China and Climate: China Releases Energy System Five-Year Plan

China will aim to install 3,500 gigawatts of renewables capacity by rolling out nuclear energy construction, onshore and offshore wind and solar resources, smart grids and energy storage systems, and a national unified electricity market for green certification and pricing. Charging infrastructure will also double, reaching forty million charging stations. Altogether, those efforts are projected to raise the country’s total annual energy production capacity from 5.13 billion tons in 2026 to 5.8 billion tons in 2030. Such outlined investments are expected to exceed approximately $2.94 trillion.  

As for fossil fuels, China plans for a stable annual crude-oil production at about two hundred million metric tons, and natural gas output is expected to continue growing, leading to stronger oil and gas exploration. The country will carry that out by continuing to expand gas pipeline infrastructure and developing five major coal-supply bases and production-capacity reserves.  

China’s dual-edged strategy thus reflects a broader geopolitical one that weathers large-scale market disruptions by spearheading expansive energy diversification. 

By substantially cutting crude-oil imports and likely releasing some of its strategic oil reserves, China has helped stabilize global oil prices. Those actions allowed it to absorb a significant portion of the oil supply shock as fighting choked off shipping in the Strait of Hormuz.  

Analysts have called that absorption “the most important thing” to come out of the war in Iran. But although those stabilizing actions are temporary and signify the extraordinary market power of China’s strategic crude-oil reserves, why China would take such drastic action is less clear. At first glance, higher oil prices would clearly benefit China’s clean tech exports. CFR expert David M. Hart has opined, however, that those clean tech exports only compose a small share of China’s total exports, and China likely wants to limit the closure’s detriment to the purchasing power of the customers of its other, much larger arenas of trade. Eventually, though, the closure will likely increase demand for China’s clean tech. But the dust in Iran needs to settle first. 

China’s Regulations on the Implementation of the Mineral Resources Law took effect this June to improve the governance and development of its domestic critical mineral resources and related supply chains. Among the seventy-nine articles listed, key themes include how to grant exploration and mining licenses, how to meet environmental standards in mining areas, and how public and private actors can jointly stockpile critical minerals. The overall move signals China’s push forward to secure strategic minerals as a matter of national security. 

This legislation came ahead of the fifty-second Group of Seven (G7) in Évian-les-Bains, France, where world leaders announced the Critical Minerals Resilience and Production Alliance, a coordinated push to secure critical minerals for key supply chains, such as renewable-energy technologies. Of note, the declaration outlines a goal to reduce reliance on single suppliers outside the G7 and partner countries for rare earths and permanent magnets to under 60 percent by 2030, with an ambition to reach 50 percent as soon as possible. Many have understood that ambition as an implicit nod to China, which produces over 90 percent of the world’s supply. In response, China’s foreign ministry urged the G7 to “stop disrupting the international trade order” with “self-made rules.”   

After Canadian Prime Minister Mark Carney and Chinese President Xi Jinping’s preliminary trade deal in January of 2026, Geely Holding Group’s Lotus Eletre will be the first Chinese-owned and -built electric vehicle (EV) to enter the Canadian market at a reduced tariff rate of 6.1 percent. Built in Geely’s manufacturing plant in Wuhan, the luxury SUV will retail at C$119,900, down from C$313,500. Carney has previously mentioned that China has been a more “predictable” partner than the United States; Canada’s connections to its neighbor, he says, have devolved into “weaknesses.” 

China’s ambassador to Canada, Wang Di, has reported that other Chinese brands, including Chery and BYD, have been in discussion with Canadian government agencies about following Lotus’s lead. Already, those brands have brought models to test Canadian conditions, signaling that the Lotus deal may be the first of many as Canada diversifies its trade relations. 

While discussions of the Power of Siberia 2 pipeline during the May 2026 bilateral meeting between Xi and Russian President Vladimir Putin have stalled, China is preparing to receive Russian gas elsewhere. According to Reuters, China is readying a second terminal in Shandong Province to receive liquefied natural gas (LNG) from Russia’s Arctic LNG 2, which is currently under sanctions. The terminal is expected to be ready in October 2026 with a capacity to receive five million tons a year. An additional terminal would allow China to import more Russian LNG, and Reuters reported that Novatek has cut prices to attract Chinese buyers since August 2025. The asymmetry in the relationship is clear. China buys on its terms; Russia, desperate for export markets, obliges. 

On June 12, 2026, the EU Council agreed to extend the Carbon Border Adjustment Mechanism (CBAM), which currently covers mostly raw materials, to cover downstream products as well. The extension, which would come into effect on January 1, 2028, still requires negotiations between the EU Council and the European Parliament before it is finalized. But it is likely that China, as it was during the first iteration of the CBAM, will be the nation most impacted by this move. When CBAM first came out, Chinese officials criticized it, saying it would “unfairly penalize developing countries,” while also characterizing Europe’s approach to trade as “defensive.” 

While the U.S. is not following Europe’s lead on taxing carbon, the Trump administration is reportedly drafting an energy inverter ban aimed at foreign companies—a move similar to inverter restrictions put in place by the EU in the spring of 2026. The moves will and do impact invertor exports coming out of China. Responding to a request for comment by Reuters, the Chinese Embassy described a potential U.S. ban as “overstretching the concept of national security.”