China’s Ministry of Ecology and Environment released its annual climate report on 21 October 2026. It reviews China’s climate policy developments since 2025 and presents the latest available data on implementation progress.
Renewable energy plays a larger role
The report records a 5% decline in CO₂ emissions per unit of GDP in 2025, bringing the reported reduction since 2020 to 17.7%. This indicates a less carbon-intensive economy, but the development of total emissions also depends on economic growth. It is important to note that the measuring approach of total emissions has changed since the last reporting period (see Carbon Brief).
Changes in energy supply feature prominently. Non-fossil energy sources, including renewables and nuclear power, accounted for 21.7% of total energy consumption in 2025, up from 16% in 2020. Renewable electricity generation reached 3,990 TWh, equivalent to 38% of electricity consumption. Its additional output covered the year’s entire increase in electricity demand, while thermal generation declined for the first time in nearly a decade.
The expansion continued in 2026, with solar overtaking coal in installed generating capacity in July.
Industrial and transport changes advance
The report also documents efforts to modernise emissions-intensive industries. Between 2021 and 2025, facilities representing 940 million tonnes of crude steel capacity underwent retrofits to reduce air pollution. Upgrades in the coke and cement industries targeted pollutants such as dust, sulphur dioxide, and nitrogen oxides. The figures show the scale of industrial upgrading, rather than how much CO₂ was avoided.
New energy vehicles accounted for 50.8% of new vehicle sales in 2025, already a decade before the 2035 NDC milestone for them to become mainstream. Further railway electrification and growth in rail and water freight also feature among the reported implementation results.
Carbon markets broaden their scope
Following its expansion beyond power generation to steel, cement and aluminium production, the national emissions trading system (ETS) covered 3,680 companies and more than 65% of China’s CO₂ emissions. Cumulative allowance trading exceeded 917 million tonnes by June 2026. The report attributes approximately 530 million tonnes of CO₂ reductions in thermal power generation during 2021–2025 to the ETS. For scale, this five-year total is roughly 80% of Germany’s greenhouse-gas emissions in 2024, measured in CO₂ equivalents (source UBA).
The national voluntary carbon market, relaunched in January 2024 under revised rules for project approval and emissions verification, had 40 projects registered by June 2026. It enables eligible projects to earn revenue from verified emission-reduction credits, which companies can also use to meet up to 5% of their annual allowance-surrender obligations under the mandatory ETS.
Climate adaptation efforts expand
Adaptation measures include investment in water infrastructure and agricultural resilience, alongside wider warning coverage. Heat warnings reached 23 provinces and more than 170 cities, districts, and counties.
Progress within China’s climate policy framework
The report presents these implementation results alongside previously announced commitments and policy developments. These include China’s 2035 Nationally Determined Contribution, the National Climate Change Plan for the 15th Five-Year Plan period and the dedicated climate provisions in the Environmental Code. It also reviews plans for wider carbon-market coverage and a transition towards an allowance system based on an absolute cap by 2030.
Original policy: https://www.mee.gov.cn/ywgz/ydqhbh/qhbhlf/202610/t20261021_1183474.shtml
