How world's top CO2 emitter China became a major player in transition minerals and renewable energy

As countries worldwide rush towards renewable energy, China finds itself at the centre of global supply chains for the minerals we need for the energy transition (also known as critical minerals). 

China is the world’s largest consumer of nickel, cobalt, copper and lithium – minerals that are essential to electric cars, solar panels and electric grids.  

Crucially, it is also the biggest owner of global production of cobalt (42%), copper (14%), and rare earths (nearly 90%) and the third biggest owner of lithium production (16%). 

It also contributes more than 80% of the world's photovoltaic modules and 70% of wind power equipment and is the world's largest producer and consumer of new energy vehicles (NEVs). 

In 2023, China's battery electric vehicles (BEVs) held a 62% share of the global market. 

But how did China – the world’s largest emitter and the largest coal producer, importer and consumer – come to be a global leader in producing renewable energy? 

How did China become the world’s largest emitter of CO2?

Since the founding of the People’s Republic of China in 1949, China has transformed from one of the world’s poorest countries into one of its largest economies.  

This seismic shift was underpinned by an industrial revolution fuelled by China’s most critical and accessible energy source – coal.  

Coal mining expanded heavily during the country’s first and second Five Year Plans (FYP) (1953-1962), to fuel its burgeoning steel industry, electricity and to lay its industrial foundation.   

Major sites like the Daqing Oil Field and the Karamay Oil Field in the Northeast underwent large-scale exploration, gradually forming the backbone of China’s energy supply.  

The fifth FYP (1976-1980) resumed state-led investments in mines, transportation networks and power plants, marking the start of coal’s role as China’s economic engine.   

The Reform and Opening-up era starting in 1978 introduced market liberalisation, fostering township mines and local entrepreneurs in coal-rich regions like Shanxi and Inner Mongolia, creating a new economic class of "coal bosses".  

Associated infrastructure such as railways and roads continued to be built to transport coal from remote areas to industrial centres.  

By the 2000s, under the “West-to-East” energy projects and the “Great Western Development” strategy, China’s western coal resources were developed on a large scale to strengthen the national supply chain, boost industrialisation and support local economies.  

In 2007, the central government allocated 910 million yuan (equal to over a third of the national budget) to geological surveys to "seek coal" in the west.  

Supported by the continuous policy priority over time, coal has remained dominant in China’s energy consumption matrix from 75% in the 1990s to 55.3% in 2023.  

Pollute first, clean up later  

Environmental and health risks accompanied China's coal boom from the start. As industrial growth and coal dependence surged, widespread pollution has plagued rivers and damaged air quality.  

As early as in 1973, China held its first National Environmental Protection Conference, where speakers acknowledged for the first time that China faced significant environmental problems requiring serious policy and regulatory attention.  

Environmental conservation became a formal function of all levels of government with environmental protection agencies established from the central to local levels. Initial measures were taken to address severe pollution in cities and rivers.   

Subsequent milestones included the constitutional recognition of environmental protection in 1978 and its elevation to national policy in 1983, as well as landmark legislation such as water and land pollution prevention laws (1984, 1987), the Mineral Resource Law (1986) and its Implementation Rules (1994) and the Environmental Protection Law (1989).  

The first real recognition of coal’s environmental impact came in 1994 with the China Agenda 21, which acknowledged coal's dominance (fuelling 75% of energy consumption) and its role in severe pollution.  

However, during China’s industrial boom, economic priorities often overshadowed environmental concerns, and the "pollute first, clean up later" approach persisted. 

As industrial growth surged, coal dependence made China the world’s largest carbon emitter by the mid-2000s.  

By the 1980s, China had become the world’s third-largest acid rain region. And in 2013, Beijing’s "airpocalypse" saw smog levels exceed the World Health Organisation’s safe limit more than 30 times.  

A groundswell of public opposition to the environmental and health impact of coal and increased global scrutiny exposed the vulnerabilities in China’s coal-dependent energy supply and underscored the urgent need for diversification.  

How has China invested in renewable energy?

Following the 1973 oil crisis, China recognised that fossil fuels would eventually be depleted.  

Around 1980, the State Council established central and local energy research institutions and renewable energy offices within the central government, initiating comprehensive research and planning for renewable energy.   

But it was not until 1989 – when China began participating in the work of the Intergovernmental Panel on Climate Change (IPCC) – that the Chinese government started to recognise the connection between global climate change and energy consumption and responded to international criticism of its contribution to global carbon emission. 

China’s initial forays into renewable energy initially focused on hydropower to address electricity shortages. Biogas, fuelwood, wind and solar energy projects also began.  

China set ambitious renewable energy targets throughout the 2000s.  

In 2002, China’s commitment in the Johannesburg Earth Summit and approval of the Kyoto Protocol marked the beginning of its scaled-up renewable energy initiatives and participation in global efforts to tackle climate change.  

The same year, China enacted its Environmental Impact Assessment Law, which encouraged the public to participate in environmental impact assessments. This is widely regarded as the beginning of formally incorporating public voices into environmental governance in China. 

In 2005, the Renewable Energy Law was enacted and formed the policy framework for supporting renewable energy development in China, followed by various implementing measures, rules and standards over time.  

One year after the law passed, China’s production capacity of solar photovoltaic cells reached a record-breaking 300,000 kilowatts, making it home to over 10% of the world’s production capacity.  

Renewable energy at the time accounted for approximately 8% of China’s total primary energy consumption.  

In 2007, China issued its Medium- and Long-Term Development Plan for Renewable Energy, pledging that by 2020, non-fossil fuel energy would account for 15% of its total primary energy consumption.  

The 15% goal was significant at the time, as non-fossil energy generation was primarily dependent on hydropower and nuclear power, both of which involve lengthy construction cycles.  

To meet this target within a shorter timeframe, China focused on rapidly expanding wind and solar power generation.  

This played a pivotal role in driving a decade of rapid development in China's wind and photovoltaic power sectors after 2009.  

The original commitment was raised to 20% by 2030 in 2015 at the Paris COP.  

In 2009, a nationwide "Golden Sun Program" was launched, which provided subsidies, technological support and market incentives for solar projects.  

Although this programme came to an end in 2013 due to profit-driven fraud, poor implementation and monitoring, China’s photovoltaic industry continued to grow, with the Qinghai Tarlatan Photovoltaic Power Station and Dunhuang Photovoltaic Industrial Park becoming some of the largest photovoltaic projects in China and even the world.  

In addition, China’s National Energy Administration’s data shows that in the first half of 2024, renewable energy generation accounted for approximately 35.1% of the total electricity generated nationwide, among which wind and solar power together contributed about 20% of total electricity production.      

How China became the world’s key transition minerals supplier 

At the same time as China's coal boom in the 1970s, the government prioritised mining for rare earth elements (REEs).  

Dubbed the "industrial vitamin", REEs gained national importance as China developed technology for refining high-purity materials within six years, becoming a global leader in mineral refining by the 1990s.  

China's mass exports of rare earths reduced global prices dramatically, known as the "China Impact", with China producing over 85% of global output before 2014. 

But it was during the 2000’s that China really recognised the value of minerals for energy transition.  

In 2007, while coal, gold and iron ore remained the top three focal points for solid mineral exploration investments, copper, molybdenum, tin and tungsten also began attracting significant capital.  

The shift of attention to more minerals such as lithium, cobalt and nickel were driven by China’s increasing interest in the development of clean energy technologies, particularly NEVs.  

In 2009, the State Council in its Automobile Industry Adjustment and Revitalisation Plan outlined a national NEV development strategy and launched a so-called "Ten Cities, Thousand Vehicles" initiative.  

This symbolised the start of NEV industrialisation in China. 

In 2014, in its National Plan for Addressing Climate Change (2014-2020), China promoted EVs with tax incentives and prioritised low-carbon technology, including solar and wind power generation, large-scale renewable energy storage and grid integration, NEV technologies, and low-carbon alternative fuel technologies.  

With strong and consistent support from policies and subsidies, China's NEVs production reached 78,499 units in 2014, marking a 3.5-fold increase compared to the previous year.  

That same year, President Xi Jinping stated that NEVs are an essential path for China to transition from a major automobile producer to a strong automobile powerhouse.  

One year later, the "Made in China 2025" plan was launched, prioritising sectors including NEV that demand transition minerals like lithium, cobalt and rare earths. 

What next for China’s role in the transition mineral supply chain? 

From its coal-fuelled period of industrialisation to its dominance in the rare earth and lithium markets, China's journey to becoming a global leader in transition mineral production reflects decades of strategic planning, technological innovation and policy evolution. 

This transformation underscores a complex balancing act between economic growth, environmental sustainability and global ambition.   

As China continues to adapt, its regulatory frameworks for ensuring a responsible and sustainable mineral supply chain will play a crucial role in determining its role in the global green energy transition. 

Join us in our next instalment, as we explore China’s current regulatory framework on transparency, accountability, and sustainability in its mineral supply chains at home and overseas.