Katerina Swanson
China's economy is heavily reliant on fossil fuels, which account for 86% of its primary energy consumption. Despite commitments to reduce carbon emissions, China continues to invest in fossil fuel infrastructure, particularly coal-fired power plants, which can operate for 40-60 years. China is also investing in oil refining capacity and is a major importer of natural gas. However, China has also emerged as the largest investor in clean energy transition, investing $266 billion in 2021, and its investments in renewable energy sources such as nuclear power, hydroelectricity, and wind and solar power are rapidly growing.
| Characteristics | Values |
|---|---|
| China's investment in clean energy in 2024 | 6.8 trillion yuan ($940 billion) |
| Global investment in fossil fuels | $1.12 trillion |
| China's GDP contribution from clean energy in 2024 | 10% |
| China's GDP growth in 2024 | 26% |
| China's share of global carbon emissions between 1990 and 2020 | 22% |
| China's target share of non-fossil fuels in primary energy consumption by 2030 | 25% |
| China's nuclear power generation capacity as of January 2022 | 50,769 MW |
| Target nuclear power generation capacity by 2025 | 70,000 MW |
| China's ranking in international gas power generation investments | 13th |
| China's investment in international gas power generation | $6.8 billion |
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What You'll Learn
China's investment in oil refining capacity
China's economy is largely based on fossil fuels, which generate 86% of its primary energy consumption. China has been investing heavily in oil-refining capacity and is projected to surpass the United States as the world's top refiner of petroleum products. China's refining capacity has expanded significantly in recent years, addressing the country's transportation fuel needs and the demand for feedstocks in its petrochemical industry.
China's refinery throughput, or the volume of crude oil processed to produce gasoline, diesel, jet fuel, and other refined products, has increased alongside its growing capacity. In 2023, China processed a record-high average of 14.8 million barrels per day, surpassing the United States. China's expanding refinery capacity has contributed to its position as the world's largest importer of natural gas and oil, ensuring its energy security.
While China's refineries have historically struggled with low utilization rates and marginal profits, particularly among independent refiners known as "teapot refiners," the situation has improved in recent years. Shandong-based teapot refiners underwent consolidations and mergers, such as the Shandong Refining Energy Group merger in 2017, leading to more efficient operations. Additionally, China permitted independent refiners to increase their crude oil imports, enhancing their productivity.
China's growing refinery capacity aligns with its commitment to the Paris Agreement, under which it aims to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060. However, critics argue that China's continued investment in long-lasting carbon-emitting assets undermines its pledges. China's coal industry believes it can coexist with the 2060 pledge, focusing on improving efficiency and capturing more particulates that contribute to smog.
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China's coal investments
China has been one of the most prominent investors in global power infrastructure, with $52 billion invested in coal power generation in Belt and Road Initiative (BRI) countries over the past two decades. In 2021, China pledged to stop building new coal-fired power plants and support low-carbon and clean energy initiatives. This retreat from overseas coal power investments could potentially wipe out $50 billion in investments and significantly reduce carbon emissions.
Despite this pledge, China's domestic coal programme has continued, with state-owned utilities expanding their coal-fired power plants. In 2024, China witnessed a resurgence in the construction of new coal-fired power plants, reaching a ten-year high. This trend was driven by investments from coal-mining companies and energy groups with coal-mining operations, aligning their strategies to sustain coal's dominance. Major coal-producing provinces, such as Xinjiang, Inner Mongolia, Shaanxi, and Gansu, were among the most active in commissioning and building new coal power projects.
China's economy is heavily reliant on fossil fuels, particularly hydrocarbons, which generate 86% of its primary energy consumption. The country has a target to peak carbon dioxide emissions around 2030 and achieve carbon neutrality by 2060. However, China's coal industry believes it can coexist with the 2060 pledge, and the country has continued to invest in long-lasting carbon-emitting assets. China is also investing heavily in oil-refining capacity and is set to become the world's top petroleum product producer.
While China's pivot from coal is a positive step towards sustainability, experts remain concerned about an increase in overseas gas investment. The transition from coal to gas could lock in polluting infrastructure for decades, hindering the goal of limiting global temperature rise to 1.5 degrees Celsius. China's ability to promote green power sources and reduce its reliance on fossil fuels will be critical in addressing global climate challenges.
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China's gas investments
China's economy is largely based on fossil fuels, which generate 86% of its primary energy consumption. China has continued to invest in these sources, particularly in the oil-refining industry, where it is set to overtake the United States as the world's largest refiner and producer of petroleum products. China is also the world's largest importer of natural gas.
China's five major natural gas companies include three state-owned energy giants: Sinopec Shanghai Petrochemical Co. Ltd., China National Petroleum Corporation, and China National Offshore Oil Corporation. The largest of these, Sinopec, had a consolidated revenue of over $314 billion, with natural gas production reaching 27 billion cubic meters in 2022. Shenergy Group Company Limited, another major player, recorded consolidated revenue of $5.6 billion and supplied 8.1 billion cubic meters of natural gas.
China's domestic upstream investment in natural gas reached a record $51.2 billion in 2022, a 19% increase year-on-year. While China has focused on domestic gas production, it also relies on pipeline imports and LNG imports, adjusting the latter based on global gas prices.
China's investments in fossil fuels, particularly coal, have continued to grow despite its pledges to peak carbon dioxide emissions by 2030 and become carbon-neutral by 2060. China added 11.4 gigawatts of new coal-fired capacity in the first half of 2020, with plans to expand its coal-fired power fleet until around 2030.
Experts are concerned about an unsustainable increase in China's overseas gas investments, which could lock in polluting infrastructure for decades. However, China's clean energy investments are nearing the scale of its global fossil fuel investments, with a significant contribution coming from the electric vehicle and solar industries.
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China's clean energy transition investments
China's economy is largely based on fossil fuels, which generate 86% of its primary energy consumption. However, China has pledged to become carbon neutral by 2060, and its investments in clean energy are nearing the scale of its global fossil fuel investments. In 2024, China invested 6.8 trillion yuan ($940 billion) in clean energy, with significant contributions from the electric vehicle, battery, and solar industries. China is also turning to nuclear power to reduce its reliance on fossil fuels, with plans to increase installed nuclear capacity to 70,000 MW by 2025.
China has emerged as the world's largest investor in the clean energy transition. In 2021, the country invested $266 billion in energy transition measures, accounting for more than one-third of the global total. This shift towards clean energy is evident in China's growing investments in renewable energy sources such as hydroelectric power and wind and solar infrastructure. China's commitment to clean energy is further demonstrated by its pledge to stop financing overseas coal projects and its efforts to cooperate with other nations on climate-related issues, such as reducing methane gas emissions.
Despite these positive steps, there are concerns about China's continued investment in fossil fuels, particularly in overseas gas projects. Experts worry that China's increasing investment in gas could lock in risky gas supplies and polluting infrastructure for decades. Additionally, China's domestic coal consumption remains high, and it continues to build coal-fired power plants, with a planned expansion of about 10% by 2025. However, China has pledged to strictly limit" the increase in domestic coal consumption and increase the share of non-fossil fuels in primary energy consumption to around 25% by 2030.
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China's nuclear energy investments
China's economy is largely based on fossil fuels, which generate 86% of its primary energy consumption. However, China has also invested heavily in nuclear energy. In 2024, nuclear energy constituted about 5% of China's power generation, and this figure is expected to double by 2040. China has achieved 100% domestic production of key nuclear power equipment and is exporting its nuclear reactor designs overseas.
China's nuclear energy strategy is led by the National Nuclear Safety Administration (NNSA), which has authorized three state-owned enterprises to own and operate nuclear power plants: the China National Nuclear Corporation (CNNC), the China General Nuclear Power Group (CGN), and State Power Investment Corporation (SPIC). In 2024, SGCC invested about CNY 600 billion in the grid system.
China has a strong impetus to develop nuclear power due to the air pollution caused by its coal-fired plants. In October 2018, the NDRC's Energy Research Institute stated that China's nuclear generating capacity must increase to 554 GWe by 2050 to limit the global temperature rise to below 1.5 °C. This would require an investment of more than CNY 8.7 trillion ($1.3 trillion).
China's nuclear power construction began in the 1950s with cooperation from the USSR. From 1959 to 1963, China invested over $1.5 billion in a gaseous diffusion plant utilizing a 300 MW reactor in Lanzhou. In 2019, SPIC signed an agreement with the Baishan municipal government for the Baishan Nuclear Energy Heating Demonstration Project, which would use a CNNC DHR-400 reactor. In 2025, China approved the construction of 10 new nuclear generating units for a total of $27 billion.
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Frequently asked questions
China has invested billions in fossil fuels, with an emphasis on coal and oil refining capacity. China's economy is based on fossil fuels, which generate 86% of its primary energy consumption.
China added 11.4 gigawatts of new coal-fired capacity in the first six months of 2020, with plans to expand its coal-fired power fleet by about 10% by 2025. China is also investing heavily in oil refining and is set to become the world's largest petroleum product producer.
Yes, China has emerged as the world's largest investor in clean energy transition. In 2021, China invested $266 billion in energy transition measures, accounting for over a third of global investments. China has also pledged to stop financing overseas coal projects and is investing in nuclear power and renewable energy sources such as hydroelectricity.
