China’s pledge to stop building coal plants abroad helps BRI: AIIB
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China’s pledge to stop building new coal-fired power projects overseas could improve the reputation of its massive Belt and Road Initiative, said the president of the Asian Infrastructure Investment Bank.
Chinese President Xi Jinping made the pledge on coal on Tuesday at the United Nations General Assembly. China would support developing countries in their transition to low-carbon and green energy. However, he did not give any further information.
“I think this is very much [an] important policy initiative taken by China,” Jin Liqun, president of AIIB, told CNBC’s “Squawk Box Asia” on Thursday.
“It could enhance the reputation of the Belt [and] Road Initiative,” he added.
Jin explained that Beijing was struggling to reconcile the demands from countries other than China for its coal-fired plants and its climate commitments. Xi said last year that China aims to become carbon neutral by 2060.
He said, “Now I believe the decision has been made.” China must do all it can to help these countries with renewable technology.
The coal-fired power station in Jiayuguan province of Gansu, China on Thursday April 1st 2021.
Qilai Shen / Bloomberg | Bloomberg | Getty Images
The Belt and Road Initiative or BRI is an ambitious program to build physical and digital infrastructure connecting hundreds of countries from Asia to the Middle East, Africa and Europe. The U.S. and many countries have criticized the BRI for financing building projects — particularly those involving coal — that harm the environment.
The burning of coal creates large amounts of carbon dioxide. Japan and South Korea previously announced that they would no longer fund overseas coal-powered projects.
Coal projects were a consistent feature of the BRI in the last few years. The International Institute for Green Finance in Beijing, which is a think tank based in Beijing, found that coal made up 46% of China’s energy investments via the BRI.
China has started to move away from such projects, and has not invested in any new coal plants in the first half of 2021, research by the think tank found. Japan, South Korea and South Korea previously announced that they would no longer fund overseas coal power projects.
Clean energy
China has built nuclear power plants domestically, but it could focus on other other forms of clean energy for other countries, said Jin.
He said that the most efficient way to generate hydropower, wind, and solar energy is by developing it. New technology in solar would make it more cost-effective and efficient.
International Institute for Green Finance stated that more than 57% Chinese energy overseas investments through the BRI by 2020 were made in hydro, solar, and wind projects. According to the think tank, 26.85% of these investments were made in coal.
However, some countries may not be able to retire their coal plants on schedule, said Shirley Zhang, principal analyst at energy consultancy Wood Mackenzie.
She said that “Due the relative young age of coal plants in Asia, and the absence of new coal financing,” countries might be forced to prolong the lives of existing coal fleets to make way for a more disruptive transition.
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