In September 2020, China announced that it would aim to peak its carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060. This move represents an important commitment by China to align its emissions targets with the levels of rapid and deep decarbonization needed to reduce the risks of climate change. As the largest emitter of carbon dioxide in the world annually, China faces daunting challenges in reaching this long-term net zero goal. A lasting nationwide transformation of the economy and energy system would be needed, and this will not happen without significant efforts by both the public and private sectors.

This note analyzes the key policy challenges for China’s carbon neutrality transition. It explores the technological and economic feasibility of moving to carbon-free economy and highlights the importance of developing a credible long-term roadmap. A comprehensive carbon mitigation policy package is recommended, followed by a discussion on complementary reform to manage risks and facilitate the transition.