China’s energy shift displaces oil demand
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China reduced its reliance on fossil fuels as renewable energy sources expanded, impacting global oil demand.
For a quarter-century, China drove growth in global fossil fuel consumption, accounting for half of the increase in oil demand and over 90% of the growth in coal demand between 2000 and 2025. Recently, however, coal generation has stopped growing in 17 of China’s 26 provinces, and the country’s clean energy system is growing while parts of its fossil fuel system shrink.
Battery storage plays a key role in this transition, with its capacity doubling in the last two years to balance the increasing supply of renewable energy. This shift extends beyond power plants and vehicles, now impacting eight industrial sectors that increasingly rely on electricity instead of fossil fuels. During the second quarter of this year, China’s adoption of electric vehicles displaced 1.5 million barrels of oil per day, approximately 1.5% of global demand, comparable to the entire consumption of France.
This represents a doubling of oil displacement from transportation compared to the same period last year. Sinopac, China’s largest oil company, reported a 9% decrease in demand from January to June. Nine of the ten best-selling cars in China are now either plug-in hybrid or battery-electric vehicles, and sales of electric heavy trucks rose by roughly 90% year-on-year through the first half of 2026.
China also exported a record $20 billion worth of green energy products in August, providing access to clean energy for other countries.
