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The report identifies China as the world's largest methane emitter and explores how sustainable finance can bridge the investment gap for abatement. It highlights the 2025 NDC update as a critical window for action and recommends the integration of quantitative methane targets, expanded green taxonomies, and the inclusion of methane in the national emissions trading system to mobilise the estimated USD 7.7 billion in annual investment needed.

China is advancing a 1.3 TW pipeline of utility-scale solar and wind projects, with operating capacity reaching 1.4 TW by 2025. The country has become a global leader in offshore wind, growing its capacity to 42.7 GW by March 2025. While offshore wind is being used to decarbonize coastal industries and produce green hydrogen, the sector faces challenges from the 2021 phaseout of national subsidies and competition from ongoing coal and gas developments. The report suggests adopting hybrid auction mechanisms and centralized marine spatial planning to ensure sustainable growth.

China is advancing a 1.3 TW pipeline of utility-scale solar and wind projects, with operating capacity reaching 1.4 TW by 2025. While solar and onshore wind are expanding rapidly, particularly in Xinjiang and Inner Mongolia, offshore wind has emerged as a global powerhouse, accounting for 50% of global capacity. However, the offshore sector faces challenges from the 2021 phaseout of national subsidies and competition from planned coal and gas capacity in coastal provinces. The document argues for a transition from provincial development to a coordinated national policy framework incorporating hybrid auction mechanisms and robust spatial planning.

The report analyzes how the EU's Carbon Border Adjustment Mechanism (CBAM) affects Guangdong province, a major hub for iron, steel, and aluminium exports. While initial exposure is limited, the report warns that pressure will increase as CBAM expands. It recommends that Guangdong accelerate industrial decarbonization—specifically through electrification and green hydrogen for steel and renewable energy for aluminium—and establish a carbon pricing system compatible with the EU Emissions Trading System (ETS). Additionally, it suggests that EU policymakers enhance dialogue on emissions accounting, allocate CBAM revenues to support climate action in developing economies, and engage in international platforms like the Climate Club.

In 2024, China approved 66.7 GW of new coal power and saw 94.5 GW begin construction, the highest level since 2015, despite adding a record 356 GW of wind and solar capacity. This 'energy addition' strategy is driven by long-term power purchase agreements (PPAs) that guarantee coal generation and the influence of coal mining companies, who financed over 75% of new approvals. These factors lead to the curtailment of renewables and a shift away from using coal plants as flexible regulating capacity. The report concludes that China's coal expansion contrasts sharply with global trends, as China accounted for 93% of global coal construction starts in 2024.

China's large generation state-owned enterprises (SOEs) have significantly diversified into renewable energy, contributing to a relative decline in coal power's share of the generation mix from over 70% in the mid-2000s to about 60% in 2023. While this strategy has accelerated the transition, the report warns that China is approaching a critical turning point where coal generation may enter an absolute decline, potentially peaking around 2025. The authors argue that current diversification efforts are insufficient to address the systemic risks to the 'coal-electricity ecosystem,' which includes coal production, logistics, and chemical industries. They propose a 'beyond-diversification' approach that emphasizes a just transition for coal-dependent regions, comprehensive economic restructuring, and coordinated stakeholder bargaining to mitigate social tensions and the rural-urban divide.

China is leading global renewable energy deployment with 339 GW of utility-scale solar and wind power under construction, nearly double the capacity of the rest of the world combined. By the first quarter of 2024, wind and solar accounted for 37% of China's total power capacity. While the country is on track to potentially reach 1,200 GW of installed capacity by the end of 2024, significant obstacles remain, including a reliance on coal to mitigate intermittency, insufficient Ultra High Voltage (UHV) transmission lines, and rising curtailment rates in several provinces.

China is significantly leading global renewable energy deployment, with utility-scale wind and solar projects under construction totaling 339 GW—double the combined total of all other countries. While China is on track to meet its 2030 target of 1.2 billion kW of wind and solar capacity years ahead of schedule, it faces critical challenges regarding grid stability, reliance on coal for intermittency regulation, and high curtailment rates in northern and northwestern provinces.

In 2023, China maintained its position as the world's largest green bond issuance market, despite a slight decline in total volume. The market is characterized by a strong preference for short-dated debt and a growing reliance on Second Party Opinions to enhance credibility. While green bonds are increasingly aligned with the 100% Use of Proceeds (UoP) rule, social and sustainability bonds face challenges with transparency and disclosure. Sustainability-linked bonds (SLBs) are prolific in number but rarely utilize greenhouse gas (GHG) reduction targets. Policy drivers include the China Green Bond Principles and the China-EU Common Ground Taxonomy, alongside emerging local transition finance guidelines for hard-to-abate sectors like steel and chemicals.

The report examines the potential for direct electrification to decarbonize China's industrial process heating, which accounts for nearly three-quarters of the manufacturing sector's CO2 emissions. It focuses on industrial heat pumps for low-temperature needs (up to 165 °C) and thermal batteries for high-temperature needs (up to 1,700 °C). A techno-economic analysis reveals that while coal-fired boilers currently have the lowest levelized cost, industrial heat pumps become the cheapest option for low-temperature heat when 2030 carbon pricing is included. The report identifies significant barriers, including the high cost of electricity relative to coal and limited equipment availability, and recommends policies such as equipment rebates, carbon pricing expansion, and the optimization of Green Electricity Certificates to accelerate the transition.

China is currently off track to meet its 2025 climate commitments, including targets for carbon and energy intensity and the share of non-fossil fuels. This is driven by a surge in coal power permitting and construction, with 114 GW approved and 70 GW starting construction in 2023. Despite official rhetoric that new coal plants serve a 'supporting' role for grid stability and renewable integration, the report finds this is often a 'smokescreen' for bulk power generation, leading to significant overcapacity and stranded asset risks.

This summary report details the outcomes of the High-Level Think Tank Seminar on Energy and Climate Change held in Beijing on April 25-26, 2024. The event brought together representatives from China and the United States to discuss decarbonization strategies, methane reduction, energy efficiency, carbon capture, and climate finance, while coordinating positions for COP29 and COP30.

The April 2024 China-US High-Level Dialogue in Beijing served as a venue for experts to discuss decarbonization strategies and identify collaboration opportunities despite challenging national-level relations. Key discussions focused on the differing sources of methane emissions, the scaling of CCUS and renewable energy, and the need for interoperable standards in trade and corporate disclosure. Both nations emphasized the importance of subnational cooperation and the role of the Sunnylands Statement in guiding joint efforts toward COP 29 and COP 30.

China is experiencing a significant increase in coal power capacity, with 37 GW starting construction and 52 GW permitted in the first half of 2023. The report argues that most of these projects violate central government policies intended to limit coal to a supporting role for renewables, instead serving as bulk power generation. This trend, driven by energy security concerns and a desire to maximize carbon-intensive capacity before the 2030 peaking deadline, risks creating massive overcapacity and undermining China's carbon neutrality goals.

The report details the growth and composition of China's GSS+ debt market, highlighting that China was the largest global source of green bonds in 2022. It examines the shift toward 100% use-of-proceeds alignment, the emergence of transition finance for hard-to-abate sectors, and the dominance of rural revitalisation in the social bond segment.

In 2022, China experienced a dramatic surge in coal power project activity, permitting 106 GW of new capacity—the highest level since 2015. While 50 GW started construction, representing six times the capacity of the rest of the world combined, the trend is driven by rising peak electricity loads and a rigid grid paradigm. Despite claims that new plants are for "supporting" grid stability, evidence suggests they are intended for baseload use. This expansion occurs alongside record clean energy additions, but risks undermining China's carbon neutrality goals if it leads to a moderation of clean energy buildout or increased CO2 emissions.

The document describes CCS as an integrated infrastructure for capturing, transporting, and storing CO2. It notes a history of failure, with only 10% of projects between 1995 and 2018 being completed, but highlights a recent surge in investment and project pipelines, particularly in North America and Europe. The author argues that CCS is currently only truly essential for the cement sector, as renewables outperform it in power generation and green hydrogen is expected to undercut blue hydrogen by 2030. It warns against carbon capture and utilisation (CCU) and enhanced oil recovery (EOR) due to high energy requirements and the risk of increasing net emissions.

The report examines why China's coal power capacity continued to grow between 2016 and 2020 despite decarbonization goals, citing both surface-level needs (supply security, heating) and deep-seated drivers (local government enthusiasm, rigid dispatch mechanisms). It argues that coal power must transition into a 'supportive role' providing flexibility and backup for wind and solar. To achieve this, the authors suggest four policy entry points: breaking path dependency by curbing local government enthusiasm, reforming electricity markets to incentivize flexibility, coordinating coal and electricity policies to ensure supply security, and adopting a reflexive, inclusive governance model.

The report analyzes the 2021 Chinese green bond market, which saw a sharp rebound with USD 109.4bn in total issuance. It highlights the role of top-down policy guidance, such as the Green Bond Endorsed Project Catalogue (2021 Edition), in standardizing the market and aligning it with international principles. The analysis finds a positive correlation between local policy efficacy scores and the volume of green bond issuance, particularly in economically developed regions like the Yangtze and Pearl River Deltas. However, stakeholders identify challenges including inadequate information disclosure and a lack of issuer experience in identifying green assets. The report recommends strengthening disclosure standards, developing transition finance frameworks, and expanding innovative products like sustainability-linked bonds to support high-emitting sectors.

In 2021, China's coal-fired power construction reached its highest level since 2016, with 33 GW of new capacity starting construction. Despite carbon neutrality targets, investment in long-process steel remains high, with China accounting for 85% of global new long-process capacity. The report warns that these investments lock in coal dependency and risk creating stranded assets valued at hundreds of billions of dollars. While there is growth in electric arc furnace (EAF) steel and renewable energy targets, the scale of new fossil-fuel infrastructure continues to outpace the transition needed to meet Paris Agreement goals.