China stopping overseas coal finance to cut as much emissions as Europe going net-zero2 min read
China’s recent decision to end financial support for building new coal plants abroad could make a major difference in global efforts to limit the use of fossil fuels.
The International Energy Agency estimated in its World Energy Outlook that China ending funding for overseas coal, a new policy announced last month, could lead to the cancellation of up to 190 gigawatts of coal projects and prevent the emission of as much as 20 billion metric tons of carbon dioxide — roughly the same amount that would be saved by the European Union hitting its goal of net-zero emissions by 2050.
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To put that amount in context, a wave of coal plant retirements in the U.S. has cut the country’s coal capacity by 105 gigawatts since 2010, according to Carbon Brief.
Germany, home to the world’s fifth-largest coal fleet, has 44 gigawatts of operating coal plants.
“The pledge on overseas coal is globally significant,” said Justin Guay, director of global climate strategy at the Sunrise Project, an environmental group. “If we can take off Germany’s coal fleet four or five times over, that is going to help bend the curve on emissions.”
To be sure, China’s pledge is vague and incomplete, and its effect is dependent on how it defines the policy. Most analysts are interpreting China’s pledge to mean it would stop building coal plants in the pre-construction phase that have received public Chinese finance, meaning those that have not broken ground.
“The question will be about those coal plants that have reached financial close and have broken ground — what does it mean for those projects, where there might be more pain in walking away from them?” Guay told the Washington Examiner.
China, the largest greenhouse gas emitter globally ahead of the U.S., remains the world’s top consumer of coal domestically and has not acted to curb domestic use.
But Guay found IEA’s analysis noteworthy because the agency is historically considered conservative in its analysis.
“It’s not like Greenpeace put that out there,” he said. “There was definitely thought and data that went into producing that number.”
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China had been isolated as the last, and largest, financier of coal globally, after South Korea and Japan joined other Group of Seven nations in committing earlier this year to end international funding for coal.
The end of coal support from those three countries essentially means the vast majority of new coal built outside of India and China won’t be built or financed, since the next frontiers for coal expansion in Southeast Asia and sub-Saharan Africa are heavily reliant on public investment because they lack a robust private finance market.