Addressing the 76th United Nations General Assembly on September 21, Chinese President Xi Jinping declared that China “will not build new coal-fired power projects abroad,” thereby signaling a move by the world’s second-largest economy toward helping reduce carbon emissions. Xi also pledged that China would hit peak carbon emissions by 2030 and become carbon-neutral by 2060, targets he had already announced last year.
According to Boston University’s Global Power Database, China Development Bank and Export-Import Bank of China have extended US$51.6 billion in financing coal power plants worldwide, with some 33.5 gigawatts of coal-fired plants under construction overseas (20GW) or in the planning stage (13.5GW) and backed by Chinese financing.
While Xi’s announcement was welcomed by Western leaders, including UN Secretary General António Guterres and John Kerry, the first US special presidential envoy for climate, other climate watchers remain skeptical, questioning whether Xi’s statement is a commitment to stop China’s engineering, construction and procurement for new projects or also a moratorium on financing for new coal-fired power plants from Chinese public and private financial institutions.
Some analysts also question whether “new” projects include those already in the planning stage but not yet under construction.
Is Xi’s declaration on coal at the UN General Assembly a face-saving obfuscation aimed at mollifying world leaders in their push to address climate change or an honest effort to reduce worldwide use of coal in electricity generation? If we compare Beijing’s international efforts with its efforts at home, the answer may be a little of both.
Domestically, China’s net construction of new coal-fired power capacity in the past year grew by 29.8GW – greater than three times that of all other countries in the world combined – and enough to offset a worldwide decrease of 17.2GW, according to the Center for Research on Energy and Clean Air in Finland.
And if Beijing sticks to its latest five-year development plan (approved this year), China will continue the construction of new coal-fired power plants.
So even under a verifiable elimination of both building and financing of international coal-fired power plants, Xi’s statement still doesn’t go far enough to warrant any of the optimism coming from climate watchers.
The economic competitiveness of renewables has made coal-powered plants less attractive overall.
As China currently has a pipeline of some 100-300GW of domestic coal-fired capacity planned, Xi’s pledge, even if it were honored and extended to a total cancellation of the 33.5GW of international capacity China has in the pipeline, would have a minimal effect on climate change worldwide, as Beijing will build far more coal-fired capacity domestically than overseas.
Gary Sands is a senior analyst at Wikistrat, a crowdsourced consultancy, and a director at Highway West Capital Advisors, a venture capital, project finance and political risk advisory. He has contributed a number of op-eds for Forbes, US News and World Report, Newsweek, The Diplomat, The National Interest, EurasiaNet, and the South China Morning Post. He spent six years in Shanghai, four years in Ho Chi Minh City, and is now based in Taipei.