Climate experts say China's carbon emissions may have peaked, which could affect global climate targets, the fight against global warming — and the Australian coal industry.
China is currently the world's biggest emitter, accounting for some 30 per cent of global carbon emissions, but a report by the Center for Research on Energy and Clean Air (CREA) found that in the year to May 2025, China's CO2 emissions dropped 1.6 per cent.
China policy expert at CREA Belinda Schäpe said the trend had also continued in the months since.
Ms Schäpe told the ABC the finding was "really unique" because the only other times the country had recorded a year-on-year decline in CO2 emissions were during times of economic downturn, like the COVID-19 pandemic.
[GRAPH CO2 emissions]"It's really quite a historic result," Ms Schäpe said.
"It's due to a really rapid increase in renewables build-out in China that has translated into an increase in power generation coming from clean sources and driving down the coal share in the power mix, and with that, bringing down emissions."
She said China led the world in green energy uptake.
"China added more solar and wind power capacity than the rest of the world combined last year," she said.
"In May [2025] alone, China built out 90 gigawatts of solar capacity, which is really huge. It translates to roughly 100 solar panels per second.
"We are now at a point where solar and wind capacity is actually bigger than all thermal power capacity. So not only coal, but also including gas, oil and other fossil fuel sectors."
Li Shuo, director of the China climate hub at the Asia Society Policy Institute, told the ABC he thought that despite previous emissions fluctuations, the country would continue to reduce its carbon output.
"It certainly suggests that after three decades of very rapid economic growth, and also growth in China's emissions, the emission peak point for China has come very close, if it has not happened already," Mr Li said.
"We have certainly entered into, if not yet an emission peak, a plateauing period for China's emissions.
"We have entered a new phase of China's emissions, a phase that features a stabilisation of China's emissions and increasingly large-scale integration of China's renewable energy power, which, I hope, will actually make the country reduce its emissions from this point on."
If the world is to keep global warming below 1.5 degrees Celsius, the amount of emissions released into the atmosphere needs to come down, not stabilise, according to the United Nations Intergovernmental Panel on Climate Change (IPCC).
Climate experts say a failure to limit global warming below that figure will result in catastrophic consequences for people and the planet.
China still building new coal plants
Despite the rapid installation of renewable energy plants across the country, China is still building new coal-fired power plants.
Beijing approved on average two coal-powered projects a week in 2022 and 2023, after power shortages in 2021.
Belinda Schäpe said a backlog of these projects was now coming online, but they were using less coal.
"There's been a significant drop in coal imports … in June, there was a 25 per cent year-on-year drop in coal imports," she said.
"In June, China's power demand growth was actually 70 per cent higher than last year this time around, but solar and wind power generation met 89 per cent of that power demand growth.
"That's what we've been seeing over the last six months, really, where renewables, or solar and wind in particular, accounted for 24 per cent of total electricity generation.
"As a result, the coal share in the power mix has dropped to the lowest level since 2016, to just over 50 per cent."
'The writing is on the wall'
Chinese President Xi Jinping has pledged to continue phasing down the country's coal consumption in the next five years, between 2026 and 2030.
Jorrit Gosens, a climate change and energy policy fellow at the Australian National University, said Australia needed to rethink the future of coal mines.
"The writing is on the wall a little bit in the future economic potential of that industry," he said.
China imports roughly 30 per cent of Australian thermal coal exports, making it Australia's largest market.
Dr Gosens said China's increasing wind and solar power generation, combined with increasing domestic supplies of coal, created a "double whammy" for Australian coal exports.
"It should be expected that those export volumes will continue to decrease over the next few years."
Other Asian markets of Australian coal, such as South Korea and Japan, would follow suit as they decarbonised, he said.
Dr Gosens pointed to the Mt Arthur coal mine in NSW, for which BHP could not find a buyer because of the shrinking demand of coal and its liabilities, like rehabilitation costs.
He said local community leaders and the federal government needed to transition communities historically reliant on coal mines into other industries.
"Currently, we're still seeing more resistance to change than embracing of that transition, which I think is a risky strategy given the demand for our product is not going to be determined by those local communities or by the federal government," he said.
"Our best bet really is to make sure that there are viable alternatives for when it does get to that point."
Trump's America 'decoupling' from China on climate
US President Donald Trump's policy agenda has seen green energy subsidies replaced with coal subsidies.
Li Shou said it was clear that the two countries were now on different paths.
"We are seeing a decoupling between the climate path of the US and the Chinese one," he said.
He said some conservative forces within China may use the US's withdrawal from clean energy as motivation "for domestic inaction", but he was confident that it would not change the country's policy direction.
"China has over the last decade or so become the superpower when it comes to wind technology — deploying and manufacturing wind, solar batteries and electric vehicles," he said.
"This will not change because of what is happening or not happening in the US and if anything, Beijing will just continue with this green path because doing these things is ultimately in the country's long-term economic interest.
"There has been a realisation on the Chinese side that they should continue and double down on their climate and environmental agenda, not because of the global situation and the US situation, but just for their own sake, to clean up the skies in major Chinese cities."
China is set to announce its new climate reduction targets as part of the Paris agreement later this year.
He said that would tell the world a lot about where the global appetite to reduce emissions was at.
"Whether China chooses to coordinate with some of the other geopolitical powers will also tell us a lot about where the global climate agenda stands and to what extent countries, including China and Australia and the European Union, can still engage," Mr Li said.
