China’s energy policy in 2026 is a study in contradictions: the world’s largest emitter and largest builder of coal power is simultaneously the world’s largest investor in renewable energy and the largest manufacturer of solar panels, wind turbines and electric vehicles. Understanding China’s energy trajectory is essential for anyone tracking global energy markets.
The Coal Reality
Despite strong growth in renewables, coal remains the backbone of China’s electricity system, accounting for more than 55% of total generation. China continues to build new coal-fired power stations — a fact that has drawn significant international criticism — while simultaneously retiring older, less efficient capacity. The net effect is a coal fleet that is gradually becoming more efficient and slightly shrinking in its share of generation, but remaining enormous in absolute terms.
Renewables: Record Growth
China installed more renewable energy capacity in 2025 than the rest of the world combined, a trend that has been consistent for several years. The country’s solar and wind industries benefit from massive manufacturing scale, low labour costs and strong government support, making China the global cost leader in clean energy technology.
China’s target of 1,200 GW of wind and solar capacity by 2030 — announced at COP26 — is on track to be exceeded ahead of schedule. Renewables are now the largest source of new power capacity additions in China.
The Electricity Demand Challenge
China’s electricity demand is growing rapidly, driven by industrial expansion, rising living standards, EV charging and — increasingly — AI data centre power demand. The scale of demand growth means that even with record renewable additions, coal generation is not declining in absolute terms in the near term.
