Speaking to the UN General Assembly, Chinese President Xi Jinping announced that China "will not build new coal-fired power projects abroad[1].” This move is seen as a pivotal step in addressing global emissions, as China is one of the largest funders of coal-fired power plants. However, the impact of this commitment depends on how it is interpreted and implemented by China’s ministries, which would make a significant difference in China’s climate and energy policy.
China is the biggest funder of financing coal projects overseas. The ten largest funders of coal-fired power projects are Chinese banks, which have financed almost 70% of the world's coal power projects in the last five years[2]. Over the years, China has funded coal power abroad to produce 42 gigawatts of electricity, enough to power at least 30 million households[3]. While most of the funding channels through BRI projects to Bangladesh, Vietnam, and Indonesia, many African countries and some European states also receive significant amounts[4].
Research has estimated that Xi's speech could cancel forty-four coal plants worth a combined $50 billion and decrease at least 54 gigawatts of proposed China-backed coal plants that are not yet under construction[5]. Soon after Xi's statement, the Bank of China declared that it would not finance new coal mining and power project overseas since the fourth quarter of 2021, while continuing to support those projects whose contracts it has already signed[6].
However, the positive political signal is not a one-way ticket to successful policy delivery. The significance of Xi's speech on China's decarbonization effort should be read with the Chinese ministries' domestic policy directive. Soon after the power shortage last year, China’s leadership has repeatedly emphasized ensuring energy security. In the “two sessions”, China’s Premier Li Keqiang requested that nation’s low carbon transformation be consistent with the “establishing the new before abolishing the old” principle stipulated by Xi in July 2021[7]. The principal commands ministries to reduce carbon emissions in a “steady and stable way” rather than “campaign-style” energy reduction[8]. Followed the directive of two sessions, the National Energy Administration released the guideline on energy development for 2022. The “primary principles” were securing supply and strengthening energy reserves to better “address the risks and challenges affecting energy security[9].”
Since then, China has aggressively pushed for increasing coal production and supply. Five new coal power projects with a combined capacity of 7.3 gigawatts were approved in the first six weeks of 2022[10], and three coal mine projects received greenlights in February 2022[11]. State-owned power companies have also continued to build new coal-based projects[12]. Domestically, China now has 88.1 GW under construction, and 158.7 GW proposed for construction, which brings a total of 247 GW of coal power on schedule, exceeding the U.S[13].
While Xi’s pledge signifies China’s commitment to decarbonization, the fact that it does not extend to domestic coal-fired projects will significantly lessen its impact. Until China moves away from coal-fired power plants within China’s border, it will be much more difficult to address climate change.
[1] Valerie Volcovici, David Brunnstrom, and Michelle Nichols, “In Climate Pledge, Xi Says China Will Not Build New Coal-Fired Power Projects Abroad,” Reuters (Thomson Reuters, September 22, 2021), https://www.reuters.com/world/china/xi-says-china-aims-provide-2-bln-vaccine-doses-by-year-end-2021-09-21/.
[2] Laurel Sutherlin, “Banking on Climate Chaos 2022,” Banking on Climate Chaos, March 30, 2022, https://www.bankingonclimatechaos.org/#data-panel.
[3] Quirin Schiermeier, “China's Pledge on Overseas Coal - by the Numbers,” Nature News (Nature Publishing Group, September 29, 2021), https://www.nature.com/articles/d41586-021-02645-w.
[4] OECD, “China’s Belt and Road Initiative in the Global Trade, Investment and Finance Landscape,” 2018, https://www.oecd.org/finance/Chinas-Belt-and-Road-Initiative-in-the-global-trade-investment-and-finance-landscape.pdf.
[5] Joe Brock and David Stanway, “China's Overseas Coal Power Retreat Could Wipe out $50 Bln of Investment,” Reuters (Thomson Reuters, September 22, 2021), https://www.reuters.com/business/energy/chinas-overseas-coal-power-retreat-could-wipe-out-50-bln-investment-2021-09-22/.
[6] Reuters, “Bank of China to Stop Financing New Coal Mining, Power Projects Overseas from Q4,” Reuters (Thomson Reuters, September 24, 2021), https://www.reuters.com/business/sustainable-business/bank-china-stop-financing-new-coal-mining-power-projects-overseas-q4-2021-09-24/.
[7] Chinanews, “李克强谈碳达峰碳中和：坚持先立后破 通盘谋划,” 中国新闻网, March 5, 2022, https://www.chinanews.com.cn/gn/2022/03-05/9693102.shtml.
[8] 新华网 , “中共中央政治局召开会议 分析研究当前经济形势和经济工作,” 新华网, July 30, 2021, http://www.xinhuanet.com/politics/leaders/2021-07/30/c_1127713888.htm.
[9] NDRC, “‘十四五’现代能源体系规划,” January 29, 2022, https://www.ndrc.gov.cn/xxgk/zcfb/ghwb/202203/P020220322582066837126.pdf.
[10] “China Briefing, 5 May 2022: 'Gigantic' Wind and Solar Bases; Coal Capacity 'Surge'; Loans for 'Clean' Coal,” Carbon Brief, May 5, 2022, https://www.carbonbrief.org/china-briefing-5-may-2022-gigantic-wind-and-solar-bases-coal-capacity-surge-loans-for-clean-coal.
[11] Bloomberg, “China Signals Coal Reliance to Continue With Three New Mines,” Bloomberg.com (Bloomberg, February 21, 2022), https://www.bloomberg.com/news/articles/2022-02-21/china-signals-coal-reliance-to-continue-with-three-new-mines.
[12] Global Energy Monitor, “China’s Power & Steel Firms Continue to Invest in Coal Even as Emissions Surge Cools Down,” August 2021, https://globalenergymonitor.org/wp-content/uploads/2021/08/Chinas-Power-Steel-Firms-Continue-to-Invest....pdf.
[13] CREA, “China Dominates 2020 Coal Plant Development,” February 2021, https://globalenergymonitor.org/wp-content/uploads/2021/02/China-Dominates-2020-Coal-Development.pdf.
Reference
Bloomberg. “China Signals Coal Reliance to Continue With Three New Mines.” Bloomberg.com. Bloomberg, February 21, 2022. https://www.bloomberg.com/news/articles/2022-02-21/china-signals-coal-reliance-to-continue-with-three-new-mines.
Brock, Joe, and David Stanway. “China's Overseas Coal Power Retreat Could Wipe out $50 Bln of Investment.” Reuters. Thomson Reuters, September 22, 2021. https://www.reuters.com/business/energy/chinas-overseas-coal-power-retreat-could-wipe-out-50-bln-investment-2021-09-22/.
Brunnstrom, David, and Valerie Volcovici. “In Climate Pledge, Xi Says China Will Not Build New Coal-Fired Power Projects Abroad.” Reuters. Thomson Reuters, September 22, 2021. https://www.reuters.com/world/china/xi-says-china-aims-provide-2-bln-vaccine-doses-by-year-end-2021-09-21/.
“China Briefing, 5 May 2022: 'Gigantic' Wind and Solar Bases; Coal Capacity 'Surge'; Loans for 'Clean' Coal.” Carbon Brief, May 5, 2022. https://www.carbonbrief.org/china-briefing-5-may-2022-gigantic-wind-and-solar-bases-coal-capacity-surge-loans-for-clean-coal.
Chinanews. “李克强谈碳达峰碳中和：坚持先立后破 通盘谋划.” 中国新闻网, March 5, 2022. https://www.chinanews.com.cn/gn/2022/03-05/9693102.shtml.
CREA. “China Dominates 2020 Coal Plant Development - Global Energy Monitor,” February 2021. https://globalenergymonitor.org/wp-content/uploads/2021/02/China-Dominates-2020-Coal-Development.pdf.
Global Energy Monitor. “China’s Power & Steel Firms Continue to Invest in Coal Even as Emissions Surge Cools Down,” August 2021. https://globalenergymonitor.org/wp-content/uploads/2021/08/Chinas-Power-Steel-Firms-Continue-to-Invest....pdf.
NDRC. “‘十四五’现代能源体系规划,” January 29, 2022. https://www.ndrc.gov.cn/xxgk/zcfb/ghwb/202203/P020220322582066837126.pdf.
OECD. “China’s Belt and Road Initiative in the Global Trade, Investment and Finance Landscape,” 2018. https://www.oecd.org/finance/Chinas-Belt-and-Road-Initiative-in-the-global-trade-investment-and-finance-landscape.pdf.
Reuters. “Bank of China to Stop Financing New Coal Mining, Power Projects Overseas from Q4.” Reuters. Thomson Reuters, September 24, 2021. https://www.reuters.com/business/sustainable-business/bank-china-stop-financing-new-coal-mining-power-projects-overseas-q4-2021-09-24/.
Schiermeier, Quirin. “China's Pledge on Overseas Coal - by the Numbers.” Nature News. Nature Publishing Group, September 29, 2021. https://www.nature.com/articles/d41586-021-02645-w.
Sutherlin Senior Communications Strategist 415-246-0161 laurel@ran.org, Laurel. “Banking on Climate Chaos 2022.” Banking on Climate Chaos, March 30, 2022. https://www.bankingonclimatechaos.org/#data-panel.
新华网. “中共中央政治局召开会议 分析研究当前经济形势和经济工作.” 新华网, July 30, 2021. http://www.xinhuanet.com/politics/leaders/2021-07/30/c_1127713888.htm.
Comments