On 30 June, Premier Li Keqiang announced China's formal pledge to cap its carbon dioxide (CO2) emissions by 2030 ahead of the UN climate conference later this year in Paris.
Globally, the announcement is a major milestone with total pledges from countries now representing more than 50% of global carbon emissions.
Our H1 2015 update shows that China's CO2 emissions will still be growing at an average 1.3% year-on-year from 2030 to the end of our forecast in 2035. However, we expect carbon emissions per unit of Gross Domestic Product (GDP) to drop by 65% between 2005 and 2030 – on track with China's carbon intensity target.
China's economy is moving away from more energy-intensive industry to the services sector, while the country is making significant improvements in energy efficiency. The power sector is clearly shifting towards clean energy - a trend we expect to continue - with the installation of nearly 200 GW wind and 100 GW solar by 2020.
But, for China to cap its emissions by 2030 the country will still require a further reduction in carbon intensity or a slowdown in economic growth to roughly 4.5% annually. Its target to increase natural gas in total primary energy demand to 10% by 2020 is 20% higher than our base case forecast, along with their target to lower coal consumption for newly built coal-fired plans to 300 grams coal equivalent per kWh.
It's clear that sustained success in Chinese gas and further technological advancement in domestic coal will be required if the country's targets are to be achieved.
China carbon pledge boosts UN climate talks [Subscription required]
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