Dual Carbon Goals (Carbon Peaking and Carbon Neutrality)

The "Dual Carbon" goals represent China's solemn commitment to the world: striving to peak carbon dioxide emissions before 2030 and aiming to achieve carbon neutrality before 2060. Serving as the core strategy driving China's comprehensive green economic and social transformation, the Dual Carbon goals have evolved from a conceptual vision into quantifiable, verifiable hard targets, shifting entirely from a "restrictive obligation" into a "driving force" for economic growth.

Core Concepts

Carbon Peaking refers to the point in time when carbon dioxide emissions reach an all-time historical peak before entering a trajectory of sustained decline. China has pledged to achieve carbon peaking before 2030, with the 15th Five-Year Plan period (2026–2030) serving as the critical and decisive phase for this campaign.

Carbon Neutrality refers to offsetting self-generated carbon dioxide emissions through afforestation, energy conservation, emissions reduction, carbon capture, and other measures to achieve net-zero carbon dioxide emissions. China has pledged to achieve carbon neutrality before 2060.

Policy Framework and Quantified Targets

The Dual Carbon strategy has established a "1+N" policy framework. The "1" represents the top-level master plan (the Action Plan for Carbon Dioxide Peaking Before 2030 issued by the State Council in 2021), while "N" covers specific implementation blueprints across various sectors and industries. In March 2026, the 15th Five-Year Plan outline designated "actively and steadily promoting and achieving carbon peaking" as an independent chapter; in June of the same year, the State Council reviewed and approved the 15th Five-Year Action Plan for Carbon Peaking, marking a clearer operational roadmap.

Key quantified targets include:

• By 2030, carbon dioxide emissions per unit of GDP will be reduced by 17% compared to 2025, with non-fossil energy accounting for 25% of total energy consumption

• Energy consumption per unit of GDP will decrease by approximately 10% during the 15th Five-Year Plan period

• By 2030, New Energy Vehicles (NEVs) are targeted to account for 30% of total vehicle parc, while new energy commercial transport vehicles will account for 25%

• By the end of the 15th Five-Year Plan period, the scale of the green and low-carbon industry is projected to exceed RM20,000,000,000,000

Core Directives for the Automotive Industry

The automotive sector was highlighted three times in the 15th Five-Year Action Plan for Carbon Peaking, positioned as the primary lever for decarbonising the transport sector. Linking the three key decarbonisation pillars of manufacturing, resources, and transportation, the automotive carbon reduction roadmap focuses on three main thrusts:

Industrial Upgrading and Multi-Powertrain Development. Expanding the Battery Electric Vehicle (BEV) and hybrid segments while advancing zero-carbon alternative fuels such as hydrogen, ammonia, and methanol to build a diversified multi-powertrain landscape. Roadmap 3.0 specifies that by 2040, NEV passenger car penetration will exceed 85%, while Internal Combustion Engine (ICE)-equipped passenger vehicles (HEVs, PHEVs, and REEVs) will still account for approximately one-third of the market.

Circular Economy and Resource Recycling. Enhancing the standardised recycling and high-value utilisation of end-of-life traction batteries and scrapped vehicles, alongside expanding the remanufacturing sector. As motor vehicles consume substantial amounts of steel, aluminium, and critical raw materials such as lithium, nickel, and cobalt, circular recycling and dismantling significantly curb upstream emissions from energy-intensive manufacturing processes.

Low-Carbon Transport Decarbonisation. Steadily growing the NEV car parc, accelerating fleet electrification in the public sector, backing the commercial deployment of new energy heavy-duty commercial vehicles, and developing zero-carbon highway transport corridors. Direct tailpipe emissions from fuel combustion during vehicle operation account for roughly 70% of the industry's total carbon footprint, representing the primary battleground for emissions reduction.

Institutional Reform: Shifting from "Dual Energy Control" to "Dual Carbon Control"

The dual control system of total carbon emissions and carbon intensity, which replaces traditional dual control of energy consumption, stands as the most critical institutional reform in implementing the Dual Carbon goals. This marks a fundamental shift in the green transition benchmark from "how much energy is consumed" to "how much carbon is emitted," precisely steering industry and society away from fossil fuel dependence towards clean energy sources.

In April 2026, the General Office of the CPC Central Committee and the General Office of the State Council officially issued the Comprehensive Evaluation and Assessment Measures for Carbon Peaking and Carbon Neutrality, integrating dual carbon control requirements into statutory governance frameworks to rigorously enforce carbon peaking accountability across all government tiers.

Challenges for Automakers

Under the Dual Carbon framework, decarbonisation is rapidly evolving from an optional corporate initiative into a mandatory compliance requirement. Car manufacturers face the tension between long-term certainty and short-term volatility: while certain domestic mandatory regulations are still developing, global drivers such as carbon border adjustment mechanisms (e.g., EU CBAM), supply chain shortages of low-carbon materials, and stricter green financing standards are already clear. Carmakers must swiftly establish Scope 1, 2, and 3 emissions baselines, execute no-regret initiatives (such as energy-efficiency retrofits and renewable electricity procurement), and secure access to low-carbon raw materials, including green aluminium, green steel, and recycled plastics.

Total carbon emissions from the automotive industry are projected to peak in 2028—ahead of the national timeline—with overall emissions dropping by over 60% from their peak by 2040. Ultimately, the Dual Carbon goals are compelling the automotive sector to pivot decisively from volume-driven expansion toward high-quality, sustainable green growth.