As War Roils Energy Markets, China Sees Its Emissions Drop

China's carbon dioxide emissions have remained steady or decreased for over two years due to the growth of renewables, which have reduced the demand for fossil fuels. However, the country recently experienced its steepest quarterly emissions decline since the 2022 pandemic lockdowns, as energy prices were affected by the Iran war. Between July and September, China's carbon dioxide emissions dropped by 3.1 percent, the largest quarterly decline since the pandemic.

Oil consumption declined by 4 percent year on year, as drivers switched to electric vehicles, which accounted for two-thirds of new passenger vehicle sales in China in September. This shift has helped China cut oil imports in response to the conflict. Emissions from coal also fell by 3 percent year on year, as the rapid expansion of renewables outpaced the increase in power demand.

China added enough wind, solar, and nuclear generation during this time to power Germany and more than double the amount required to meet China's growing energy needs.

Furthermore, emissions from steel and concrete production dropped due to the ongoing construction slowdown. Despite the decline in coal generation, China continues to build new coal plants. As the number of generators increases and coal power usage decreases, the average plant is experiencing fewer running hours. China now generates far more clean electricity than its power grid can handle, with the first six months of this year seeing the rejection of about a quarter of its wind and solar output due to excess capacity.

However, the rapid growth of clean energy in China faces challenges, including insufficient transmission infrastructure to distribute the abundant renewable power from generation sites to areas where it is needed. Additionally, a policy that guarantees the purchase of electricity from newly built coal power plants hinders the transition to cleaner energy sources.