlines, according to new research released on August 25.

The Centre for Research on Energy and Clean Air (CREA) and Global Energy Monitor (GEM) said in a report reviewing the first half of 2025 that while Beijing has engineered drops in coal-fired power output and carbon emissions, construction of new coal projects is at its highest level in ten years.

“That trend is likely to continue over the next two years unless the government takes action,” the report warned. It added that Beijing’s earlier pledges to push coal into a supporting role in the energy mix “haven’t been properly implemented,” even though the fuel’s share of power generation has fallen to a nine-year low of 51% and renewables now account for 60% of total installed capacity.

“This rush of activity signals possible pressure from the industry to expand coal projects as a last ditch effort before China’s 2030 carbon peaking deadline,” CREA and GEM said.

The findings put pressure on China’s next five-year plan, due early next year, to provide what the report called “a clear, coordinated road map for managing coal power’s decline.”

The report also highlighted policy uncertainty in the renewables sector. China’s solar installations slowed in July as developers awaited further clarification of new rules introduced in June that could affect project returns. Meanwhile, Longi Green Energy Technology, one of the country’s largest solar companies, reported a narrower first-half loss as additions in solar capacity helped offset the impact of persistent industry overcapacity.

Green energy champion

Despite the problems with phasing out coal, China has made more progress towards decarbonising its economy than any other major economy.

China continues to consolidate its position as global green energy champion after wind and solar power overtook coal as the biggest contributor to its energy mix, as of June this year, according to data from the country’s National Energy Administration (NEA).

“Solar and wind power generation met 82% of overall power demand growth in July. However, thermal power output rose 4.7% y/y, driven by a decline in hydropower generation,” CREA reported. “In the first seven months of 2025, solar and wind power accounted for 23% of total electricity generation, up from 19% a year earlier. Their output rose by 27% y/y, far outpacing the 4% growth in power demand.”

China has been investing heavily into renewable energy and two thirds of all solar panels in operation today are working in China. Together wind and solar are close to making up 40% of China’s generating capacity. Nevertheless, China remains dependent on coal-fired power stations to power its fast economic growth.

Rystad Energy’s analysis forecasts that by 2026, solar power alone will surpass coal as China’s primary energy source, with a cumulative capacity expected to exceed 1.38 TW, which is 150 GW more than coal. However, wind and solar overtook coal as the biggest contributor to the energy mix for the first time in August last year.

Despite coal’s early dominance, with around 50 GW of annual installations before 2016, since 2020, the annual installations of wind and solar energy have consistently exceeded 100 GW, three to four times higher than coal additions. In 2023, China set a record with 293 GW of wind and solar installations, supported by gigawatt-scale renewable hub projects from NEA’s first and second batches connected to the grid.

China hit its ambitious renewable energy goals only four years after setting targets and six years ahead of schedule, Oil Price reported on February 1.

China remains the biggest polluter in the world and largest emitter of GHGs, but it has emerged as the global green energy champion after Beijing threw itself into building out its renewable energy generating capacity. Moreover, as reported by bne IntelliNews, despite its high level of emissions, it remains well within its carbon budget of allowable emissions under the terms of the 2015 Paris Agreement on climate change.

For the first time, China, the world’s biggest emitter of greenhouse gases (GHGs), has seen its CO2 emissions go into reverse and start falling, despite a rapid growth in demand for power.

The new analysis shows that China’s emissions were down 1.6% year on year in the first quarter of 2025 and by 1% in the latest 12 months.