China’s Xi Jinping Says Country Will Stop Financing Coal-Fired Power Abroad

China’s Xi Jinping Says Country Will Stop Financing Coal-Fired Power Abroad
China's President Xi Jinping remotely addresses the 76th session of the United Nations General Assembly in a pre-recorded message. (Image: Mary Altaffer, AP)

In remarks made at the United Nations General Assembly on Tuesday, Chinese President Xi Jinping said that the country would move away from financing coal projects abroad — a huge move that would take away the largest remaining source of support for new coal-fired power.

“China will step up support for other developing countries in developing green and low-carbon energy, and will not build new coal-fired power projects abroad,” Xi said during his pre-recorded statement broadcast to the assembly at UN headquarters.

In his remarks, Xi did not give a timeline for when the country would phase out support. How fast China ends financing coal will be crucial if the world meets its climate goals. But the announcement could signify the end of one of the largest remaining financial lifelines for coal projects.

China is currently the muscle behind more than half of the world’s proposed coal projects that are currently in the pre-construction phase — around 163 gigawatts of power’s worth of projects overall, with 40 gigawatts of those abroad. That’s a big number, but it’s significantly lower than what it used to be: China has cancelled 74% of its coal projects since 2015, when the Paris Agreement was signed, withdrawing support for 484 gigawatts of coal power over the past six years.

Still, as of 2019, China had more than 300 coal plants in the pipeline that it was supporting, in countries that include Turkey, Vietnam, Indonesia, Bangladesh, Egypt, and the Philippines. As coal’s economic future gets increasingly dimmer, these countries could feel the heat of a bad investment as they pay back loans they got from China.

The Paris Agreement doesn’t include any sort of regulation or oversight of national investments in fossil fuel projects in other places. But international pressure has been ramping up on China to end financing dirty coal projects. Both South Korea and Japan, the second and third largest financing countries, also made pledges to end coal financing earlier this year. Their financial commitments to coal are dwarfed by China’s, though, which makes the new announcement (pending details, of course) a potentially bigger deal. Among G20 countries, China has defended coal financing as recently as this summer. But the change of tone may put pressure on other obstinate actors like Russia and India to rethink their investments.

While the announcement is welcome news in terms of international development, China is also the world’s biggest coal market, home to half of the world’s coal plants that are still in operation. The country generates 70% of its electricity from coal. These coal plants have stood in the way of the country making meaningful progress on its climate pledges.

Last year, even as China faced record air pollution largely from coal-fired power plants and promised it was cutting emissions, it commissioned a record 38.4 gigawatts of new coal plants — more than three times the amount of coal power commissioned in the rest of the world. While Xi’s announcement is historic, it remains to be seen how quickly China will phase out support for international projects — and whether it will also clean up the coal-fired mess at home.