China’s carbon dioxide emissions were unchanged year-on-year in the third quarter of 2025, extending an 18-month period of flat or declining output that began in March 2024.
Beneath this apparent stability is a widening split between sectors: electric-vehicle uptake continued to displace transport oil demand, construction-related emissions fell amid a prolonged real-estate contraction, and the power sector held steady despite accelerating demand. Yet the chemical industry’s rapid expansion more than offset reductions elsewhere, complicating China’s pathway toward an emissions peak.
Transport fuel emissions fell 5% year-on-year, driven by declining gasoline, diesel, and jet fuel consumption as EV penetration deepened. Cement and metals production also contracted, with emissions down 7% and 1%, respectively, reflecting reduced building activity. In contrast, the chemical sector’s output rose sharply. Production of primary plastics increased 12% in the first three quarters of the year, chemical fibers 11%, and ethylene 7%, lifting oil consumption outside transport by 10% and pushing total oil demand 2% higher despite declines in mobility-related fuels.
The power sector remained the central balancing force. Electricity demand growth accelerated from 3.7% in the first half of 2025 to 6.1% in the third quarter, yet power-sector emissions stayed flat. Solar generation rose 46% year-on-year and wind output increased 11%, with non-fossil sources meeting nearly 90% of incremental demand. Slight improvements in coal-plant thermal efficiency and a shift toward more gas-fired generation limited fossil output growth. China installed 240 gigawatts of solar and 61 gigawatts of wind capacity in the first nine months of the year, leaving the country on track for another record in annual renewable additions.
Nevertheless, the margin is narrow. Power demand has shown a strong seasonal pattern since 2021, with growth consistently higher during the summer cooling season when residential electricity use has risen by 13% annually, compared with 6% in other months. Cooling-degree days have increased by roughly one third since 2015–16, reflecting hotter summers and rising air-conditioning saturation. Because electricity growth tends to ease in the final quarter, the fourth quarter of 2025 will likely determine whether national emissions end the year slightly above or slightly below 2024 levels.
On the supply side, China’s renewable build-out remains substantial but uneven. Early 2025 saw more than 180 gigawatts of wind and 230 gigawatts of utility-scale solar under construction, according to the Global Energy Monitor. However, installation rates slowed sharply after May, following the introduction of a new pricing system requiring developers to secure direct offtake contracts. This shift triggered a rush to complete projects earlier in the year, leaving fewer for the third quarter. Provincial decisions on minimum pricing and contracts-for-difference now loom large, as implementation remains incomplete across most regions. Meanwhile, the expansion of fossil capacity continues. With 230 gigawatts of coal-fired power still under construction, coal-plant utilization could fall from 54% at its 2024 peak to roughly 43% if coal generation remains stagnant, raising the risk of prolonged overcapacity.
Industrial oil use illustrates a parallel structural tension. While transport oil consumption fell by 4–5% across all major fuels, domestic petrochemical demand surged. China is approaching near balance in primary plastics trade, with 2025 imports down 8% and exports up 8%, but domestic demand growth remains the primary driver of increased output. Packaging consumption continues to expand alongside online retail and food delivery, with express parcel volumes up 17% through September 2025 and the food delivery sector expected to grow 11% this year. Although policymakers have introduced measures to curb single-use plastics, growth in consumption has so far outpaced regulatory intervention.
Whether China’s annual emissions rise or fall in 2025 remains too close to call, though a decline became more likely after September posted an estimated 3% year-on-year drop. The symbolic significance is considerable. China has pledged to peak emissions before 2030 but has never clarified the specific year. Missing the 2021–25 carbon-intensity target—an 18% reduction—further complicates the picture. By the end of 2025, intensity is expected to fall only about 12%, implying that the subsequent five-year plan will require a substantially steeper 22–24% decline to meet China’s 2030 commitment of a 65% reduction relative to 2005 levels.
New guidance announced in September adds another layer of complexity. China’s 2035 target commits to cutting emissions 7–10% below an undefined “peak level,” leaving room for provinces to increase emissions before the anticipated peak in order to set a higher baseline—a dynamic known domestically as “storming the peak.” A forthcoming national “dual control” system for carbon intensity and total emissions could limit this behavior, but its implementation timeline remains unclear. If not in place by 2026, provinces may have incentives to maximize short-term output, even as national targets emphasize gradual coal reductions and accelerated clean-energy expansion.
China’s emissions trajectory in 2025 ultimately reflects a system stretched between competing forces: strong renewable growth offset by rapid petrochemical expansion, rising electricity demand counterbalanced by improving efficiency, and ambitious national climate goals constrained by uneven provincial implementation. The numerical outcome for the year may be marginal, but the structural signals point to a critical inflection point for China’s energy and industrial policy over the coming decade.
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