China’s five green economy challenges in 2026

China’s new five-year plan aims for carbon peaking by 2030 and neutrality by 2060, but coal still dominates energy. Challenges include inefficient renewable energy distribution and costly grid upgrades.

As China heads into the new year it will start rolling out its 15th five‑year plan, this one is for 2026-2030.

Beijing is doubling down on greening its economy, and aims to hit two major climate goals: “carbon peaking”, where carbon dioxide emissions have reached a ceiling by 2030, and “carbon neutrality”, where net carbon dioxide emissions have been driven down to zero by 2060.

Yet, China’s green push sits uneasily with its energy realities: coal still provides about 51% of its electricity as of mid‑2025, underpinning China’s difficulty in greening its energy system swiftly. Here are five major challenges that will shape China’s green transition as it moves into 2026.

Imagine standing in western China (for instance in Tibet, Xinjiang and Qinghai), which produces a lot of solar and wind energy. On bright and windy days, these installations generate vast amounts of clean electricity. Yet much of that power goes to waste.

China’s grid can only handle a limited load, and when renewable generation peaks, it risk overloading the power network. So grid operators respond by telling energy producers to dial down output, which is a process called “curtailement”. The result is that electricity from the west often fails to reach eastern economic hubs, such as Beijing, Tianjin, Shandong, Jiangsu, Shanghai, Zhejiang, Fujian and Guangdong, where demand is greatest.

China needs to invest heavily in the ways to transport and store excess energy. The State Grid Corporation of China claims that it will be spending 650 billion yuan (£69 billion) in 2025 to upgrade the power network, and perhaps much more in subsequent years.

The challenge here is sustaining these capital-intensive projects while the broader economy still grapples with the lasting effects of the 2021 property crisis.

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