Land Scarcity Could Add $42 Billion to China’s Carbon-Neutral Power Bill

China’s race to build a carbon-neutral power system by 2060 has an invisible bottleneck that most decarbonization plans barely acknowledge: land. A new study published in Nature Sustainability by Ziheng Zhu of Fudan University and Tsinghua University, Runxin Yu of the Chinese Academy of Sciences, and Da Zhang of Tsinghua University provides the most detailed accounting yet of how land availability reshapes the economics of a fully decarbonized electricity grid. By coupling a gridded assessment of renewable energy potential with a spatially and temporally resolved optimization model of China’s entire power system, the researchers show that land is not merely a passive backdrop for solar panels and wind turbines but an active production factor whose scarcity carries a measurable price. Their central finding is sobering: under restrictive land-use policies, the annual cost of running a carbon-neutral power system in 2060 could rise by up to roughly 300 billion yuan, about 42 billion US dollars, an increase of 4.1 percent compared with a scenario in which land is freely available.

The methodological heart of the study is the China Integrated Sustainable Power System Optimization model, known as CISPO, which integrates land-use constraints and renewable resource assessments directly into a capacity-expansion and hourly-dispatch framework. The researchers simulated five-year intervals from 2030 to 2060 across three contrasting land-supply scenarios, ranging from an open regime in which developers can access most technically suitable terrain to a conservative regime reflecting strict protections for cropland, forests, grasslands and water shorelines. These scenarios draw on China’s actual regulatory landscape, including national rules governing the use of forest land for photovoltaic stations and wind farms, the Grassland Law, the Land Administration Law, and guidelines restricting construction along rivers and lakes. By embedding these real policy boundaries into the optimization, the team captured how legal and environmental restrictions, not just physical geography, determine where wind and solar can actually be built.

One of the study’s most striking conceptual contributions is the treatment of land as a spatially heterogeneous production factor with a quantifiable marginal value. The researchers extracted the shadow prices of the variable renewable energy capacity constraints in each grid cell, effectively asking how much the whole power system would save if one more unit of renewable capacity could be squeezed into a particular location. The results reveal a dramatic geographic asymmetry. High-value land is concentrated in eastern and central China, close to the demand centers where electricity is consumed. Siting additional renewables there reduces the need for expensive long-distance transmission lines and for overbuilding remote generation in the resource-rich but demand-poor west. In effect, a square kilometer of suitable land near Shanghai or Wuhan is worth far more to the system than a comparable parcel in the sparsely populated northwest, even if the northwest enjoys better sunshine and stronger winds.

When stringent land-use restrictions are imposed, the optimization model responds in a predictable but consequential way: renewable deployment migrates. With the most accessible land near demand centers placed off limits, the model shifts wind and solar construction toward the resource-rich frontier regions. Northwestern solar deployment increases by approximately 48 percent relative to the base scenario by 2060. This relocation is not free. Moving generation farther from load centers raises inter-regional transmission requirements by roughly 20 percent in 2060, meaning China would need to build substantially more high-voltage corridors to carry electricity from the remote interior to the coastal megacities. Transmission lines themselves consume land, face their own permitting hurdles and add capital cost, creating a feedback loop in which land scarcity in one domain generates infrastructure pressure in another.

Despite these frictions, the study delivers a reassuring headline: carbon neutrality remains technically achievable even under the most restrictive land assumptions. The model finds feasible pathways to a zero-carbon power system in all scenarios, meaning land constraints do not derail decarbonization. What changes is the price tag and the configuration of the system. The 4.1 percent cost penalty, while modest relative to the enormous overall investment required for full decarbonization, represents tens of billions of dollars per year by 2060, resources that could otherwise fund storage, grid modernization or electrification of other sectors. The finding reframes land policy as an economic lever: decisions about which parcels are open to renewable development directly shape the national cost of climate mitigation.

The study also connects land scarcity to electricity prices, an issue of growing political salience as China deepens its power market reform. Using marginal-cost-based price formation, the researchers show that the cost differences across land-use scenarios could become visible in market-based electricity prices, depending on market design and cost-recovery mechanisms. Recent reforms, including the 2025 policy notice on deepening market-oriented reform of on-grid tariffs for new energy, are pushing renewables toward full market participation. If land restrictions systematically raise the marginal cost of supply, consumers and industries in land-constrained regions could face persistently higher prices, while the benefits of cheap remote renewables are eroded by transmission charges. This linkage between land policy and retail electricity costs is likely to become a central tension in China’s energy governance.

The research arrives amid a global reckoning with the land intensity of renewable energy. Solar and wind are far less land-efficient per unit of energy than fossil or nuclear plants, and studies from the western United States to Brazil have documented mounting conflicts between renewable buildout and agriculture, biodiversity and community interests. In China, a surprising share of existing photovoltaic capacity has been installed on cropland, prompting regulatory tightening. The new study quantifies, for the first time at national scale, what such tightening costs the power system, transforming an abstract land-use debate into concrete economic terms. It also highlights the value of land-saving alternatives that appear in the literature, including rooftop photovoltaics, floating solar on reservoirs, agrivoltaics that combine farming with electricity generation, and photovoltaic deployment on degraded or industrial land such as open-pit mines.

For policymakers, the implications cut in several directions. First, the shadow-price analysis offers a spatial prioritization tool: protecting the highest-value land near demand centers imposes the largest system costs, so land-use decisions in eastern and central China deserve the closest scrutiny. Second, the 20 percent increase in inter-regional transmission needs under restrictive scenarios argues for proactive grid planning, since transmission projects take years to permit and build. Third, the modest overall cost penalty suggests that China has genuine flexibility; even a conservative land regime does not make decarbonization prohibitively expensive, provided the system can re-optimize around the constraints. The authors’ framework, with data and code publicly available on GitHub, allows other researchers and planners to test alternative land policies, resource assumptions and technology costs.

The study’s scope is limited to the power sector, and the authors note that cost differences will surface in market prices only as reform deepens and depending on how costs are recovered. Extending the analysis to heating, hydrogen production and electrified transport, all of which will compete for the same renewable generation, is an obvious next step. Yet the core message is already clear and widely applicable: as the world pivots from whether to decarbonize to how, the humble question of where to put the panels and turbines has become a first-order economic problem. China’s experience suggests that every country plotting a net-zero grid should start counting not just its terawatt-hours but its square kilometers, because in the land-energy nexus, geography is destiny and scarcity has a price.

Subject of Research: Land availability constraints on China's transition to a carbon-neutral power system

Article Title: Navigating the land–energy nexus for carbon-neutral power systems in China

Article References: Zhu, Z., Yu, R., & Zhang, D. (2026). Navigating the land–energy nexus for carbon-neutral power systems in China. Nature Sustainability. https://doi.org/10.1038/s41893-026-01941-5

Image Credits: AI Generated

DOI: 10.1038/s41893-026-01941-5

Keywords: China, carbon neutrality, power system optimization, land use, renewable energy, solar power, wind power, transmission, shadow prices, electricity markets, Nature Sustainability, energy modelling