China Energy Transition Review 2025

Foreword

The world stands at a pivotal moment. Climate change, energy security, and economic development are no longer separate challenges. Increasingly, they are interwoven – and so too must be our response.

For too long, emerging economies have faced what seemed like a stark trade-off between growth and sustainability. As this report highlights, China’s green ascent challenges that assumption.

Through scale, innovation and long-term planning, China is demonstrating that decarbonisation can go hand in hand with industrial upgrading, job creation and improved quality of life. These lessons carry significance not only for China, but for the broader region – especially Southeast Asia, where energy demand is rising and development needs remain pressing.

Of course, China’s experience is not a one-size-fits-all blueprint. Each country must chart its own course, shaped by its unique resources, needs and priorities. Still, China provides a valuable reference point – showing what is possible when long-term vision is matched with pragmatic, coordinated action. 

For Southeast Asia and other emerging markets, the task ahead is to translate that possibility into tailored strategies. The choices we make today will shape the direction of our economies and the well-being of generations to come. To build a better future, one of the most promising paths lies in seizing the opportunities of the energy transition – and doing so together.

Executive summary

Faster, broader, deeper: China’s energy transition is transforming global energy realities

China’s clean energy transition is fundamentally reshaping the economics of energy across the world. Accelerating deployment of renewables, grids and storage in China, combined with electrification of transport, buildings and industry, are rapidly bringing China itself towards a peak in energy-related fossil fuel use, while also reducing costs and accelerating uptake of clean electro-technologies in other countries. These twin trends are creating the conditions for energy-related fossil fuel use globally to peak and decline.

China’s adoption of renewable energy continues to accelerate. In 2024, wind and solar electricity generation rose by 25% compared with the previous year. In the first half of 2025 it was 27% higher than in H1 2024 – enough, alongside other trends, to cut fossil fuel generation by 2% compared with H1 2024. In the 12 months to June 2025, wind and solar (2,073 TWh) generated more electricity than all other clean sources (nuclear, hydro and bioenergy) combined (1,936 TWh). Just four years ago, wind and solar generated half as much electricity as other clean sources combined.

The renewables transformation is underpinned by world-leading investment in clean energy, energy storage and transmission grids. China is the biggest investor in clean energy worldwide, spending $625 billion USD in 2024 – 31% of the global total of $2,033bn. The volume of installed battery storage tripled in the three years to 2024. Grid investment rose to an all-time high in 2024 of 608 billion RMB ($85bn USD), up by 25% from 486 billion RMB ($68bn) in 2019. 

Beyond electricity, the transition is reshaping end-use sectors. Electricity is comfortably the biggest energy source in buildings, and in 2023 overtook coal to become the biggest energy source for industry. Oil-derived fuels still dominate in transport, but China’s rapidly-expanding electric vehicle fleet is progressively gaining ground. The share of electricity in final energy demand across the wider economy continues to grow, reaching 32% in 2023, out-pacing many mature economies. 

China has embarked on this transition for a variety of reasons. Interviews with experts conducted for this report reveal that within China there is a realisation that the old development paradigm centred on fossil fuels has run its course, and is not fit for 21st century realities. The government’s aim to establish an ‘ecological civilisation,’ which simultaneously delivers on economic, social and environmental goals, is the response, embedded in the Constitution since 2018. 

The clean energy transition is constraining China’s dependence on imported fossil fuels, reducing energy costs, stimulating growth and jobs and creating export markets. In 2024, investment and production in clean energy contributed 13.6 trillion RMB ($1.9 trillion) to the national economy – a sum equivalent to about one-tenth of China’s GDP, or the total GDP of Australia – and the sector is growing three times faster than the Chinese economy overall. The depth of buy-in within business is reflected in research, development and innovation: Chinese companies now account for about 75% of global patent applications in clean energy technology, up from just 5% in 2000. 

These investments in the clean energy future are driving dramatic cost reductions across the world in key technologies such as wind turbines, solar panels, storage batteries and electric vehicles. The benefits are increasingly being felt in emerging markets, many of which are overtaking OECD countries in wind and solar generation share and in electrification.