China ranks 17 out of 120 countries on the ETI 2023 and is a new entrant in the top 20 countries. It is among the biggest producers and consumers of energy in the world while also being one of its biggest GHG emitters, currently accounting for one-third of the total global GHG emissions. China has maintained a consistent upward trajectory on the ETI over the past 10 years, improving strongly on system performance and transition readiness. Scores on the secure dimension within system performance have improved, mainly through better quality of electricity supply diversification and associated grid improvements. Sustainable scores, however, remain low on an absolute scale as coal is still the main fuel for generation, accounting for 60% of total power output⁶³ despite large amounts of renewable energy capacity financed and installed over the years.

China’s attempts to improve the enabling environment for energy transition are steps in the right direction, evidenced by President Xi Jinping’s September 2020 commitment at the UN General Assembly to reach peak carbon emissions before 2030 and achieve carbon neutrality by 2060.⁶⁴ China is emerging as a world leader in innovation: public spending on research and development has risen by 35% since 2014.⁶⁵ In pursuing carbon neutrality, however, China faces the challenge of ensuring continued energy security while shifting away from fossil fuels. Nonetheless, in recent years, the theme of China’s energy industry has been green development, with several policies and measures designed to accelerate the energy transition, the net results of which are reflected in its high ETI score on regulation and political commitment.

In June 2022, China released its 14th FYP on Renewable Energy Development (2021-2025). As reported by the Energy Foundation, it is “a comprehensive blueprint for further accelerating [its] renewable energy (RE) expansion. The plan targets a 50 percent increase in renewable energy generation (from 2.2 trillion kWh in 2020 to 3.3 trillion kWh in 2025), establishes a 2025 renewable electricity consumption share of 33 percent (up from 28.8 percent in 2020), and directs that 50 percent of China’s incremental electricity and energy consumption shall come from renewables over the period 2021-2025. … The RE plan is the second major energy-related 14th FYP released [in 2022].… [It] establishes detailed targets for primary energy… [It] establishes detailed targets for primary energy and more. …These two FYPs together reaffirm China’s commitment to honouring its carbon pledges through accelerated RE growth”.⁶⁶

China has done a great deal to use green finance to increase renewables, investing over $380 billion in 2021, and being one of the first countries to issue a green bond project catalogue, to develop its own Green Bond Principles and to work with the EU to develop the Common Ground Taxonomy.⁶⁷ One of the most significant efforts in this surge was powering industrial clusters with green and renewable electricity. China’s environmental ministry also proposed to support exploration of near zero-carbon emissions and carbon neutrality pilot demonstrations. Simultaneously, the country is promoting construction of large-scale renewable energy bases, distributed development of wind and photovoltaic in the central and south-east regions, integrated development of water and solar bases in the south-west region, and centralized development of offshore wind in eastern coastal areas.

The energy transition in China requires a huge shift in resources, innovation and new technologies to enhance energy efficiency and resource productivity. A recent World Bank report estimates that China will need between $14 trillion and $17 trillion in additional investments up to 2060 for green infrastructure and technology in the power and transport sectors alone⁶⁸ and highlights important lessons, including the need for public and private sectors to work together, “a more predictable regulatory environment as well as better access to markets and finance that would allow the private sector to play a central role in delivering market solutions, improving productivity, reducing costs, stimulating technological innovation, and filling the financial gap. … [In addition], training and reskilling workers from the fossil fuel sector and providing targeted assistance to the most affected local communities”⁶⁹ could ensure an equitable energy transition.