Understanding China's "two sessions" implication for climate policy in the year 2025.

In the heart of Beijing, the annual "two sessions" political event took place this spring, marking China's commitment to its ambitious "dual-carbon" goals. These goals aim to peak carbon emissions and reach carbon neutrality by 2060.

The event, lasting about a week, culminated in the delivery of the "government work report" by the premier. This speech outlined the previous year's achievements and priorities for the year ahead, including the annual GDP target of 5%. Boosting domestic consumption was highlighted as key to achieving this target.

To incentivise "eco-friendly consumption", the government pledged to steadily promote China's climate action. This includes strengthening financial support for R&D for low-carbon technologies, enhancing the development of renewable energy, promoting new-energy vehicles (NEVs), and developing green finance standards and institutions.

Recognising the importance of clean-energy technologies to economic growth, China is putting 300 billion yuan (US$41 billion) into a consumer trade-in programme that will allow drivers to swap combustion-engine cars for NEVs. The net impact of this stimulus measure on China's emissions is currently unknown.

China's economy has not become much more energy efficient in recent years, offsetting the decarbonisation effects of renewable technology deployment. To address this, the government is likely to aim for stable growth in the real estate and construction sector, rather than stimulating it with rapid and energy-intensive growth. These sectors have been the biggest driver of domestic consumption for decades in China.

The government work report reiterated calls to keep some fossil-fuel capacity for energy security, while also committing to reducing steel output and encouraging oil refiners to produce more petrochemical products instead of fuel. The government will take steps to promote orderly development of the NEV, lithium-ion battery, and solar industries.

The event also emphasized the need to upgrade China's electricity grid to cope with vast renewables additions. Renewable energy buildouts will continue in 2025, with a focus on new energy bases in desert areas and offshore wind. The financing of the "low-carbon upgrade trials" for coal power plants in China involves Chinese government agencies, state-owned energy companies, and international financial institutions supporting clean energy transitions.

In addition to domestic efforts, China will continue to help African nations develop in "green sectors". The NDRC confirmed that clean-energy technologies will receive support from a one trillion yuan (US$138 billion) fund that will be issued for "frontier fields".

China's climate and energy policy in 2025 will likely follow well-established priorities, such as balancing decarbonisation and energy security. The government pledged to reduce energy intensity by 3% in 2025, excluding renewables and nuclear. However, China is expected to miss its 14th five-year plan energy intensity target.

In conclusion, China's 2025 economic strategy is heavily focused on clean energy and decarbonisation, with significant investments in renewable technology and infrastructure. While the net impact of these measures on emissions is uncertain, the government is taking steps to promote orderly development of key industries and upgrade its electricity grid to accommodate renewable energy. The commitment to the "dual-carbon" goals and support for clean energy in Africa further underscores China's long-term commitment to a sustainable future.