Carbon budgeting and control
The UK is a world leader in counting carbon. In 2002, it became the first country to introduce a national emissions trading scheme (ETS), as a pilot for the EU’s Emissions Trading System which subsequently launched in 2005. In 2008, the UK’s Climate Change Act put into law a system of caps on emissions under a series of five-year ‘carbon budgets’, designed to ensure a smooth trajectory towards meeting long-term climate targets. In 2021, following the UK’s exit from the EU, the UK re-established its own standalone ETS.
China is developing its 15th Five-Year Plan, to be finalized in March 2025, covering the period 2026–30. In line with China’s pledge to achieve peak CO₂ emissions before 2030, all levels of government, sectors and industries must formulate action programmes in 2025 showing how they will achieve this in their respective domains, with each action programme required to have a timetable, roadmap and mission statement.
As China looks past its projected peak in emissions and designs a framework for achieving carbon neutrality by 2060, it can benefit from the UK’s ample expertise in carbon budgeting and control.
Carbon budgeting
Both countries have committed to long-term net zero emissions targets, with the UK aiming for 2050 as its deadline for achieving net zero and China aiming for 2060. Meeting these targets requires a sophisticated planning and monitoring framework. In the UK, this is provided by the system of carbon budgets and the progress reports to parliament prepared by the CCC.
China, meanwhile, is moving from a system based on controlling energy use to one focused on controlling emissions. In August 2024, a work plan to accelerate the establishment of a ‘dual carbon’ control system was approved by the State Council. The plan states that between 2026 and 2030, targets limiting carbon emissions and carbon intensity will replace those limiting energy use and energy intensity. While China already has carbon intensity targets, this will be the first time that the country has imposed an absolute limit on CO₂ emissions. Once emissions peak, and with the cap in place, China will need to ‘budget’ for carbon much as the UK does.
With over 15 years of carbon budgeting experience, and all its carbon budgets to date successfully met, the UK can provide valuable support to China as the latter seeks to integrate a carbon budget mechanism in its emerging dual carbon framework.
China’s nationwide cap will be disaggregated to the provincial and municipal levels, with local governments required to develop their own carbon budgets. This will be an enormously complex task, technically and politically, as the national government will need to strike the right balance between enabling local ownership of emissions reduction policies and ensuring the consistency of local emissions with the nationwide cap. The UK’s CCC has valuable experience to impart here, having proposed budgets and assessed progress for different sectors and for the four nations of the UK.
China’s dual carbon work plan states that establishing a measuring and monitoring system, including emissions accounting rules and carbon-footprint standards, will be a priority in 2025, and a specific work plan on this system was issued by the National Development and Reform Commission (NDRC) in November 2024. The UK’s well-established carbon accounting system could provide a useful reference for Chinese officials as they develop their own system.
China’s development of its first ever carbon budget, and the preparation of the 15th Five-Year Plan, coincides with an important stage in the UK carbon budgeting cycle. In February 2025, the CCC will publish its advice to the UK government for the Seventh Carbon Budget (for the period 2038–42), and for much of the year the committee will be engaged in outreach to explain and promote its proposals. This provides an excellent window of opportunity for practical UK–China cooperation, with potential for high and lasting impact.
Emissions trading and border adjustment
China announced plans for its own ETS in 2011. Pilot schemes in eight cities and provinces during the 2010s led to a domestic carbon trading system entering operation in 2021. The UK, a pioneer in emissions trading, has provided expertise and guidance to China throughout the ETS development process, including on aspects such as market design, regulatory oversight and linking to international systems.
On its launch in 2021, China’s ETS became the largest carbon market in the world despite applying only to the power sector, which accounts for 40 per cent of the country’s total carbon emissions. When, as planned, the steel, aluminium and cement sectors are added, the ETS is expected to cover 60 per cent of China’s emissions.
There is clear value in continued cooperation between China and the UK as China further develops its ETS and seeks to make it an effective tool for reducing emissions. Aspects that will have a major impact on the trajectory of Chinese – and therefore global – emissions include expanding the scheme to new sectors, phasing out free allocations of emissions permits, shifting from an intensity-based system to total emissions caps (see also ‘Carbon budgeting’, above), and aligning the scheme with the above-mentioned carbon budgets under dual carbon control.
There is also a strong rationale for bilateral technical cooperation on the UK’s Carbon Border Adjustment Mechanism (CBAM), which will take effect on 1 January 2027. Prior cooperation on methodologies and reporting, in advance of the entry into force of the CBAM, would be beneficial both for the UK, which will want to ensure the smooth introduction of this complex new measure, and for China, which is keen to better understand both the carbon content of its products and the CBAM’s implications for Chinese exporters.
Practical exchanges of this nature could also help to ease trade tensions over the CBAM by enabling the UK to demonstrate that its objective is not ‘green protectionism’ but rather to encourage trading partners to decarbonize in pursuit of shared global climate goals. Presenting and explaining plans for developing the UK CBAM, including the schedule for enlargement to other sectors, could be an effective trust-building measure.
Emissions modelling
Technical modelling plays a vital role in informing climate policy decision-making. It is through modelling the impact of different transition pathways on greenhouse gas emissions and economic performance that governments can credibly commit to emissions reduction targets, and so provide important long-term policy signals to domestic industries as well as to international counterparts.
In the absence of models that capture the full range of factors likely to determine future emissions, governments may lack the confidence to commit to ambitious targets. It follows that more accurate and comprehensive models could reduce this reluctance and encourage greater ambition. This is of particular salience given that both the UK and China put considerable emphasis on meeting the climate targets they set for themselves and share a commitment to climate policymaking grounded in the best available scientific evidence.
In the UK, the CCC is developing methods to quantify the uncertainty in its models, accounting for variables such as economic growth, population growth and the impact of weather on electricity generation. In China, better modelling is needed to manage the considerable uncertainty that exists around measuring methane emissions from coal mines, including the extent to which it will be possible in practice to mitigate methane leakage from such mines.
Given these challenges, experts from China and the UK could usefully work together to scrutinize the assumptions in their emissions modelling, thereby helping to put ambitious climate policy on a firmer footing. The two governments share an interest in improving their modelling capabilities, and have expertise to offer each other in this domain, notwithstanding restrictions on data sharing that may limit cooperation in sensitive areas such as energy.
Climate change mitigation
The UK’s success in integrating low-carbon technologies into its energy system, and China’s success in deploying these technologies at speed and at scale, present opportunities for mutual learning that could drive emissions reductions in both countries.
Low-carbon integration
China is adding variable renewable energy sources to its electricity grid at an unprecedented rate. At the same time, electricity consumption has grown rapidly as the economy has expanded, with the wide-scale deployment of EVs also significantly adding to power demand. Increasingly, too, climate change is emerging in its own right as an important driver of electricity consumption, as heatwaves lead to spikes in the use of air-conditioning.
This wholesale and simultaneous transformation of both supply and demand requires a new electricity management system. This is a major undertaking, and is key to decarbonizing China’s power sector: if successful, it will allow China to fully realize the potential of its renewable energy resources while accelerating the retirement of coal power, in line with the principle of ‘building the new before discarding the old’. Coal remains dominant in China, accounting for 60.5 per cent of power generation in 2023, and President Xi has pledged to reduce the use of coal over the period of China’s 15th Five-Year Plan (2026–30).
Chinese electricity system designers and grid managers could learn valuable lessons from the UK’s experience of smoothly phasing out coal and introducing renewables. The UK has successfully struck a balance between, on the one hand, maintaining a liberalized and competitive power market and, on the other, using policy tools such as contracts-for-difference for renewables to lower emissions.
Chinese electricity system designers and grid managers could learn valuable lessons from the UK’s experience of smoothly phasing out coal and introducing renewables.
The UK is embarking on a new phase of power market reform and system governance, with its review of electricity market arrangements (REMA) set to conclude in mid-2025. If UK planners were to share their experiences of this process with counterparts in China, and collaborate with China on new digital tools for enabling system flexibility and efficiency, this could help China better integrate renewable sources of energy into its grid. In so doing, China would be better placed to maximize the emissions reduction potential of its remarkable success in deploying low-carbon technologies.
Deployment of low-carbon technologies
Until relatively recently, the dominant model of climate change and clean energy cooperation between developed countries (including the UK) and China has involved the former providing the latter with technological know-how, with the goal of accelerating the Chinese energy transition and/or obtaining commercial benefits such as access to the Chinese market. Now, however, the world is learning from China. Other countries are seeking insights from China’s domestic innovation in areas such as EV batteries, and from its experience of deploying low-carbon technologies at speed and at scale.
Gaining an in-depth understanding of how China has been so successful in developing and deploying low-carbon technologies would help to accelerate the UK’s own energy transition. The UK government has set a target of obtaining at least 95 per cent of its electricity from zero-carbon sources by 2030. This will require scaling up deployment of all clean technologies.
One way in which the UK could usefully benefit from China’s insights is in the widespread deployment of rooftop solar panels. China’s Whole County PV programme has had considerable success in boosting uptake of solar photovoltaic (PV) systems in the east of the country, where land is scarce, thereby reducing demand for energy from the coal-dominated grid and lowering bills for residents. The UK’s secretary of state for energy security and net zero, Ed Miliband, has spoken of his desire to ‘unleash a UK solar rooftop revolution’.
Technical exchange with China would also be valuable for the UK in supporting an expansion of EV charging infrastructure, a sector in which China leads the world by a significant margin. In order to meet a UK government target of providing 300,000 public charging points by 2030, annual installation rates in the UK will need to have trebled by the end of the decade.
Climate risk and climate change adaptation
China and the UK face different sets of climate-related vulnerabilities. Nevertheless, assessing the risks and putting in place governance practices to tackle them is a shared challenge, and has been an important component of UK–China climate cooperation for more than a decade, notably under the UK–China Cooperation on Climate Change Risk Assessment programme that began in 2013 (see above).
Risk assessment
The governance frameworks of both the UK and China make provision for systematic assessment of the risks of climate change. In the UK, this is done through the climate change risk assessment (CCRA), published every five years since 2012. In China, it is done through periodic national assessment reports, published every four to six years since 2002.
Risk assessment is a dynamic process: understanding of climate risks continually develops and evolves. For example, growing appreciation of ‘cascading’ climate risks from abroad led the UK to incorporate the category of ‘risks to the UK from climate change impacts overseas’ in its assessment framework for the third CCRA in 2022. The rising profile of cascading risks in international climate policy thinking underscores the importance of ongoing bilateral exchanges on climate risk assessment.
In terms of specific potential exchanges of information, expertise and tools, it would be valuable for the UK and China to compare the instruments each currently uses to assess climate risks and their impacts. For example, the instruments China used in its 2020 comprehensive national survey on natural disaster risk could be instructive for UK planners. This comparison process could be extended to technical definitions of individual risks, such as heatwaves and floods, and the tools used to measure them.
China and the UK could also develop their existing joint work on risk assessment to consider risks to nature, building on research into the links between climate change and biodiversity loss carried out under the UK–China Cooperation on Climate Change Risk Assessment programme. This could tie in with pursuit of the goals of the 2022 Kunming-Montreal Global Biodiversity Framework (GBF), which China played a key role in delivering.
China and the UK could collaborate on further research on the co-governance of climate and nature, developing methods and indicators for assessing, quantifying and addressing nature-related risks and impacts, developing standards for nature finance, and identifying new possibilities for investing in nature.
Adaptation finance
As climate change impacts increase, countries around the world are grappling with the question of how to pay for climate change adaptation. The UK and China are no exception, although at their respective levels of economic development they are comparatively better equipped to do so than are many other countries.
By providing a clear economic justification for public and private investment in climate change adaptation, attributing a monetary value to adaptation actions can increase financial flows to the relevant sectors and initiatives. This can allow adaptation measures to be presented not simply as a cost, but as an investment with a range of ‘dividends’ – from the avoidance of financial losses to the provision of economic, development, social and environmental co-benefits that are enjoyed whether or not the climate risk comes to pass.
The CCC’s independent assessment of climate risk, which will be delivered in 2026 and will inform the UK government’s fourth CCRA, will focus on the economics of adaptation. Meanwhile, China is keen to establish a scientifically rigorous approach to a policy area it sees as increasingly critical. As such, China and the UK have a shared interest in joint research to develop the economic rationale for adaptation finance. There would also be benefit in examining the sources of adaptation finance and tools of delivery available to the two governments, and in reflecting on what can be learned from the features and operations of the mechanisms that are planned or in use.
Measuring adaptation progress
China is keen to better understand how climate risk governance can be devolved to local authorities and specific sectors. The UK is seen as one of the most advanced countries in this regard. As China implements its National Adaptation Strategy, it is looking to develop mechanisms to ensure that actors at different levels do what is required to address the climate risks identified in risk assessment processes. In the UK, meanwhile, the CCC is in the process of defining metrics and targets for adaptation progress, to answer the question of what a UK that is well adapted to climate change looks like. Joint research on metrics, targets and accountability mechanisms for adaptation is thus an area of mutual interest, and presents an opportunity for practical exchange.
Integrating mitigation and adaptation
Despite the clear logic of taking an integrated approach to climate change mitigation and adaptation, the two are often treated separately. There is, however, appetite on the parts of the UK and China to pursue these two dimensions of climate action in a holistic way. In the UK, the CCC has recently been restructured to reflect this priority. In 2023, notably, it prepared a series of recommendations for the Welsh government on integrating mitigation and adaptation agendas.
Since the release of its National Programme to Combat Climate Change in 2007, China has consistently emphasized the need to place equal emphasis on mitigation and adaptation. As the country faces worsening climate impacts, and accelerates its low-carbon transition, officials are keen to understand what pursuing the two together looks like in practice.
At a minimum, integrating mitigation and adaptation requires that the infrastructure relied on to mitigate climate change, such as electricity pylons, be made resilient to physical climate risk. However, integration can also encompass less obvious measures, such as requiring that houses are systematically made resilient to future climate change, for example through water-efficiency devices or property-level flood protection, at the same time as emissions-reducing devices such as heat pumps are fitted. Efficient, integrated strategies such as these minimize disruption and lower costs.
China and the UK could usefully consider jointly developing the systems-thinking needed for the successful and effective integration of mitigation and adaptation.
City-level policymaking, in particular, provides opportunities for this type of bilateral cooperation. Already there has been collaboration on sustainable urban development initiatives, beginning in 2007 with the UK–China Sustainable Cities Initiative, which facilitated expert exchanges and fostered business collaboration in cities such as Wuhan and Chongqing. Recent projects such as that between Tsinghua University and University College London on low-carbon buildings could provide a basis for further cooperation.
Supporting international climate action
Plurilateral cooperation
The UK and China could boost the impact of their bilateral climate cooperation by bringing in strategically chosen third countries. A clear candidate in the near term for this sort of ‘plurilateral’ arrangement is Brazil, with which both the UK and China enjoy good bilateral relations. During the visit of President Luiz Inácio Lula da Silva to Beijing in April 2023, the Chinese and Brazilian governments committed to ‘broadening, deepening and diversifying’ their bilateral cooperation on climate change. Meanwhile, under the Keir Starmer government in the UK, climate change has quickly become central to the UK–Brazil relationship. Brazil, which will host the UN’s COP30 climate summit at the end of 2025, is a respected and constructive international actor on climate and the environment.
The UK and China could boost the impact of their bilateral climate cooperation by bringing in strategically chosen third countries. A clear candidate for this sort of ‘plurilateral’ arrangement is Brazil.
One area of focus for potential China–UK–Brazil collaboration could be nature. Protecting and restoring natural systems is integral to limiting global temperature rise: terrestrial and marine ecosystems, such as forests and oceans, absorbed 54 per cent of greenhouse gas emissions from human activities in 2012–22. Biologically ‘megadiverse’ Brazil counts more forest within its borders than any country other than Russia.
China is Brazil’s largest trading partner by far, and growing Chinese demand for soybeans and beef has been linked to illegal deforestation in the Amazon. President Xi and his Brazilian counterpart, President Lula, have committed to work together to combat illegal logging and deforestation.
The UK, which appointed Ruth Davis as its first ever special representative for nature in October 2024, to work alongside Rachel Kyte as climate envoy, plans to spend at least £3 billion of its £11.6 billion international climate finance commitment between 2021/22 and 2025/26 on the protection, restoration and sustainable management of nature. During a visit to Brazil by the UK secretary of state for energy security and net zero, Ed Miliband, in August 2024, he and his Brazilian counterparts pledged to deepen cooperation on tackling deforestation.
A further area of potential collaboration between China, the UK and Brazil is industrial decarbonization. Since December 2023, the UK and Brazil have been cooperating on policy ‘hubs’ designed to promote industrial decarbonization and support the development of hydrogen clusters (zones in which enterprises collaborate in the production and use of hydrogen for different purposes). China and Brazil have been seeking to deepen and widen similar relationships in a variety of areas. During President Xi’s state visit to Brazil in November 2024, the two countries signed 37 bilateral agreements covering sectors including industry, energy and sustainable development.
Beyond working with Brazil alone, China and the UK could combine their respective resources, expertise and influence to assist a wider range of developing countries in decarbonizing electricity systems and building resilience to climate impacts. Projects under this sort of ‘South–North–South’ cooperation could build on China–UK complementarities or existing areas of cooperation to create capabilities and synergies that might not be achievable in isolation. Potentially interesting options might include initiatives on deploying and integrating distributed solar power systems, or joint capacity-building on climate risk management. This mode of cooperation is likely to be most effective in countries, regions or cities where the UK and China have their own existing projects.
Green finance
China and the UK have a shared history of collaboration on green finance. Important joint initiatives in recent years have included the UK–China Green Finance Taskforce and the UK–China Green Finance Centre. At the 11th UK–China Economic and Financial Dialogue, in January 2025, the two countries reiterated their ‘recognition of each other as primary partners in green finance’.
The UK provided substantial support in helping China ‘green’ its Belt and Road Initiative (BRI), encouraging the financing of sustainable infrastructure projects across Asia, Africa and Europe. In 2018, the UK and China jointly published a set of voluntary Green Investment Principles for the BRI. To date, there are 49 signatories – mostly financial institutions – to these principles, along with 20 supporters and three observers.
The UK and China also have experience of working together to promote multilateral agreements and standards in green finance. The two countries’ central banks, the People’s Bank of China and the Bank of England, co-chaired the G20 Green Finance Study Group (GFSG), established during China’s G20 presidency in 2016. After a hiatus, the group was re-established in 2021 as the Sustainable Finance Working Group (SFWG), with China and the US as co-chairs. The UK and China could usefully consider how they might work together to increase the effectiveness of the G20 SFWG, as well as that of other multilateral finance forums of which the two countries are important members, such as the EU-led International Platform on Sustainable Finance.
As an early member of the China-headquartered Asian Infrastructure Investment Bank (AIIB), and a major contributor to the World Bank, the UK has an important bridging role to play as the two institutions look to strengthen their green finance standards.
There may also be value in joint UK–China research on private sector climate finance. Developing a shared understanding of what should qualify as climate finance, and of the financial and non-financial barriers to investment, would be an important contribution at a time when public finance continues to fall far short of what is needed.
The resumption, in January 2025, of the UK–China Economic and Financial Dialogue, including the announcement that China’s first renminbi-denominated sovereign green bond would be listed in London, should give fresh momentum to the two countries’ work on green finance.
Early-warning systems
The Climate Science for Service Partnership for China (CSSP) is a collaborative climate science initiative between the UK’s Met Office, the China Meteorological Administration, and the Institute of Atmospheric Physics at the Chinese Academy of Sciences. Since its establishment in 2014, the CSSP has convened meetings and discussions involving more than 200 scientists from 20 research organizations in the UK and China, produced over 400 peer-reviewed studies, and enabled the development of prototype climate services to boost resilience to climate change. The CSSP is an important example of how scientists can successfully work across borders to address shared challenges. As such, it could potentially serve internationally as a model for bilateral climate science collaboration.
As extreme weather events become more frequent and more severe, climate services of the sort developed by the CSSP are growing in importance. Early-warning systems have been identified as an effective way to limit the damage climate change causes to human societies, from destruction of infrastructure to loss of life. In recognition of this, UN secretary-general António Guterres launched the Early Warnings For All initiative in 2022, with the aim of ensuring that ‘everyone on Earth is protected from hazardous weather, water, or climate events through life-saving early warning systems by the end of 2027’. Rapid advances in forecasting and prediction, coupled with widespread penetration of mobile phones, are driving progress towards this goal.
With a history of cooperation on climate science and forecasting, and political will on both sides to share this expertise with countries on the front line of climate change, there is a clear rationale for China and the UK to coordinate more closely on early-warning systems.
At COP29 in November 2024, Chinese vice-premier Ding Xuexiang emphasized China’s support for international cooperation on early-warning systems, and announced a series of measures to help establish a global early-warning network. These included improving interconnectivity between different early-warning systems and sharing China’s system with developing countries. For its part, the UK Met Office has developed early-warning services in countries including Tanzania and the Philippines. At COP29, UK development minister Anneliese Dodds announced a new funding package for the Weather and Climate Information Services (WISER) Africa programme.
China and the UK increasingly integrate disaster-risk reduction in their broader national climate adaptation strategies. The UK–China Cooperation on Climate Change Risk Assessment programme notably involved collaboration on flood forecasting and environmental monitoring, both of which are essential in improving disaster response times and protecting vulnerable populations.
With a history of cooperation on climate science and forecasting, and political will on both sides to share this expertise with countries on the front line of climate change, there is a clear rationale for China and the UK to coordinate more closely on early-warning systems and lead efforts to develop global coverage by such systems.
Multilateral processes
The coming year will be pivotal for global efforts to combat climate change. Ahead of COP30, which will take place in Belém, Brazil in November 2025, governments around the world are due to share the third iteration of their nationally determined contributions (NDCs), outlining their plans for reducing emissions and increasing adaptation and resilience by 2035.
Increasing the ambition of these updated NDCs so that they better align with the Paris Agreement’s temperature goals poses a significant challenge. The expected exit of the US from international climate diplomacy and the anticipated repeal of domestic climate policies under the second Trump administration will make this more challenging still. Under these circumstances, countries that are firmly committed to addressing climate change have a more important role to play.
This provides an opportunity for China and the UK to raise their profile. At COP29, both countries demonstrated their desire to show climate leadership, with the UK using the conference to announce a revised NDC, making it one of the first countries to formally update its climate targets. The UK’s new NDC is ambitious, committing to reducing the country’s greenhouse gas emissions by at least 81 per cent by 2035. China also made its presence felt at COP29: early in the conference, Chinese vice-premier Ding made public, for the first time, details of China’s climate funding for developing countries – more than RMB 177 billion (US$24.5 billion) since 2016 – constituting an important signal and providing a vital benchmark for climate finance negotiations.
The UK and China should now consider how, together, they can provide bilateral leadership to support the multilateral climate process and push other countries to go further.