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Readying for the descent

Readying for the descent

Proposed reforms to China's emissions trading system suggest the government is preparing for peak emissions

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Peter Sainsbury
Jul 10, 2025
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Readying for the descent
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Welcome to Carbon Risk — helping investors navigate 'The Currency of Decarbonisation'! 🏭

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China’s CO2 emissions have probably peaked, or are very close to doing so.

Analysis published by Carbon Brief and prepared by the Centre for Research on Energy and Clean Air (CREA) suggests that China’s emissions from fossil fuels and cement declined by 1.6% year-on-year in Q1 2025, and by 1% over the past year. While emissions from the power sector fell by 5.8% versus 12 months ago, elsewhere in the economy they rose by 3.5%, with the coal-to-chemical sector the largest driver of emissions growth (more on that later).1

Whether this turns out to be a structural break in the upward trajectory in emissions from the second largest economy remains to be seen. China has experienced false dawns before. In 2015/16 authorities attempted to rebalance the economy away from investment and towards consumption causing a shallow drop in emissions. More recently, in 2022, draconian pandemic lockdowns and a sluggish property sector weighed more heavily on emissions.

China's CO2 emissions drop due to clean energy for first time

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Intrigued by the prospect of an imminent reversal in Chinese emissions, Ben McNeil of Emmi and

Carbon Alpha
developed a regression model based on the past quarter of a century of data to test whether China (and the world at large) is close to a historic turning point in emissions. Projecting through to 2030, his forecast suggests that Chinese emissions have essentially plateaued at around 12 Gt CO2 per year. Check out his latest article where he outlines his projections for other regions - Europe, America, India, the rest of the world - and what it all means for global emissions (see The Kaya identity).2

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