China’s overseas coal power retreat could wipe out $50 billion of investment By Reuters
By David Stanway and Joe Brock
SHANGHAI/SINGAPORE (Reuters) – China’s pledge to stop building coal-fired power plants overseas could cull $50 billion of investment as it slashes future carbon emissions, analysts said, although Beijing’s own domestic coal programme is still propping up the dirty fossil fuel.
In a recorded address to the United Nations General Assembly, Chinese President Xi Jinping stated that China will help develop countries produce green energy and halt coal-fired power plant construction abroad.
China is under intense international pressure to stop overseas coal funding as part its revised package of pledges on national climate change to the United Nations.
Beijing has the biggest source of funding for global coal power plants. Xi’s announcement could have a profound impact on expansion plans for countries such as South Africa, Indonesia, Vietnam, Vietnam, and Bangladesh.
(Graphic: Coal power projects financed by China – https://graphics.reuters.com/CHINA-COAL/gdpzyqnqrvw/chart.png)
The announcement could affect 44 coal plants earmarked for Chinese state financing, totalling $50 billion, according to Global Energy Monitor (GEM), a U.S. think tank. GEM stated that this could reduce carbon dioxide emissions by up to 200 million tonnes per year in the future.
“China’s announcement is one of the most significant developments on the climate front this year, as it may well mark the end of international public financing for coal plants,” said GEM’s coal program director, Christine Shearer. “We’ll find many countries turning to alternative sources of power generation instead, and hopefully they are supported to ensure it’s clean energy.”
(Graphic: China-backed coal power plants now at risk – https://fingfx.thomsonreuters.com/gfx/ce/zgvombjbbvd/ChinaPrePermitCoalPlants.png)
Environmental groups also said it would force big coal financiers like the Bank of China, linked with 10 gigawatts of overseas coal power capacity, to draw up a timetable to withdraw from the sector.
China made the pledge after South Korea and Japan did so this year. This will turn off the water supply to the three largest public funders of coal-fired power plants overseas.
This announcement came just hours after Joe Biden, the U.S. president, pledged to increase spending to help developing countries deal with climate change to $11.4 million by 2024. World leaders set new goals ahead of the COP26 United Nations summit on climate change that will begin in November.
“DOMESTIC COAL ADDICTION”
Despite widespread optimism about Xi’s announcement, his carefully worded statement revealed few details and left room for existing projects to continue.
According to the Boston University Global Development Policy Centre, there are currently more than 20 Chinese-financed coal-fired energy units in construction across South Africa, Pakistan and Indonesia. The planning stages of 17 more are underway.
(Graphic: Key coal consumers, exporters and importers – https://fingfx.thomsonreuters.com/gfx/ce/zgpombjrbpd/KeyCoalConsumersExporters.png)
“The details of the overseas coal exit have not been defined yet, including timetable, eligibility, and separation between public and private financing,” said Yan Qin, lead carbon analyst at Refinitiv, a financial data provider. The details are less important to me. When China’s leader announced this goal, the statement can be this simple and short, but it will be implemented thoroughly.”
China has not yet made any commitments to increase its coal-fired power plant capacity.
E3G published a report this month stating that China’s national programme is responsible for nearly half of the global coal-powered plant constructions.
Xi promised that China would “strictly manage” its new coal-powered plants over 2021-2025, but the country won’t reduce its coal consumption before 2026.
Li Shuo from Greenpeace, senior climate advisor said that China should work harder to curb its dependence on domestic coal.
(Graphic: Carbon dioxide emissions by region – https://fingfx.thomsonreuters.com/gfx/ce/akvezqnaapr/CO2EmissionsbyRegionto2020.png)