Over 70% of the world's new coal projects are financed by China, with the country having invested over $50 billion in the past decade to building power plants abroad. Funds from the People's Republic have propped up coal plants in countries from Vietnam to Bangladash to Brazil, but this practice will soon come to an end, according to a pledge made by Chinese president Xi Jinping to the United Nations General Assembly on Tuesday.
"China will strive to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060," he said in a prerecorded message. "This requires tremendous hard work, and we will make every effort to meet these goals. 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."
No timeline was given, with Xi's climate commitment just one bullet point in a larger speech about promoting "dialogue and cooperation" among the world's countries, a nod to escalating tensions between China and the US. Yet the surprise announcement may be a sign of what's to come in November, when world leaders will converge in Glasgow, Scotland, for COP26, the United Nations Climate Change Conference.
It's not yet clear what this means for projects already approved by China's state banks. China is on the hook to fund 40 gigawatts of coal power around the world, according to Thom Woodroofe of the Asia Society Policy Institute. Much of China's investment comes through the Belt and Road Initiative, through which Chinese banks have funded infrastructure projects across the developing world.
The policy of eschewing coal production in favor of renewables in developing countries could have significant implications for the planet's battle against climate change in coming decades. Human-generated carbon emissions, created by burning fossil fuels such as coal, have seenover preindustrial levels.
It's estimated that 72% of coal plants in development outside of China are being funded by Chinese banks, according to Quartz data. Since 2013, over 26 gigawatts of coal-powered electricity has been built with the backing of Chinese investments.
However, Xi's Tuesday announcement doesn't blaze a new path for the country as much as put in writing an existing trend.
"China has in fact stopped providing financial support to any new coal-fired power projects outside of China since 2020," said Hao Tan, associate professor at the Newcastle Business School in Australia and researcher of China's energy transition. "This is likely due to commercial reasons, for instance increasing financial risks of coal power assets ... and potential carbon pricing around the world."
China is following the footsteps of Japan and South Korea, with both countries committing earlier this year to cutting off overseas coal plants from funding. The three countries together have been responsible for funding 95% of the world's new coal projects since 2013, according to EndCoal.com.
But while China is curbing its overseas entanglement with coal, its domestic production is still rising. Over 20 new coal projects were approved within China during the first six months of the year, says Greenpeace.
"While phasing out overseas coal finance is very important, it does not let China off the hook from taking bold climate action within its own borders," said Helen Mountford, vice president of climate and economics at the World Resources Institute, in a statement. "It is crucial that China strengthen its 2030 climate target to align with its pledge to zero out emissions by 2060. As the world's largest emitter, China should join the 117 countries that have already updated their 2030 climate targets, and submit a stronger national climate commitment before COP26 in November 2021."