China’s falling emissions amid Iran war spark hope of decarbonisation watershed

China's carbon dioxide emissions experienced a 1% decrease in the second quarter of 2026, primarily due to a sharp decline in oil consumption. The overall use of oil fell by 9%, with transport-related oil use declining by 16% following disruptions in Gulf supply through the Hormuz Strait. This marked the first instance where reductions in oil consumption led to a nationwide decrease in CO2 emissions, as coal consumption had been the main driver in previous cases.

Key factors contributing to the decline in oil consumption included the rise of electric vehicles (EVs) and public transport. EVs and public transportation led to transportation levels increasing despite a sharp drop in fuel use. The impact of EVs on oil consumption was nearly twice as significant as the increase in the number of EVs on the road alone, as usage of existing EVs surged. Oil consumption displaced by EVs in the first half of 2026 surpassed the UK's total oil consumption over a six-month period.

While structural factors such as the deployment of solar and wind power and slower demand growth played a role, behavior changes also contributed to the significant drop in oil consumption. The curtailment of solar and wind output led to an increase in coal power generation, even with strong hydro output, solar and wind capacity growth, and reduced demand.

Major increases in coal power capacity and a power market that favored coal limited the extent to which new wind and solar capacity could replace coal generation. Annual coal use for chemicals production also slowed down to 8% from 15% in 2025 and 19% in the first quarter.