Published September 24, 2025 | Version v1

China can decarbonise the world – but even that won't fix its overcapacity problem

  • 1. Natixis
  • 2. ROR icon Bruegel

Description

China is on track to meet global green-tech demand but needs to pivot from manufacturing to infrastructure. China needs to increase its investment in power infrastructure to reduce renewable curtailment and curb its reliance on carbon-intensive power sources. First, China needs to ramp up investment in its national power grid to increase power transmission capacity. Second, China needs to set more ambitious targets for energy storage capacity to support the functioning of the power grid. Finally, global demand for power infrastructure is rising. Given the rising share of renewable power, global power grid systems need to be upgraded as disturbances from weather events require greater grid stability. This will continue to boost China’s exports of electrical equipment, supporting the economy. Power infrastructure may even replace renewable equipment as a new source of trade revenue, as it is less sensitive and thus less likely to be a target of sanctions. By pivoting investment from renewable energy capacity to power-grid upgrades and equipment, China can shore up an otherwise underwhelming domestic economy, keep on track for its net-zero emissions targets and relieve geopolitical pressures.

Files

China_can_decarbonise_the_world.pdf

Files (560.5 kB)

Name Size Download all
md5:5c198b2f0372cdd33d887b89520ddac4
560.5 kB Preview Download

Additional details

Funding

European Commission
DWARC - Dealing with a Resurgent China 101061700