Daily on Energy: Questions surround China's commitment to scrap building coal plants overseas

  • Sep 22, 2021
  • Washington Examiner

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COAL SPLASH: China made a big splash at yesterday’s U.N. General Assembly, with President Xi Jinping announcing the country will stop building new coal plants abroad, which, if fulfilled, would cut off all international public support for the dirtiest fossil fuel.

But China’s pledge is vague and incomplete, opening a host of questions whose answers will determine how meaningful of a step it is when it actually comes to helping produce significant cuts in global greenhouse gas emissions.

“My attitude at this point is ‘trust but verify,’” Kelly Sims Gallagher, who directs the Climate Policy Lab at the Fletcher School at Tufts University, told me. “There are a lot of outstanding questions to which we need answers before we can understand the magnitude and impact of this announcement.”

Most analysts are interpreting China’s pledge to mean it would stop building coal plants in the pre-construction phase that have received public Chinese finance, meaning those that have not broken ground. That interpretation would lead to the cancellation of over 40 gigawatts of coal projects in 20 countries, equivalent to the size of the current coal fleet of Germany, according to E3G, a European think tank.

But it remains to be seen how China defines “new.”

“The question will be about those coal plants that have reached financial close and have broken ground, what does it mean for those projects, where there might be more pain in walking away from them?” Justin Guay, director of global climate strategy at the Sunrise Project, told me.

Customers of Chinese coal plants were already pausing or canceling orders, including Bangladesh, the Philippines , Vietnam , Indonesia , and Pakistan, so there’s also a question of whether Beijing is simply riding a convenient wave.

This year, China has not provided any funding for overseas coal plants through its Belt and Road initiative.

“Nations around the world are increasingly abjuring coal based on higher prices, air pollution, and emissions; therefore, China’s economic sacrifice may be less than it appears,” Paul Bledsoe, an adviser with the Progressive Policy Institute, told me.

Chinese banks, too, have been distancing themselves from new coal deals, analysts say, making it easier for Beijing to formalize an end to international support, a step the Biden administration was pushing for.

“Most Chinese lenders, especially banks with foreign operations exposed to international trends, norms, and pressure were moving way ahead of Beijing on this,” Guay said. “They saw the changing economics before Beijing did.”

Don’t get me wrong -- this is still a big deal: Nonetheless, a commitment by the Chinese government to cut off the spigots overseas will accelerate the global phaseout of coal, the “single most important step to keep the 1.5-degree goal of the Paris Agreement within reach,” said U.N. Secretary-General António Guterres.

China had been isolated as the last, and largest, financier of coal globally, after South Korea and Japan joined other Group of Seven nations in committing earlier this year to end international funding for coal.

The end of coal support from those three countries essentially means the vast majority of new coal built outside of India and China won’t be built or financed, since the next frontiers for coal expansion in Southeast Asia and Sub-Saharan Africa are heavily reliant on public investment because they lack a robust private finance market.

What Xi didn’t say: But China’s decision to focus on international coal finance suggests Beijing is not ready to grapple with curbing its own appetite.

“China took this step because it makes sense for the Chinese. So long as there is domestic demand for coal, it probably doesn’t make sense for them to announce additional steps,” Jane Nakano, a senior fellow in the Energy Security & Climate Change Program at the Center for Strategic and International Studies, told me.

Most of China’s power still comes from coal, and it remains the world’s top consumer of coal domestically, making it the largest greenhouse gas emitter by far.

Xi announced at a virtual climate summit President Joe Biden hosted in April that China plans to phase down its coal use in the second half of this decade, but he provided little detail.

China has committed to reaching carbon neutrality across its economy by 2060, along with peaking emissions before 2030, but has so far ignored pleas by Biden and other world leaders to commit to specific near-term actions that would enable earlier peaking.

“The thing that bothers me is this is an attempt to distract from China’s unwillingness to reduce their overall emissions by 2025,” Bledsoe said. “The elephant in the room remains China’s unwillingness to bend down its total emissions curve this decade.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe ). Email [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here . If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

BIDEN CLIMATE FINANCE PLEDGE WINS KUDOS: Boris Johnson, prime minister of the United Kingdom, commended Biden’s announcement yesterday that the U.S. plans to increase its share of money toward the $100 billion annual climate finance goal supporting developing countries.

“That’s very important for us,” Johnson said in comments with Biden before the two leaders met at the White House yesterday afternoon after their appearances at the U.N. General Assembly.

“It’s fantastic to see the United States really stepping up and showing a lead -- a real, real lead,” Johnson added.

Biden pledged the U.S. will look to double the amount of money it offers within the next three years, bringing the total new target to $11.4 billion annually by 2024. The president acknowledged he needs cooperation from Congress to appropriate his promised funding.

Before Biden’s pledge, Johnson had suggested he was skeptical of U.S. climate commitments, given its volatile politics. Biden and Johnson discussed in their White House meeting ways to address gaps on emissions targets and climate finance ahead of November’s COP26 in Glasgow.

DEMOCRATS SEEK QUICK WIN ON INFRASTRUCTURE: Democratic leaders plan to vote next week on the $1.2 trillion bipartisan infrastructure bill despite demands from liberals to postpone the legislation until Congress can pass a much larger social and climate spending measure, the Washington Examiner’s Susan Ferrechio reports .

House Majority Leader Steny Hoyer told reporters yesterday the House will take up the infrastructure bill early next week, even though there is no deal yet on a second spending bill costing up to $3.5 trillion that would provide an array of new government programs and tax credits liberals are seeking.

“We are going to vote on it,” the Maryland Democrat said, adding the vote would take place either on Sept. 27 or Sept. 28.

Liberals have warned they won’t vote for the bipartisan infrastructure measure if it comes up first, which could leave Democratic leaders short of the votes needed to pass it without significant GOP support.

But top Democrats are eager to push ahead and try to pass the infrastructure plan so that Biden can sign it into law and showcase a major legislative victory for himself and the party.

The measure provides $550 billion in new spending, including $7.5 billion on new electric vehicle charging stations as well as funding for mass transit, rail, climate resilience, grid upgrades, capping abandoned oil and gas wells, and more.

Biden, meanwhile, is meeting at the White House today with key House members of both the centrist and liberal factions to mend fences, along with Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer.

HOUSE APPROVES GOVERNMENT FUNDING BILL...BUT: The House passed a stopgap government funding bill paired with an increase in the federal borrowing limit that will likely face a GOP filibuster in the Senate.

The vote was 220-211, with no Republicans supporting the measure.

Democrats, determined to avoid raising the debt limit without GOP support, looped in must-pass funding that will keep the government operating through Dec. 3.

Republicans refused to back the bill, citing their opposition to the Democrats’ social and climate spending package they plan to pass in the coming weeks without any GOP support.

Democrats hoped to lure GOP votes by attaching $24 billion in emergency spending for states damaged by summer storms and wildfires made worse by climate change. The move is likely to garner some Republican support but not enough to clear the Senate’s 60-vote hurdle.

REFINING GROUP TARGETS DEMOCRATS IN NEW AD CAMPAIGN: The American Fuel & Petrochemical Manufacturers, a group representing refiners, is launching a seven-figure ad campaign today aimed at urging Democrats in Texas and California to oppose tax increases in the reconciliation bill.

The campaign includes television, radio, digital video, and print components and is targeted at Democratic members of Congress in Texas and Central California, home to many refineries.

AFPM is specifically lobbying against methane fees, border carbon adjustments, and plastic production taxes that Democrats have floated and could be included in a final reconciliation package.

GRANHOLM PLUGS NUCLEAR IN MEETING WITH IAEA HEAD: Energy Secretary Jennifer Granholm met yesterday with International Atomic Energy Agency Director General Rafael Grossi in Vienna, where she touted nuclear’s carbon-free bona fides and promoted IAEA’s aim to “unlock the full potential” of the clean power source.

“Nuclear is a key technology for Member States as they aim to lower their emissions, grow their economies, and ultimately combat climate change in a truly sustainable way,” Granholm said in a statement.

“Nuclear power already contributes a lot, but an enabling environment is needed for its continued operation and further development and deployment, including innovations such as small modular reactors,” Grossi said.

IAEA also announced that its International Ministerial Conference on Nuclear Power in the 21st Century will be held in Washington, D.C., on Oct. 26-28, 2022, after being postponed due to the coronavirus pandemic.

SOLAR GROUP WARNS AGAINST DUTIES ON IMPORTED MATERIALS: The Solar Energy Industries Association is warning Commerce Secretary Gina Raimondo of the “dire threat” of duties on imported solar cells and panels that have been proposed by a group of anonymous petitioning companies.

The petitioners accuse solar manufacturers of circumventing antidumping and countervailing duties policies against China and call for between 50%-250% duties on imported crystalline silicon photovoltaic panels and cells from Asia.

SEIA disputes violating antidumping rules and says the duties would “devastate'' its members and interfere with the deployment of 18 gigawatts of solar-generated power by 2023.

OIL DEMAND BOUNCING BACK: U.S. oil demand is recovering from a few weeks of declines due to Hurricane Ida.

Oil demand increased to 21.15 million barrels per day last week from 19.91 million barrels p/d the week prior, the Energy Information Administration said in its Weekly Petroleum Status report .

But oil consumption remains below pre-pandemic levels, the research group ClearView Energy Partners said in a note this morning, especially gasoline demand, which could be slowing thanks to the continued spread of the coronavirus.

ICCF ANNUAL DINNER HIGHLIGHTS: The International Conservation Caucus Foundation hosted its annual awards dinner in D.C. earlier this week with Republican and Democratic members of Congress, foreign dignitaries, and business leaders in attendance.Sen. Chris Coons, a Delaware Democrat, presented Colombian President Iván Duque Márquez with the ICCF Teddy Roosevelt International Conservation Award for his work on expanding national parks and protecting biodiversity, while Sen. Rob Portman, an Ohio Republican, presented the Lifetime Achievement Award to philanthropists Melani and Rob Walton for promoting wildlife conservation and sustainability through their foundation.

“America has strong laws and the greatest success story for conservation,” said Minority Leader Kevin McCarthy, a Republican. “We should be proud to export that model to the rest of the world because we know it works.”

New York Times California is sued over its rule on solar power installers

Bloomberg Republicans to fight clean power program with ‘Byrd’ budget rule

Wall Street Journal Europe is pumping less gas as demand revives, leaving a gap Russia is filling

10 a.m. The House Agriculture Committee will hold a hearing on voluntary carbon markets in agriculture and forestry.

10:30 a.m. 2123 Rayburn. The House Energy and Commerce Committee will hold an oversight hearing on the Chemical Safety Board.