China’s five-ministry directive charts a phased pathway from pilots to heavy industry, providing a clearer policy, standards, and implementation framework for manufacturers navigating tightening carbon constraints at home and abroad.
On January 19, China’s Ministry of Industry and Information Technology (MIIT), National Development and Reform Commission (NDRC), Ministry of Ecology and Environment, State-owned Assets Supervision and Administration Commission (SASAC), and National Energy Administration jointly issued the Guiding Opinions on the Construction of Zero-Carbon Factories (MIIT Joint Release [2026] No.13).
The document establishes a staged roadmap from 2026 to 2030, moving from pilot projects in advanced manufacturing to deep decarbonization of energy-intensive heavy industry. In doing so, it elevates “zero-carbon factories” from local experimentation to a national industrial strategy.
Rather than positioning zero-carbon factories as symbolic showcases, the guidance frames them as a new industrial development model—one that integrates energy system reform, process innovation, digital management, and standards alignment. The implications extend well beyond emissions reduction, touching cost competitiveness, export compliance, capital access, and supply chain resilience.
A coordinated, multi-ministry policy push
The guidance marks the first time China has issued a unified, cross-ministerial framework dedicated specifically to zero-carbon factories, consolidating previously fragmented local pilots into a coherent national program.
From 2026, authorities will select an initial cohort of zero-carbon factories to serve as national benchmarks. By 2027, the program will expand across sectors including automobiles, lithium-ion batteries, photovoltaics, electronics and electrical equipment, light industry, machinery, and computing infrastructure such as data centres. By 2030, it will extend to traditionally hard-to-abate sectors: steel, non-ferrous metals, petrochemicals, chemicals, building materials, and textiles—where emissions intensity and abatement complexity are highest.
The initiative aligns closely with the draft 15th Five-Year Plan (2026–2030), which explicitly calls for the construction of zero-carbon factories and industrial parks. As such, the guidance functions both as a near-term implementation manual and as a preview of China’s broader industrial climate policy direction for the next planning cycle.
Crucially, the document resolves a long-standing ambiguity: a zero-carbon factory does not imply absolute zero emissions. Instead, it emphasizes maximum feasible emissions reduction under current technical and economic conditions, combined with continuous improvement and managed treatment of residual emissions.
A system-level decarbonization model
Rather than prescribing a single technology pathway, the guidance sets out a comprehensive, system-level architecture spanning measurement, energy supply, production processes, digital control, and residual emissions management.
I. Carbon accounting as the foundation
Robust greenhouse gas (GHG) accounting and management systems form the policy’s cornerstone. Enterprises are required to establish plant-level emissions inventories, strengthen process-level data collection, and align with emerging national and international standards for corporate emissions disclosure and product carbon footprints.
This focus on “scientific carbon accounting” directly addresses a structural weakness in China’s industrial decarbonization efforts: inconsistent methodologies and weak data foundations. The guidance calls for accelerated development of standards covering enterprises, production units, products, and projects, as well as frameworks for corporate GHG disclosure and product-level carbon footprint reporting.
Digitalization is positioned as a critical enabler. Factories are encouraged to deploy intelligent energy management systems, real-time emissions monitoring, and data-driven optimization tools to support “intelligent carbon control,” reinforcing China’s broader push to integrate green transformation with industrial digitalization.
II. Energy structure transformation at the source
At the energy supply level, factories are encouraged to transition rapidly toward low- and zero-carbon energy sources. These include on-site and off-site renewable electricity, green power trading mechanisms, distributed photovoltaics, wind power integration, and, where technically viable, clean hydrogen for high-temperature or chemical processes.
For sectors such as lithium batteries, photovoltaics, and data centres, electricity decarbonization is expected to deliver the majority of emissions reductions. In heavy industry, fuel substitution and electrification are expected to play a progressively larger role as technologies mature.
III. Process decarbonization through efficiency and innovation
Beyond energy sourcing, the guidance prioritizes significant gains in energy efficiency and production process optimization. Measures include deployment of high-efficiency equipment, waste heat recovery, advanced process controls, and low-carbon process redesign—particularly relevant for steel, cement, and chemical manufacturing.
IV. Product carbon footprints, offsetting, and transparency
Enterprises are required to conduct carbon footprint analyses for key products, linking factory-level decarbonization with upstream and downstream emissions. This approach mirrors international trends, including the EU’s Carbon Border Adjustment Mechanism (CBAM) and growing Scope 3 disclosure requirements.
After reduction potential has been exhausted, residual emissions may be addressed through carbon offset mechanisms, accompanied by enhanced information disclosure. The emphasis on transparency signals that offsetting will be treated as a complement—not a substitute—for real emissions reductions.
Competitiveness, compliance, and capital access
The zero-carbon factory program is as much an economic and competitiveness strategy as an environmental one. It reframes decarbonization from a cost-centre obligation into a determinant of market access, operational resilience, and financial positioning.
I. Export competitiveness and trade compliance
By explicitly calling for alignment with international standards and trade rules, the guidance reflects Beijing’s recognition that carbon performance is becoming a condition for market access. For export-oriented sectors such as batteries, photovoltaics, electronics, and automobiles, zero-carbon factories may help mitigate exposure to carbon tariffs, green procurement requirements, and supply-chain audits in Europe and other major markets.
II. Cost structures and operational resilience
Although upfront capital expenditure—particularly for energy system upgrades and digital infrastructure—will be significant, policymakers argue that lifecycle costs can be reduced through improved energy efficiency, lower exposure to fossil fuel price volatility, and tighter operational control. For data centres and advanced manufacturing, electricity costs and carbon intensity are increasingly inseparable.
III. Financing and green capital
Financial support is positioned as a core pillar of the emerging ecosystem. Standardized definitions and evaluation criteria for zero-carbon factories are expected to unlock green finance, including preferential lending, sustainability-linked bonds, and green insurance products. Over time, zero-carbon certification could become a prerequisite for accessing certain pools of capital.
IV. State-owned and private enterprise alignment
With SASAC among the issuing authorities, central and local state-owned enterprises are expected to play a leading role in early pilots. At the same time, the guidance encourages broad participation from private manufacturers, technology providers, and specialized service firms.
From pilots to industrial infrastructure
The staged rollout reflects a pragmatic sequencing strategy. Advanced manufacturing sectors with relatively low marginal abatement costs are prioritized first, allowing standards, technologies, and service models to mature before scaling into heavy industry.
By 2030, the objective extends beyond emissions reduction to the establishment of replicable models for zero-carbon factory design, financing, retrofitting, and management—effectively creating a new industrial services market.
I. Standardization as a competitive lever
More than 30 group standards related to zero-carbon factories and zero-carbon data centres have already been developed by industry associations and institutions. The new guidance accelerates the move toward national, sector-specific standards and closer alignment with international norms.
As Chinese manufacturers occupy pivotal positions in global clean energy and industrial supply chains, these standards could influence future global benchmarks.
II. Building a zero-carbon industrial ecosystem
Beyond individual factories, the policy envisions an integrated ecosystem spanning energy supply, technology R&D, standards development, finance, and professional services. Industry associations, research institutes, and service providers are encouraged to support technology transfer, demand–supply matching, training, and international cooperation.
Talent development is explicitly highlighted, with a focus on professionals fluent in both international rules and carbon management—underscoring that industrial decarbonization is now a multidisciplinary capability.
III. A structural shift in industrial policy
China’s zero-carbon factory initiative represents a structural effort to embed decarbonization into the core of industrial competitiveness, rather than treating it as a peripheral compliance exercise. By linking technology pathways, standards development, and market mechanisms, the policy aims to turn carbon constraints into a driver of productivity, innovation, and trade resilience.
For manufacturers, zero-carbon factories are moving from pilots toward baseline expectations. For technology providers, financiers, and service firms, a sizeable new market is taking shape—spanning hardware, software, standards, and strategy.
For global supply chains, China’s approach signals that the race to decarbonize manufacturing is entering a more coordinated, system-level phase, with implications well beyond its borders.