China is set to build on its clean energy momentum in 2026, consolidating its global dominance while pushing ahead with domestic decarbonization. Even as the economy faces headwinds, Beijing has signaled its determination to deepen the transition. The draft of the 15th Five-Year Plan, released last year, for the first time frames China’s ambition to become a “strong energy country,” and elevates hydrogen and nuclear fusion as future strategic sectors. Over the past year, authorities have rolled out a steady stream of policies to support low-carbon development, including renewable capacity and consumption mandates, grid upgrades, energy-storage targets and guidelines for emerging sectors such as green hydrogen. Yet as China’s so-called “New Three” sectors — electric vehicles (EVs), solar panels and batteries — mature, state support has begun to ease, and their future pace of growth will be watched closely.
- China is set to maintain rapid renewables deployment despite policy shifts.
After years of expansion, China has accumulated vast renewable capacity. By the end of November, installed capacity of solar and wind power reached roughly 1,800 gigawatts, accounting for 47% of the country’s generation capacity, according to the government’s National Energy Administration (NEA). Installation growth slowed in the second half of last year after Beijing moved from fixed feed-in tariffs to market-based pricing mechanisms for new capacity commissioned after Jun. 1. Still, 2026 could see momentum pick up again, with policymakers continuing to back renewable build-out.
Beijing’s updated nationally determined contribution, announced in September, commits China to at least 3,600 GW of wind and solar capacity by 2035 — double today’s level. Industry experts expect the country to exceed that target as early as 2030, citing strong policy support, high manufacturing capacity utilization and, crucially, the integration of green-technology industries into regional economies.
As Beijing scales back financial support for renewables, it has taken steps to sustain renewables growth through a more flexible market framework and accelerated transmission infrastructure development. Since last year, provinces have begun launching wholesale electricity markets with auction schemes tailored to solar and wind. Advancing power‑market reforms — such as the national market rollout and green‑certificate trading — is further enabling system integration and expanding interregional electricity exchange, strengthening developer revenue streams, and supporting continued renewable deployment.
Grid expansion remains another core pillar of Beijing’s renewable strategy, helping China transition from capacity growth toward greater utilization. Beyond mandates for grid-scale energy-storage systems, China is accelerating construction of long-distance transmission lines linking renewable-rich western regions with demand centers in the east. On Dec. 31, the NEA released new guidelines aiming to raise west-to-east transmission capacity to 420 GW by 2030 and increase the share of solar and wind in transmitted electricity to 30%, up from about 17% today.
Investment in grid upgrades has surged accordingly. Spending exceeded 560 billion yuan ($80 billion) in the first 11 months of 2025 and is estimated to reach around 650 billion yuan ($93 billion) for the full year, NEA data shows. Consultancy Roland Berger projects that investment could climb to about 900 billion yuan ($129 billion) in 2026. CICC, a bank, estimates that grid investment between 2026 and 2030 could surpass 4.1 trillion yuan ($586.3 billion).
- EV adoption may be tested as national and local subsidies scale back.
EVs, a cornerstone of China’s cleantech strength, have seen rapid adoption: Industry data shows EVs accounting for 53% of auto sales in the first 11 months of 2025, up from 48% in full 2024 and just 5.8% five years earlier. Growth has been driven by fast technological progress, plunging costs, layered subsidies from central and local governments, discounts from automakers, an expanding charging network, and tax incentives that penalize internal-combustion engine (ICE) vehicles. One key policy has been a vehicle trade-in program introduced last year to stimulate domestic consumption. Under that scheme, EV buyers received subsidies of 20,000 yuan ($2,900) per EV, compared with 15,000 yuan ($2,140) for gasoline cars.
With Beijing’s announcement last week of an adjusted trade‑in program for 2026, earlier forecasts of even faster EV penetration are now met with mixed views — and sales will be closely monitored. Under the revised scheme, buyers replacing an old vehicle will receive a subsidy equivalent to 12% of the new car’s price, capped at 20,000 yuan ($2,860). Central support has been “noticeably reduced,” said a Shanghai-based industry expert, adding that “the shift to a proportional system means lower-priced cars receive smaller subsidies.” EVs will also be subject to a 5% purchase tax this year, rising to 10% in 2028, he added — bringing them in line with ICE cars.
“We can’t rule out a slight increase in [EV] sales this year, but it would already be positive if growth simply holds up,” the expert said.
Others take a more optimistic view, arguing that Beijing’s retreat marks the industry’s maturation and the beginning of healthier, market-driven growth. Affordability remains a core strength, underpinned by declining battery costs and fierce — sometimes destructive — price competition among automakers, a self‑defeating practice that authorities are expected to curb further this year.
“In certain segments, EVs now have a clear advantage, and consumers are unlikely to switch back,” said Cui Dongshu, secretary-general of the China Passenger Car Association, who expects EVs to account for around 60% of China’s auto market this year. In 2024, battery-electric vehicles reached price parity with ICE cars in both small-vehicle and SUV segments, and accounted for roughly 60% of sales in those categories, according to the International Energy Agency.
- Green hydrogen is likely to gain momentum as policy support kicks in.
Driven by energy-security concerns, diversification goals and ambitions for technological leadership, China has emerged as one of the most promising producers of renewable hydrogen and its derivatives, the Hydrogen Council, an industry body, noted in September. By the end of 2025, China’s green hydrogen–ammonia–methanol projects are expected to have built production capacity of around 290,000 tons per year, according to the Hydrogen Energy Industry Promotion Association (HEIPA), exceeding the country’s original 2025 target of 200,000 tons/yr. The China Hydrogen Alliance estimates that projects under construction total about 1.14 million tons of annual capacity, with planned capacity totaling 8 million tons.
| China’s Green Hydrogen Projects | |||||
| Renewable Hydrogen | In Operation | Under Construction | Planned | ||
| No. of Projects | 102 | 71 | 475 | ||
| Capacity (‘000 tons) | 268 | 1,140 | 7,997 | ||
| Input Power Type | Solar | Wind | Solar and Wind | Hydro | |
| Capacity (MW) | 763.5 | 137.0 | 1,349.0 | 14.5 | |
| % of Total | 33.7% | 6.1% | 59.6% | 0.6% | |
| Targeted Applications | Ammonia | Refining | Transportation | Methanol | Other |
| Capacity (MW) | 1,164.0 | 348.8 | 306.5 | 273.9 | 171.4 |
| % | 51.4% | 15.4% | 13.5% | 12.1% | 7.6% |
| Source: Energy Intelligence, China Hydrogen Alliance | |||||
Despite rapid build-out, the sector faces challenges from high costs, limited infrastructure, and, above all, a lack of clear end-use demand, a Shanghai-based expert said. While China can already produce renewable hydrogen at around $2 per kilogram, adoption has been constrained without a breakthrough application to drive meaningful demand, the source told Energy Intelligence in Beijing last October.
That dynamic may begin to change as China’s carbon market improves and the EU’s Carbon Border Adjustment Mechanism enters its mandatory enforcement phase, increasing pressure on industrial emitters to decarbonize, HEIPA says. In December, the National Development and Reform Commission, China’s state planning agency, said China would, from 2026, promote green-hydrogen applications, including replacing gray hydrogen in industry such as metallurgy and refining and adopting green maritime fuels.
In 2026, green hydrogen, ammonia and methanol projects are expected to add more than 200,000 tons/yr of new capacity, lifting cumulative built capacity above 500,000 tons/yr, HEIPA estimates. In addition to regional incentives for hydrogen capacity expansion, this year’s policies from the central government will prioritize hydrogen production directly linked to renewable power and the construction of long-distance hydrogen pipelines, the association said in a recent report.
The improved prospects for green hydrogen are also expected to reshape the electrolyzer market. Chinese electrolyzer technology has matured significantly after years of experimentation and development. “Our [Chinese] equipment is now stable and proven,” one executive from a leading manufacturer told Energy Intelligence. The market has doubled in size each year recently, and 2026 may see that trend continue, he said. After that, “a full industry breakout is likely in 2027 and 2028, driven by stronger policy support and mature technology,” the executive said.
- Chinese low-carbon energy firms will continue to push deeper into overseas markets.
China’s technology and cost leadership across low-carbon sectors will continue to have global repercussions in 2026, helping support domestic growth while contributing to decarbonization abroad. Customs data shows that China exported more than 3 million EVs between January and November 2025, up from about 2 million units in 2024. BYD said it delivered a total of 4.6 million EVs in 2025, with more than 1 million sold overseas for the first time.
As overcapacity and price competition weigh on domestic markets, Chinese firms are doubling down on overseas expansion, according to the Asia Society Policy Institute (ASPI). In 2026, Chinese clean-energy companies are likely to pursue a dual-track strategy — boosting exports to markets with fewer trade barriers, often developing economies, while investing in local manufacturing and upstream supply chains where incentives or regulations require it. In addition to the New Three sectors, Chinese green technologies such as wind and electrolyzers are advancing their presence in global markets.
But in policy terms, China is not expected to assume overt global leadership on climate change even as it expands its industrial footprint and the US retreats from the climate arena. Instead, Beijing is expected to follow a “talk less, do more” approach, said Li Shuo, director of ASPI’s China Climate Hub. The strategy reflects a strong emphasis on collective action and cautious climate diplomacy, he said, while maintaining engagement in multilateral forums and bilateral cooperation without taking on what it views as disproportionate burdens.
Chinese companies, by contrast, are increasingly willing to lead on the global stage. “We have clear advantages in both cost and quality compared with Western competitors,” the electrolyzer executive told Energy Intelligence.
