China Posts First Thermal Power Decline in a Decade as EV Sales Cut Oil Demand
Ember data show clean power absorbed China's 5% demand growth in 2025, while a 9% oil consumption drop in Q2 signals the transition is reaching liquid fuel markets.
China's thermal power generation fell 0.7% in 2025, the first annual decline since 2015, even as total electricity demand rose 5%, according to Ember's China Energy Transition Review 2026, published on September 8 (2026-09-08). Wind and solar covered the entire demand increase. A 5% demand year absorbed entirely by clean generation, with fossil-fuel dispatch actually shrinking, had not occurred in a decade.5
Crude markets are registering a related shift. China's oil consumption fell 9% year on year in the second quarter as expensive crude accelerated adoption of electric cars, trucks, rail, and industrial equipment, OilPrice.com reported on September 3 (2026-09-03). ICE Brent crude front-month was at $103.84 per barrel on Thursday (2026-09-17), down 1.04% on the session.3
Electric vehicles accounted for roughly 67% of new passenger-vehicle sales in China by June 2026 (2026-06-30), Ember said. Electric trucks moved faster: sales more than doubled in both 2024 and 2025, lifting their share of new registrations to 26%. Trucks carry an outsized weight in diesel demand curves. That penetration rate is commercially significant for middle-distillate markets globally.5
Storage backed the clean-power surge. China installed around 60% of the world's new battery storage capacity in 2025, with year-on-year installations up 84%, Ember found. Surplus wind and solar output can now be dispatched during peak demand periods rather than curtailed, reducing the thermal backup generation that previously bridged shortfalls.5
Coal imports reflect the same pressures. China's coal imports fell 9.6% from 2024 to 490 million tonnes, driven by higher domestic production and the dip in thermal generation, Bloomberg reported, citing official import data. Newcastle coal physical was at $139.05 per tonne on Thursday (2026-09-17).2
Scale still qualifies the headline. China burned 4.9 billion tonnes of coal last year — more than half of global consumption. Electricity fulfils close to 30% of China's final energy demand, already above the EU and US figure of just over 20%, the Economist noted. China's generation base grew roughly 6% per year since 2014; in the decade to 2024, it added 4,273 terawatt-hours of annual output, more than 90% of the United States' entire 2024 total. A 0.7% dip in thermal dispatch is a directional shift, not a structural dismantling of coal's role.1
Beijing has pledged a 17% cut in carbon intensity, Bloomberg reported, a target that frames the country's transition commitments for the current planning period. But the government's five-year plan covering 2026-2030 did not specify a year for coal production to peak and set no hard output ceiling, Carbon Brief reported on August 20 (2026-08-20), citing Xi Jinping's public climate statements. The plan revised down a coal reserve-capacity target from an earlier figure without mandating a production cap.4
For traders, ICE Brent above $100 and Newcastle coal physical at $139/tonne suggest markets are not yet pricing sustained demand erosion from China. A cold winter or a surge in industrial output can reverse a 0.7% annual thermal generation decline within months; that seasonal sensitivity keeps coal and crude shorts from becoming a consensus position.
JKM Asian LNG was at $27.22 per MMBtu on Thursday (2026-09-17). If China's gas-fired generation follows thermal coal lower — which Ember's data do not yet confirm for gas specifically — the JKM benchmark would register the shift before European hubs. China's monthly power generation releases are the nearest data points for determining whether the 2025 thermal pullback carries into 2026.5