China’s carbon dioxide emissions are poised to decline next year, thanks to a surge of clean energy investments that have exceeded targets, concludes a new analysis this week published by Carbon Brief.

“Beijing’s solar and wind installation targets for the year were met by September,” reports the Guardian. “And the market share of electric vehicles is already well ahead of the government’s 20% target for 2025.”

Though fossil fuel demand—and hence carbon dioxide emissions—have rebounded since COVID-19 restrictions eased in January, record new renewables additions will put emissions in decline in 2024, even after factoring in a wave of new coal plants planned across the country, the new analysis concludes.

“Given the low-carbon electricity capacity already installed this year—and the outlook for hydropower generation—a drop in power-sector emissions in 2024 is essentially locked in, barring a major acceleration in electricity demand growth,” writes Lauri Myllyvirta, co-founder and lead analyst at the independent Centre for Research on Energy and Clean Air.

Known to be the world’s most carbon-polluting country, though not its biggest historical emitter, China did see its emissions drop during COVID-19 lockdowns, like everywhere else. However, in the third quarter of 2023, a 4.7% year-on-year emissions increase was recorded, Myllyvirta says. “The strongest growth was in oil demand and other sectors that had been affected by pandemic policies, until the lifting of zero-Covid controls at the end of 2022.”

But dynamics are changing in China’s second-largest emitting sector—power generation, Myllyvirta adds. “For the first time—the rate of low-carbon energy expansion is now sufficient to not only meet, but exceed the average annual increase in China’s demand for electricity overall.”

Striking Growth, Surging Investment

Solar has seen “striking growth,” with expected installations in 2023 of around 210 gigawatts, twice the total installed capacity in the United States and four times what China added in 2020. That new output, combined with added wind, hydropower, and nuclear capacity, puts new electricity generation at an estimated 423 terawatt hours—equal to the total electricity consumption of France.

There has also been a surge in investment in manufacturing capacity, especially for low-carbon technologies like solar, electric vehicles, and batteries. Meanwhile, coal capacity continues to expand, with the competing trends “setting the scene for a showdown between the country’s traditional and newly emerging interest groups.”

The coal industry in China tends to oppose the low-carbon shift, hindering the country’s transition. And the dirtiest fossil fuel is experiencing a resurgence there, with new coal-fired power plants continuing to be permitted despite commitments to “strictly control” them. Coal’s projected peak in China will be outstripped—unless all new permits are stopped, existing capacity is retired early, or permitted projects are cancelled.

However, “if coal interests fail to stall the expansion of China’s wind and solar capacity, then low-carbon energy growth would be sufficient to cover rising electricity demand beyond 2024,”  Myllyvirta writes. “This would push fossil fuel use—and emissions—into an extended period of structural decline.”

Rebounding hydropower will play its part, Myllyvirta notes, explaining that the post-pandemic increase in power demand came in July, before hydroelectricity recovered from low rainfall levels in 2022 and 2023. Operators were conserving reservoir levels for peak demand season in August, but looking ahead, China’s year-on-year increase in hydropower output is expected to be much larger in 2024. As water levels stabilize and forecasts point to more rain, the increase in hydropower availability will reduce demand for higher-emitting resources.

Right Conditions for a Renewables Surge

Set against the background of an official commitment to reducing emissions, several macroeconomic conditions came together to amplify the renewables surge. A clampdown on China’s real estate sector left local governments seeking alternatives to land sales for revenue, while high-level environment and industry policies made cleantech a promising sector.

Local governments also offered major direct and indirect subsidies to attract investments to their regions around the same time low-carbon technologies were becoming increasingly cost competitive. China has favoured green investments in the past, but cleantech had been too small to absorb the huge amount of credit mobilized—but that has changed since 2020, when the sector saw rapid growth, says Myllyvirta.

“The construction of low-carbon energy manufacturing capacity, production of low-carbon energy equipment, and construction of railways have been significant drivers of commodity demand this year, as the only areas of investment showing substantial growth,” he reports.

And China’s policy-makers may be looking at a bigger picture. “The unprecedented investment in low-carbon technology manufacturing supply chains also means that China has, in effect, placed a major economic and financial bet on the success of the global energy transition, which could affect its diplomatic positioning.”

Whether this year’s renewables record will be an isolated event or a longer trend will come down to how China balances clean energy growth against grid constraints and opposition from the coal industry,  Myllyvirta says. “From 2025 onwards, the development of power sector emissions depends on whether low-carbon energy additions are maintained or accelerated.”