Chinese President Xi Jinping’s pledge to the United Nations General Assembly yesterday that his country “will not build new coal-fired power projects abroad” was welcome news for the global climate. “Given [that] China has been up to this date the single biggest financier [of] new coal power plants across the world,” the move is “globally very significant,” says Josep Canadell, an earth system scientist at Australia’s Commonwealth Scientific and Industrial Research Organisation.
But it was not a complete surprise, says Christoph Nedopil, a development economist at Fudan University in Shanghai. “China’s government institutions were working with Chinese and international partners to evaluate a possible coal exit for a number of years.” Of 52 coal-fired power plant projects linked to China’s Belt and Road Initiative (BRI), a massive plan to build infrastructure throughout the developing world, 33 have been shelved or canceled, seven are under construction, 11 remain in planning, and only one has gone into operation, according to a June report by Nedopil.
The report noted that in 2020 for the first time, BRI investments in solar, wind, and hydropower surpassed spending on fossil fuel plants. That, Nedopil says, is a sign that the ever-decreasing cost of renewables is tipping China’s investments away from coal. He thinks even the coal power plants under construction could be re-evaluated.
China is the last major country to end government financial support for overseas coal projects, but this does not mean the end of coal-fired power plant construction in developing countries, says Kevin Gallagher, a global development expert at Boston University. Contrary to the widespread impression that most coal plants are financed by China’s state-owned banks, a study by Gallagher and Xinyue Ma, both at the university’s Global Development Policy Center, found that 87% of global investment in overseas coal plants has come from financial institutions in Japan and the West. “We will not meet our global climate and development goals if the private sector continues to finance overseas coal,” Gallagher says.
Xi’s announcement will also focus attention on China’s domestic coal projects. The International Energy Agency reported this year that China was the only major economy to increase its annual carbon dioxide (CO2) emissions in 2020. And China commissioned 38.4 gigawatts of new coal plants last year, according to the Global Energy Monitor (GEM), a nonprofit organization that gathers information on fossil fuel power projects worldwide. GEM’s 2021 report on coal plants explains that China’s provinces used coal projects to stimulate their economies in the wake of the country’s COVID-19 epidemic.
China has pledged that its CO2 emissions will peak in 2030. To meet that goal, “China needs to work harder now on its domestic coal addiction,” says Li Shuo, a senior policy adviser for Greenpeace East Asia in Beijing. “Now that China is determined to make the transition away from coal happen in other developing countries, applying it to itself shouldn’t be that challenging.”