(Bloomberg) — China’s electricity demand is becoming a key focal point in the global fight against climate change.
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As the world’s largest polluter, China holds outsized sway over whether emissions can be reduced fast enough to avoid the worst impacts of global warming. The country’s breakneck adoption of clean energy technology has created hope that it will peak and start reducing greenhouse gases far earlier than its stated goal of 2030.
But that hasn’t happened so far, in large part because the nation’s energy demand is growing unprecedentedly fast, requiring ever more coal to be burned. Electricity use grew 6.8% last year, outpacing overall economic growth at the highest clip in at least 15 years. And as China faces a slowing economy and trade tensions that are likely to be exacerbated by new US President Donald Trump, the future of power demand growth remains a huge question mark in China’s efforts to decarbonize.
“Energy demand and power demand are the number one swing factors for emissions,” said Lauri Myllyvirta, lead analyst for the Centre for Research on Energy and Clean Air. “There’s certainly a lot more room for different pathways on the demand side, depending on Trump and everything else that happens in international trade.”
Power and growth have long been linked in China. Former Premier Li Keqiang once said electricity usage, rail freight and bank lending provided a more accurate reflection of the economy than reported GDP figures. Increasing efficiency by reducing the amount of energy needed to produce goods has long been a metric the government uses to grade itself.
But that relationship has reversed in recent years as Beijing leaned on manufacturing to lead an economic rebound following the end of the Covid-19 pandemic. Electricity use rose faster than nominal GDP growth in three of the past five years, after trailing it for the entire previous decade. The China Electricity Council, the power industry’s top lobbying body, expects consumption to grow 6% in 2025.
Growing power demand is stymieing efforts to decarbonize the power sector, which accounts for nearly half of the country’s greenhouse gas emissions. Even after record additions of wind turbines and solar panels, clean power generation wasn’t enough to meet all the increased demand last year, forcing thermal power plants to burn more coal and generate about 1.5% more power than in 2023.