AsianFin -- Coal, gas, and oil are often grouped together as the three major fossil fuels, yet from a carbon emissions perspective, natural gas produces significantly less carbon than coal or oil. Research consistently shows that burning natural gas emits 25–30% less carbon than oil and about 50% less than coal for the same energy output. This duality is why natural gas is both classified as a fossil fuel and considered a “cleaner” energy source.
According to a young scholar in macroeconomics, official U.S. narratives and research led by government or oil-and-gas interests often highlight natural gas in studies focused on public utilities. The International Gas Union (IGU) reports that as of 2024, gas-fired power generation accounted for 23% of global electricity output, while in the U.S., the figure reached 43%, with nearly all new electricity supply in that year coming from gas-fired plants. With former President Trump—an advocate for oil and gas—returning to the White House, natural gas is receiving renewed policy attention, reinforcing expectations of strong development prospects.
In most developed countries across Europe and North America, gas-fired power is more accessible and economical than coal, making its deployment feasible regardless of net-zero carbon targets. Yet in China, gas-fired power accounted for only 3% of electricity generation in 2024. Under the country’s ambitious “dual carbon” targets, the future role of this relatively clean fossil fuel remains uncertain.
China’s limited reliance on gas-fired power largely stems from its natural resource endowment—rich in coal, lacking in oil, and short on natural gas. Most imported gas is prioritized for heating, with the coal-to-gas transition in heating a key policy to reduce pollutant emissions.
In China’s new energy-focused power system, gas-fired power is unlikely to lead as it does in the U.S. or Japan. Instead, its role is primarily as a regulator, balancing peak load and frequency fluctuations from intermittent renewable energy sources.
Data from the China Electricity Council shows that as of 2024, coal-fired power accounted for 55% of total electricity generation. Wind and solar combined contributed 18%, rising to 24.7% by July 2025, while hydropower accounted for 14%. Gas-fired power, by comparison, held nearly 4% of installed capacity but only 3% of generation, highlighting its relatively low efficiency.
In future energy planning, neither coal nor gas is expected to serve as a primary source of power. Instead, coal and gas will provide peak shaving, frequency regulation, and system backup, complementing wind and solar, which will dominate new energy generation.
At the same time, energy storage is emerging as a major regulator within the “generation-grid-load-storage” framework. The central government has prioritized large-scale energy storage development. On September 12, 2025, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) released a special action plan for 2025–2027, targeting 180 million kilowatts of new energy storage capacity by 2027, representing nearly an 80% increase from mid-2025.
Under the dual carbon plan, coal power is slated to gradually decline, with peak emissions expected before 2030. The shift toward renewables is inevitable, but questions remain about how renewables will manage peak load and ensure system reliability.
Academician Jiang Yi of the Chinese Academy of Engineering has argued that China could leap directly from a coal-dominated era to a low-carbon electricity era, bypassing a two-stage “coal-to-gas then gas-to-electricity” transformation. If such a path is pursued, gas-fired power may have limited room in the power mix.
Public consultations in 2021 even explored restricting new gas-fired power units, reflecting concerns over volatile natural gas prices. Many experts suggest that the regulatory role of gas-fired power could be supplemented by energy storage technologies, reducing reliance on fossil fuels.
At a forum in September 2025, Cui Yijun, Deputy Director of the Global Sustainable Development Center at the University of Maryland, emphasized that China’s robust grid and growing energy storage sector could mitigate reliance on gas power, enabling quicker reductions in coal usage and facilitating the renewable transition.
Yet, whether energy storage alone can fill the gap remains debated. Barron’s China highlighted that current pricing mechanisms and business models for energy storage cannot yet support fully market-oriented operations, limiting its effectiveness in balancing supply and demand.
Yu Han, Senior Market Analysis Manager at Total, noted that as the share of new energy increases, so does the need for flexible adjustment resources. Currently, finding the optimal balance among energy storage, coal, and gas power in terms of economics and technology remains challenging.
Despite uncertainties, gas-fired power offers advantages: short start-up times, rapid ramp-up, and wide adjustment ranges, making it suitable for peak shaving, frequency regulation, and backup power. It can also participate in combined heat and power (CHP) and other revenue models, providing potential returns on investment.
China has taken steps to enhance the economic viability of gas-fired power. In July 2025, Guangdong province issued a notice adjusting capacity electricity prices for coal and gas, supporting gas power participation in electricity markets while focusing on system regulation.
Reports by KPMG and Sinopec Economics & Development Research Institute emphasize natural gas’s growing role as a flexible, low-carbon energy source, increasingly seen as complementary to renewables. Gas-fired power is expected to see nearly 40% growth in consumption by China’s energy consumption peak phase before 2035, accounting for 24% of total energy growth.
However, core economic challenges remain. Tang Tai points out that gas prices are the biggest variable cost, affecting the profitability of gas-fired power. Experts advocate expanding domestic gas exploration, reforming pricing mechanisms, diversifying imports, and strengthening long-term supply contracts to ensure supply security and economic efficiency.
China has achieved remarkable progress in pollution control, carbon reduction, and new energy development, but implementing the dual carbon targets remains complex.
By 2024, China had already fulfilled its Nationally Determined Contribution (NDC) commitments for installed wind and solar capacity, exceeding 1.2 billion kilowatts. Yet, meeting carbon emissions and energy intensity targetscontinues to pose challenges.
Electrification rates have surpassed 28%, higher than in many developed economies. By 2030, electrification is projected to reach 35%, exceeding the OECD average by 8–10 percentage points. However, the pace of electrification outstrips new energy capacity growth, requiring fossil fuel generation to fill gaps—a phenomenon sometimes called “coal power resurgence”, shifting carbon emission responsibilities to the power sector.
On September 24, 2025, China announced updated NDCs: by 2035, net greenhouse gas emissions will fall 7–10% from their peak, non-fossil energy will account for over 30% of total consumption, and wind and solar installed capacity will reach 3.6 billion kilowatts.
While policy and research support is generally optimistic, gas-fired power faces structural constraints. Its carbon footprint is lower than coal, yet it is still considered a fossil fuel and excluded from non-fossil energy statistics. Additionally, domestic gas supply is limited, prioritized for heating rather than power generation, placing pressure on investment returns.
Recent policies, including capacity pricing reforms and inter-provincial electricity trading, offer new opportunities for gas-fired power. Yet realizing this potential requires clear signals from policymakers and proactive market participation.
In sum, gas-fired power in China occupies a delicate middle ground: cleaner than coal, more stable than intermittent renewables, yet constrained by resource limits, policy frameworks, and market economics. It is poised to serve as a regulatory and backup resource, while the future expansion of renewables and energy storage technologies gradually reshape the power landscape.
