China’s pledge to end foreign coal finance casts doubt over projects worth $50bn

  • Sep 23, 2021
  • GCR

Speaking at the UN General Assembly meeting yesterday, Chinese president Xi Jinping said China would “step up support for other developing countries in developing green and low-carbon energy, and will not build new coal-fired power projects abroad”.

Reuters notes that China has been under international pressure to end overseas coal financing as part of its updated package of national climate pledges. It says the latest pledge will affect low and middle-income countries such as Bangladesh, Zimbabwe, Indonesia, Vietnam and South Africa, which are relying on cheap coal power to fuel economic growth.

It is not clear whether this move will affect projects that have already begun, however GEM notes that together Bangladesh, the Philippines, Vietnam, and Indonesia have already announced plans to cut up to 62GW of planned coal power schemes.

GEM estimates that 25.2 GW of coal power generating capacity remain in pre-construction planning in the four countries, an 80% decline from the 125.5GW of projects at that stage in 2015.

Xi’s announcement confirms a trend noticed this year. For the first time since the advent of the Belt and Road Initiative (BRI), China did not fund any new coal projects with the BRI badge in the first half of 2021. In July, it emerged that the Industrial and Commercial Bank of China had dropped plans to fund a $3bn coal-fired power station in Zimbabwe (see further reading).

The US Climate Envoy John Kerry welcomed the announcement, saying in a statement that he was “absolutely delighted to hear that President Xi has made this important decision”.

Christine Shearer, GEM’s coal programme director, told Reuters: “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. We’ll find many countries turning to alternative sources of power generation instead, and hopefully they are supported to ensure it’s clean energy.”

However, China’s pipeline of domestic coal projects is continuing unabated.

According to GEM, China built over three times as much coal power capacity as the rest of the world combined last year – the equivalent of more than one large plant a week. China now has 247GW of stations under construction or on the drawing board – a 21% increase over 2019.

Image: Xi’s pledge may mark “the end of international funding of coal plants” (Dreamstime)

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