China’s fossil-fuel challenge — how to build a bridge to renewables But all is not lost if China can lead on cleaning up through carbon capture, utilization and storage

The world’s largest emitter of carbon dioxide relies on coal, oil and gas for its economic growth

As summer arrives in China, the country’s 2023 heatwave springs to mind. A period of extreme heat in June and July that year didn’t just scorch the land — it exposed a hard truth about China’s energy future. Temperatures in Xinjiang province shattered records at 52 °C and nationwide sales of air-conditioning units spiked by about 40% (see go.nature.com/452ckya; in Chinese).

The illusion of a stable, renewables-led grid collapsed: in Jiangsu, solar farms sputtered at low capacity as sunlight was dimmed by weeks of industrial smog. In Inner Mongolia, wind turbines stood still under a rare, suffocating heat dome. Hydropower generation fell to a historic low, whereas national carbon emissions hit a record high, as surging electricity demand and frequent power outages revived calls to expand fossil-fuel power (J. Dinneen New Scientist 3 April 2025).

Faced with the prospect of power-grid failure, China had no choice but to fall back on the dirtiest tool in its energy arsenal: coal. During peak demand, thermal power plants were shouldering more than two-thirds of national electricity needs (see go.nature.com/4gth7zr; in Chinese). The power sector’s coal consumption grew in 2023 by 9% relative to 2022, to 2.9 billion tonnes (see go.nature.com/3gnfk35; in Chinese).

The heatwave was a stark reminder that, despite its world-beating solar and wind facilities, China is still tethered — almost helplessly — to fossil fuels (see ‘China’s fossil-fuel reliance’). From steel mills to semiconductor plants, the engines of China’s growth are fuelled by coal, oil and gas. Yet clinging to the status quo risks accelerating both environmental degradation and geopolitical vulnerability.

Sources: China Petroleum Econ. and Tech. Res. Inst.; CNOOC Energy Econ. Inst.; Natl Bureau of Statistics

As the world’s largest energy consumer, China cannot simply abandon fossil fuels without jeopardizing the industrial base and social fabric that underpin its economic rise. What’s needed is realism. China’s energy future is not a binary choice between fossil fuels and renewables — it is a high-stakes balancing act between economic resilience, environmental responsibility and social stability.

At the heart of its energy strategy must be carbon capture, utilization and storage (CCUS). If the world is to meet its climate targets, China must lead not only in building green energy, but in cleaning up the energy it cannot yet replace with renewables.

Industry needs a lot of energy

In 2024, fossil fuels supplied almost 82% of China’s total energy consumption (59.6 billion tonnes of coal equivalent). Coal accounted for 53%, oil for 17%, and natural gas for 11% (see go.nature.com/3tjpe7r; in Chinese). To understand their centrality, consider three sectors that contribute 25% of national gross domestic product (GDP): steel, chemicals and construction materials . Power generation and coal-to-chemical industries alone consume around 2 billion tonnes of coal annually (see go.nature.com/4kdx9hm; in Chinese). These processes demand extreme heat: blast furnaces cannot run on solar power, and cement kilns need temperatures of 1,450 °C, which today’s renewables cannot yet reliably supply.

Even high-tech industries depend on fossil fuels. In 2022, data centres across China consumed a total of 270 billion kilowatt-hours of electricity, a 25% increase compared with 2021. This accounted for roughly 3% of the country’s total electricity consumption, much of it generated from coal (see go.nature.com/4kcz99y; in Chinese). According to a report by climate researchers at Tsinghua University in Beijing, the coal industry directly supported 2.6 million jobs in 2023. In Inner Mongolia, a region with a population of 23.8 million, coal contributes about 16% of its GDP and nearly half of its industrial profits, employing more than 180,000 people (see go.nature.com/3tsrfxs; in Chinese).

Abandoning coal without a strategy would trigger social unrest, as Germany discovered during its phase out of coal mining in the Ruhr Valley, starting in 2018. On losing a sector that once employed about 600,000 people, the region saw mass lay-offs and economic decline, sparking waves of protest and discontent (see go.nature.com/3ufk6wd).

As of 2024, China’s capacity in solar and wind energy (887 and 521 gigawatts, respectively; see go.nature.com/3gjfdwf; in Chinese) is world-leading, yet last year these renewable sources met just 18% of the country’s total electricity demand. The problem isn’t scale — it’s intermittency. For instance, during a 2022 winter cold snap, the generation capacity of Inner Mongolia’s wind farms dropped to nearly zero for 24 hours because there was so little wind. Grid operators learnt the hard way and now require coal plants in major coal-producing areas to maintain 15-day coal stockpiles — not as a fallback to the past, but as a necessity of the present.

Oil and gas are equally entrenched. China’s transportation sector alone consumes 177 million tonnes of petrol annually (see go.nature.com/4keewqm; in Chinese). Petrol and diesel still power almost 80% of China’s roughly 450 million vehicles, despite electric vehicles accounting for 41% of new car sales in 2024, according to the China Association of Automobile Manufacturers.

Oil is also the feedstock of China’s petrochemical empire. Zhenhai Refining & Chemical Company — one of Asia’s largest integrated refineries, run by the Chinese state firm Sinopec — processes up to 800,000 barrels of crude oil per day. Its output feeds China’s vast plastics and chemical industries, which together employ more than 12 million people nationwide.

Natural gas, once peripheral, is now a geopolitical and environmental linchpin. As part of the Blue Sky campaign, tens of millions of rural households have replaced coal stoves with gas boilers — slashing urban smog but driving gas imports up to 43% to cover the increased consumption (see go.nature.com/4nvkkss; in Chinese). China’s gas supply map is also a map of its foreign policy. A pipeline from Siberia delivers 38 billion cubic metres per year from Russia. In Guangdong, liquefied natural gas (LNG) terminals offload cargo from Qatar to feed factories that help to produce 70% of the world’s air conditioners.

This dependency isn’t just economic — it’s strategic. China still imports 11 million barrels of oil per day, yet 80% of it is transported by sea through the narrow, US-patrolled Strait of Malacca, according to the China National Petroleum Corporation. Gas pipelines snake through restive regions near Afghanistan, and LNG ships from Australia navigate contested waters in the South China Sea.

In response, China is doubling down on domestic exploration. In 2024, Sinopec announced it had discovered 140 million tonnes of shale oil in Shandong province, and PetroChina’s Gulong shale-oil field in Daqing is targeting a reserve of 1 billion tonnes (see go.nature.com/4kj3g5r; in Chinese). These projects — in three national shale demonstration zones — should help to cut China’s oil import reliance and replicate the US revolution in fracking, or hydraulic fracturing.

The price of fossil-fuel use is paid in carbon dioxide. In 2024, global CO₂ emissions were projected to reach a record 41.6 billion tonnes — most of which came from coal burning (see go.nature.com/4rpu6qq). China contributed a staggering 16 billion tonnes of greenhouse gases in 2023, according to the UN Environment Programme’s 2024 emissions gap report (see go.nature.com/4gzuyza), with coal alone responsible for more than 60% of CO₂ emissions. Without urgent and comprehensive decarbonization, the climate crisis will only accelerate.

Use carbon-capture technologies

China’s solution cannot be renewables alone. It must include CCUS, not as an afterthought, but as central infrastructure, similar to roads or railways. Currently, CCUS is the only proven technology with the potential to decarbonize hard-to-abate sectors such as steel, cement and chemicals, if it can be made to work at scale.

China has backed the Oil and Gas Decarbonization Charter, a global pact launched in 2023 at the COP28 UN climate summit in the United Arab Emirates to cut emissions from the fossil-fuel sector. In July 2024, PetroChina joined the initiative, aligning with more than 50 oil companies responsible for 44% of global oil output. The charter mandates real action: no routine flaring of gas from fossil-fuel operations by 2030 and the adoption of industry best practices for emissions reductions and transparent emissions reporting.

A nationwide heatwave in China in June 2023 caused a 40% surge in sales of air-conditioning units. Credit: Qilai Shen/Bloomberg/Getty

But progress remains slow. China’s national carbon market, the China Emissions Allowance, trades at 68–90 yuan (US$9.50–12.50) per tonne — well below carbon prices in the European Union, which exceed €70 (US$82) per tonne. Such low levels in China offer little incentive for companies to invest in deep decarbonization.

China emits more than 10 billion tonnes of CO₂ annually, yet current CCUS projects, mostly in the Junggar Basin in northwest China, capture just 4 million tonnes and store 2 million tonnes (see go.nature.com/3tfkpye; in Chinese). The disparity is staggering. Without a sweeping scale-up, CCUS is symbolic at best. Closing the gap will require a huge and concerted effort to make carbon capture count.

Urgent actions

First, China must drive down CCUS costs through sustained research and development and standardization. Technical standards should cover the entire CCUS life cycle: capture, transport, injection, monitoring and closure. These must include engineering protocols, environmental risk assessments and leakage detection systems.