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Decarbonization efforts hindered by China’s slow progress on electricity market reforms


The reform of China’s electricity generation to move from a centrally planned operation (CPO) to a market-based system has progressed slowly over the past decade. The slow reform pace hindered the market-share reallocation over power plants with divergent carbon intensity and thus locked the carbon trajectory of China’s power sector. Here we analyse the effects of the delayed electricity market reform in terms of CO2 emissions. Constrained by a sequence of unique fairness regulations, a multi-timescale dispatch model is developed to quantify the CPO-induced CO2 emissions from China’s power sector. We find that continuing to generate electricity through the CPO has produced an additional 3 GtCO2 emissions over 2011–2019, an amount equivalent to the total emissions of India, which is the world’s fourth-largest carbon emitter. In some provinces, the level of extra emissions accounts for up to 20% of the annual power-related greenhouse gas (GHG) emissions. We find that national level GHG emissions have increased because the CPO over-allocated ~30% of the market shares of electricity generation to high-carbon power plants, including those in provinces that have been implementing energy-saving operation policies. In addition, we find the China’s growing investment in generation capacity has exacerbated the GHG emissions impact of the CPO, whereas China’s investment in fuel efficiency improvement has reduced CPO-related emissions by over 13%. Our discoveries manifest that the economic institution and its transition in the energy sector can substantially impact the GHG trajectory and thus play a critical role of the sustainability of human society.

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Fig. 1: Assessment of the carbon impact of the CPO.
Fig. 2: CPO’s nationwide carbon impact.
Fig. 3: CPO’s different carbon impacts by provinces and the associated mechanisms.
Fig. 4: Carbon impacts of the two protocols and their interactions.

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Data availability

The data that support the plots within this paper and other findings of this study are available as Source data.

Code availability

The code used in this study is available from the corresponding author upon request.


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We thank P. Zou for policy interpretation and interview design, and L. Chen for assistance on market simulation. We thank the National Natural Science Foundation of China no. 71921003, 72140005 and U1966204 for supporting B.Z., Y.Y. and J.W., respectively. We also acknowledge the support of the Institution for Interdisciplinary Information Core Technology, the Tsinghua University-China Three Gorges Corporation Joint Research Center for Climate Governance Mechanism and Green Low-Carbon Transformation Strategy, and the International Joint Mission on Climate Change and Carbon Neutrality.

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Authors and Affiliations



Y.Y., J.W., J.U. and B.Z. conceived and designed the research. Y.Y., J.W. and Q.C. developed the framework and formulated the theoretical model. Y.Y., J.U. and B.Z. wrote the introduction. Y.Y., J.W., Q.D. and S.L. carried out the data search. Y.Y., J.W., Q.C. and Q.D. carried out the simulations and analyses. All authors contributed to the discussions on the method and the writing of this article.

Corresponding author

Correspondence to Bing Zhang.

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Nature Sustainability thanks Laurence Delina and the other, anonymous, reviewers for their contribution to the peer review of this work.

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Supplementary information

Supplementary Information

Supplementary Discussion, Supplementary Fig. 1 and Supplementary Tables 1–7.

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Source data

Source Data Fig. 2

Statistical source data of changes in the CPO’s carbon impact, influence of carbon and market environments.

Source Data Fig. 3

Statistical source data of carbon impact, market environment and quota distributions.

Source Data Fig. 4

Statistical source data of carbon impacts of the two protocols and their interactions.

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Yu, Y., Wang, J., Chen, Q. et al. Decarbonization efforts hindered by China’s slow progress on electricity market reforms. Nat Sustain 6, 1006–1015 (2023).

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