Four contradictions in China’s energy and environmental policies in 2023

2023, as the mid-point of the 14th Five Year Plan is also when assessments begin ahead of planning for the next Plan in 2024. Yet the general direction of China’s energy and environmental policies and priorities has been confusing: Despite a weak macroeconomic picture, energy and commodity demand has grown strongly in 2023. And despite a commitment to peak carbon emissions before 2030, China has been increasing coal production and adding new capacity. This has translated into a confusing stance in climate diplomacy: The US-China Sunnylands Declaration suggested progress and ambition, China’s position at COP28 was more circumspect. Finally, with questions around the decarbonisation of China’s power sector, electric vehicle (EV) penetration continues to surge, even as sales slow. The domestic market seems to be facing a consolidation but exports are rising strongly. Countries in developed economies are now grappling with the need to protect their domestic auto industries from Chinese competition while also needing to accelerate the electrification of their fleets. What do these opposing trends means for China’s energy and environmental policies? This Comment looks back at China’s energy policies and markets in 2023 and discusses these contradictions, assessing what they mean for 2024.

By: Anders Hove , Michal Meidan