CO₂ emissions dropped in July, driven by falling power generation from fossil fuels alongside reduced coal, cement, and crude steel output. Coal power generation fell for the first time this year. New energy vehicles accounted for more than 60% of domestic vehicle sales for the first time.

By Elizabeth Frost, China Analyst; Miao Chien, Data Scientist; with contributions from Lauri Myllyvirta, Lead Analyst

Imported coal is stacked at the coal terminal yard of Lianyugang Port in China’s eastern coastal province of Jiangsu, July 2026. China’s coal imports grew by 20% year-on-year in July. Photo: Cynthia Lee/Alamy

Key findings

China’s CO₂ emissions dropped in July, driven by a 3.5% decrease in power generation from coal and gas combined with falling coal, cement, and crude steel output. Coal mine output has now seen a full year without year-on-year growth.
Coal power generation dropped 2.5% after six consecutive months of year-on-year growth. Power generation from coal and gas is still up 2% year-to-date, due to exceptionally poor wind conditions, increased wind and solar curtailment, and relatively rapid power demand growth in the first half of the year.
In just the first six months of 2026, China added more wind capacity than was added in any full calendar year before 2025. In June alone, 13.6 GW of wind capacity was added, a record high for the month of June. Solar capacity additions remain depressed after 2025’s high baseline, when developers rushed to meet a policy deadline.
China’s energy system is still feeling the impacts of the Strait of Hormuz crisis, as crude oil imports fell by almost 25% year-on-year.
New energy vehicles (NEVs) sales reached two milestones: NEVs accounted for more than 60% of domestic monthly vehicle sales and 50% of year-to-date sales for the first time, with more than 1.5 million NEVs sold in July alone. NEV exports also exceeded 50% of all vehicle exports with more than 500,000 NEVs exported for the second consecutive month.

Coal generation fell for the first time in 2026

Power generation by large-scale power producers fell 0.1% year-on-year in July, while total power generation is estimated to have increased by 0.5%.
Coal power generation fell 2.5% year-on-year, following six consecutive months of increase. This followed China’s coal power generation falling in 2025 for the first time in a decade.
Gas power generation dropped by 13.9% year-on-year, reflecting the ongoing impact of shipping disruptions in the Strait of Hormuz on natural gas supplies. However, as gas plays a minor role in China’s power mix, this drop had a limited impact on overall electricity generation.
Solar generation rose by 10.4% year-on-year.
Wind generation dropped by 4.5% year-on-year, as poor wind conditions continued in July.
Hydropower and nuclear power generation grew 7% and 6.7%, respectively.

*Thermal, nuclear, and hydropower generation are based on National Bureau of Statistics (NBS) data. Solar generation is estimated from installed capacity and projected utilisation rates, adjusted for weather and average curtailment over the preceding three months. Starting this month, wind generation estimates are now calculated using a new wind projection model utilising NASA wind speed data. Figures for the most recent month are preliminary model estimates and may be revised once official generation and capacity data are released. Coal and gas generation are estimated by splitting total thermal generation using last year’s same-month fuel mix, adjusted by the year-on-year change in the fuel mix over the preceding three months.

Coal imports rise as oil and gas imports fall

China’s coal imports increased 20% year-on-year in July 2026, with import volumes for the first seven months up 4.3%.
China’s crude oil imports fell 24.3% year-on-year, reaching a nine-year low for the month of July, showing the continued impact of disruptions to shipments through the Strait of Hormuz. For the first seven months as a whole, oil import volumes declined 13.2% year-on-year.
Natural gas imports fell by 0.9% year-on-year. Cumulative imports so far this year were 3% lower than during the same period in 2025.

Coal output marked a full year without year-on-year growth

Coal output fell 10.1% year-on-year in July 2026, bringing production in the first seven months of 2026 down by 2.9% compared to the same period a year earlier. Coal output has now gone a full year without year-on-year growth.
Domestic natural gas output decreased 0.9% year-on-year in July, with total output across the first seven months of 2026 up 1.2%.
Crude oil production increased by 0.8%. Output in the first seven months increased by 0.9%.
Crude throughput dropped 15.8% year-on-year in July, as the fall in crude oil imports continued to feed through to refinery activity. Refiners are increasingly drawing on their own inventories to keep operations running.

Carbon-intensive industrial output continues to contract, with cement output falling by more than 10%

Crude steel output fell 3.6% year-on-year in July, declining by 3.1% over the year thus far. Output of steel products fell by 4.1% compared to a year earlier. Pig iron production also declined, falling 4.5% year-on-year.
Cement output continued to contract, falling 11.6% year-on-year in July, staying at its lowest level for the same period since 2020. Output in the first seven months of 2026 is down 8.6% year-on-year, reflecting the decline in China’s real estate sector.
Chemical fibre output decreased 1.7% year-on-year, extending a decline that began in April, when output fell for the first time in 22 months. Non-ferrous metal output remained elevated, up 2.5% year-on-year.
Sulfuric acid output fell by 14% due to the continued impacts of shipping disruptions in the Strait of Hormuz, affecting supplies of this key input for phosphate fertiliser production.

The steel and cement industries are the largest CO2 emitters in China, when emissions from their electricity use are included. They are also bellwethers of real estate, infrastructure, and other fixed-asset investments that play an outsized role in China’s emissions and economy. Sulfuric acid and chemical fibre output indicate wider trends in China’s emissions-intensive chemicals sector.

Tangshan blast furnace activity remains at multi-year high, as daily crude steel output reached a seven-year low

Blast furnaces for steel production remained active in the second week of August, with a starting rate of 82.7% and utilisation reaching 89.5%. Electric furnace operating rates stayed at 62.2%, slightly below the same period last year.
Daily pig iron output in late July 2026 was slightly below the level of the same period last year, while daily crude steel output reached a seven-year low for the period.
The operating rate of blast furnaces in Tangshan, China’s ‘steel capital’ and a significant source of air pollution in Beijing, reached 94.3% in early August, marking the fourth consecutive month where operating rates have reached a multiyear high.

Hebei Province industrial output is a bellwether of national priorities: when air quality and emissions are the priority, it is the most tightly regulated area due to its impact on Beijing’s pollution levels.

Wind capacity additions reach new record for June

In the first six months of 2026, China added:

72.1 gigawatts (GW) of solar power capacity, down 66% from a very high baseline in 2025, as developers rushed to meet a policy deadline to ensure their projects would be covered by the existing price-support framework;
38.6 GW of wind power capacity, down 25% from a similarly high baseline last year, but a lower drop than in solar as wind projects often have longer lead times. In the first six months of 2026, more wind capacity was added than in any full calendar year before 2025;
38.4 GW of thermal power capacity, up 49% from last year, significantly outstripping the growth in generation, leading to lower utilisation and higher curtailment of other power sources;
6 GW of hydro power capacity, up 53% from last year;
3.6 GW of nuclear power capacity, up from 0 GW in the same period last year.

In June 2026 alone, China added:

12.5 GW of solar power capacity, down 12% from June last year;
13.6 GW of wind power capacity, up 153% from last year, reaching a record high for the month of June. This year-on-year increase reflects a slump in June 2025 following the policy deadline;
6 GW of thermal power capacity, down 27% from last year;
1.9 GW of hydro power capacity; up 205% from last year;
No new nuclear power capacity; the same as June 2025.

Large-scale clean energy bases took the lead in wind and solar installations

Solar power installations this year are led by Jiangsu, Henan, Yunnan, and Sichuan. Yunnan and Sichuan’s strong showing is notable, as both are already major hydropower provinces and are set to host new hydro-wind-solar bases under the 15th Five-Year Plan (FYP).
Wind development was led by Inner Mongolia, Xinjiang, and Shandong. Inner Mongolia and Xinjiang are also part of the large-scale clean energy bases initiative under the 15th FYP.
Thermal (coal) power additions accelerated in Anhui, Guangdong, Sichuan, and Hunan. In the first sixth months of 2026, new coal power plants entering operation in China reached the highest first-half year level since 2016. Read more: China Coal Power Biannual Review – H1 2026

Solar production decline continued, as battery production remains robust

Solar cell production fell by 9.4% year-on-year in July, marking eleven consecutive months of decline. However, output remained more than 40% higher than 2024 levels, with 446 GW produced in the first seven months of 2026.

Battery production reached 218 GWh in July, a 45.5% increase from a year earlier, driven by robust demand from energy storage and export markets.

NEVs accounted for more than 60% of domestic vehicle sales for the first time

Domestic NEV sales set a new record in July, accounting for over 60% of sales for the first time with more than 1.5 million NEVs sold. This represents a 23.7% year-on-year increase.
New Energy Vehicle (NEV) production continued to grow in July, rising 29.9% year-on-year. Production in the first seven months of 2026 was up 9.5%. Overall vehicle production declined 3.4% in July, bringing the share of NEVs to 61% of all vehicles produced, up from 47% last year.
NEV exports surged by more than 150% year-on-year in July 2026, with monthly exports exceeding 500,000 vehicles for the second consecutive month, accounting for 53% of vehicle exports.

Relevant analysis by CREA:

Built for backup, contracted to run: China’s coal support system risks crowding out clean power | China Coal Power Biannual Review H1 2026
China’s new energy plan leaves emissions loose
China’s CO2 climbs 2% in early 2026 due to ‘wasted’ wind and solar
What drove China’s historic drop in power-sector emissions?
China’s new carbon metric leaves Germany-sized gap in its emissions
Reclaiming credibility in China’s steel industry: Climate ambition, financial resilience, and market trust
China’s 15th Five-Year Plan — Implications for climate and energy transition
Analysis: Clean energy drove more than a third of China’s GDP growth in 2025
Analysis: China’s CO2 emissions have now been ‘flat or falling’ for 21 months
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