In a speech to the UN General Assembly, China’s President Xi Jinping announced a new commitment to end the financing of new coal plants outside of the country, aimed at advancing China’s progress towards improving its climate profile. As China plans to end construction abroad, however, domestic capacity continues to grow at a rapid pace.
The pledge follows Xi’s announcement last year, also at the UN General Assembly, of a series of climate targets for the country, including goals to achieve climate neutrality by 2060, and to reach peak emissions prior to 2030.
In his speech, Mr. Xi said:
“We need to accelerate transition to a green and low-carbon economy and achieve green recovery and development. China will strive to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060. 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.”
China is by far the largest producer of coal-based energy, responsible for roughly half of global coal consumption. China also produces more greenhouse gases (GHGs) than any other country, with emissions reaching over 10,000 million tons of CO2 annually, as of 2016, nearly double those of the U.S. in second place.
China’s commitment to end coal construction abroad has major implications for the industry around the world, although recent trends indicate that demand for overseas coal capacity has been declining. According to the Centre for Research on Energy and Clean Air (CREA), Between 2000 and 2017, Chinese firms invested approximately $115 billion in overseas power plants, and Over 120 GW of coal fired capacity can be linked to China. Recent CREA research, however, indicated that waning coal demand and existing overcapacity has driven a sharp trend of project cancellations. The study found that 4.5 times as much capacity has been shelved or cancelled than entered into construction since 2017.
While China’s coal investments abroad end, however, domestic construction appears to remain strong. In a separate study released earlier this year by CREA and Global Energy Monitor, the organizations found that over 38 GW of new coal plants were commissioned in China in 2020, more than 3x the new capacity commissioned in the rest of the world combined, while construction permits for new coal projects in China also accelerated.