China Pledges to Stop Building Coal Plants Abroad: Explained

Xi Jinping, China’s top leader, said on Tuesday that his country would stop building coal-burning power plants overseas, a major shift by the world’s second-biggest economy to move away from its support of the fossil fuel.

China “will not build new coal-fired power projects abroad,” he told the United Nations General Assembly on Tuesday.

The news comes amid a broad international effort to reduce coal use and to keep global temperatures from rising at their current pace, which scientists have warned could be disastrous.

The announcement by China, which is by far the biggest domestic producer of coal and the largest financier of coal-fired power plants around the world, was cautiously welcomed by experts.

“Now all the major public financiers of coal have sent the signal that they are moving away from overseas coal,” said Kevin P. Gallagher, a professor of global development policy at Boston University, who has been tracking China’s global energy financing. “China’s announcement could be a step toward them catalyzing green transformations.”

Last year, China built more than three times more new coal power capacity than all other countries in the world combined, equal to “more than one large coal plant per week,” according to estimates from the Centre for Research on Energy and Clean Air in Finland.

China’s net construction of coal power capacity within the country grew by 29.8 gigawatts, essentially wiping out the gains of the rest of world, where net coal power capacity decreased by 17.2 gigawatts, according to the Centre.

It is enough to power 750,000 homes or 110 million LED light bulbs, according to experts, or almost one time-traveling DeLorean.

Currently more than a dozen countries, mostly in Asia.

China’s main sources for financing the construction of coal power plants, the China Development Bank and Export-Import Bank of China, have poured $51.6 billion dollars into coal power plants around the globe, according to a Boston University tracker.

The largest portion of it, more than $34.4 billion, is in Asia, according to the tracker.

Indonesia is China’s largest coal mining partner, with 21 projects and about $9.3 billion in investments, followed by Vietnam, which has 13 projects and $8.8 billion in investments, according to the tracker.

Pakistan has seven coal power plants funded by China, with $4.5 billion. Other countries with coal power plants funded by China include South Africa, Ukraine, Bangladesh, Russia and Turkey, just to name a few.

Domestically, China produces about 1,200 gigawatts of energy from coal, according to Greenpeace China. The coal power plants it has helped build abroad produce less than 100 gigawatts, the group said.

Mr. Xi’s announcement did not address domestic production. And the country’s latest five-year development plan, approved earlier this year, allows for expanded coal-power construction at home for years to come.

There are about 40 gigawatts of new coal power plant projects across 20 different countries that are in varying stages of development, according to Li Shuo, a policy adviser with Greenpeace China.

For some host countries, partnering with China is the only way to draw energy from their own supply of coal, he said. That is because China has an abundance of money, the steel mills that are needed to make coal power plants and the engineering expertise that many other countries don’t have.

“The host country may never be able to pull off those projects,” Mr. Li said. “For some, it’s a deal breaker. If you don’t have Chinese support, you won’t have these projects.”

South Korea and Japan have been the two largest supporters of coal-fired power plants abroad after China. In April, South Korea announced plans to stop funding such projects. In May, Japan did, too. In light of that, China’s role in financing power plants overseas “was only going to grow,” said Lauri Myllyvirta, an analyst with the Centre for Research on Energy and Clean Air, a research organization.

Plans to build coal power plants have also been shelved (South Africa), reconsidered (Bangladesh) and faced funding troubles (Vietnam).

When Mr. Xi said China “will not build new coal-fired power projects abroad,” he did not specify if he meant the government only, or if it also included private companies in China, wondered Mr. Li of Greenpeace.

He also said the statement did not make clear whether the moratorium on “building” meant no more financing, or if the new policy would apply to projects that have already been proposed, approved or are under construction.

Mr. Li said he would like to have more clarity on these issues in the coming weeks.


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