‘Game-changer’: China to stop funding overseas coal projects

Chinese President Xi Jinping has said that China would no longer fund the construction of new coal-fired power projects overseas, surprising the world on climate for the second straight year at the United Nations General Assembly.

China has supported coal projects in developing countries including Indonesia and Bangladesh and has been under heavy diplomatic pressure to put an end to the financing to help the world meet the goals of the Paris climate agreement to reduce carbon emissions.

Xi’s announcement on Tuesday followed similar moves by South Korea and Japan earlier this year.

“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 in a pre-recorded video address at the annual UN gathering.

The pledge came hours after United States President Joe Biden announced a plan to double financial aid to poorer nations to $11.4bn by 2024 to help those countries switch to cleaner energy and cope with global warming’s worsening effects.

Although Xi’s speech was short on detail, the initiatives could provide some momentum going into COP26, the key global climate talks that are due to start in the Scottish city of Glasgow at the end of October.

“This is an absolutely seminal moment,” said Xinyue Ma, an expert on energy development finance at Boston University’s Global Development Policy Center.

In the run-up to the historic 2015 Paris climate deal, a joint US-China agreement helped kick-start the successful negotiations.

The US climate envoy John Kerry quickly welcomed Xi’s announcement, calling it a “great contribution” and a good foundation for success in Glasgow.

“We’ve been talking to China for quite some period of time about this. And I’m absolutely delighted to hear that President Xi has made this important decision,” Kerry said in a statement.

Alok Sharma, the British minister who is heading COP26, also hailed Xi’s announcement.

“It is clear the writing is on the wall for coal power. I welcome President Xi’s commitment to stop building new coal projects abroad – a key topic of my discussions during my visit to China,” he said on Twitter.

‘Real game-changer’

Climate campaigners also welcomed the pledge from the world’s largest emitter of greenhouse gases.

From 2013 to 2019, data shows that China was financing 13 percent of coal-fired power capacity built outside China – “far and away the largest public financier,” according to Kevin Gallagher, who directs the Boston University centre.

The climate advocacy movement 350.org called Xi’s announcement “huge,” saying it could be a “real game-changer” depending on when it takes effect.

Helen Mountford, the vice president for climate and economics at the World Resources Institute, said it was “a historic turning point away from the world’s dirtiest fossil fuel.”

“China’s pledge shows that the firehose of international public financing for coal is being turned off,” she said but noted that Beijing continued to invest in coal at home.

China brought 38.4 gigawatts of new coal-fired power into operation last year – more than three times what was brought on line globally.

Non-governmental groups in a letter earlier this year said the state-run Bank of China was the largest single funder of coal projects, providing $35bn since the Paris climate agreement.

Xi repeated pledges from last year that China would achieve a peak in carbon dioxide emissions before 2030 and carbon neutrality before 2060.

Some experts have criticised the targets as not ambitious enough, although the pledges allowed Beijing to claim the moral high ground on the issue after then-US President Donald Trump, who called climate change a “hoax”, withdrew from the Paris climate agreement.

One of Biden’s first moves after assuming office in January was to return the US to the Paris agreement.

“China was the last man standing. If there’s no public finance of coal from China, there’s little to no global coal expansion,” Justin Guay, the director of global climate strategy at the Sunrise Project, a group advocating for a global transition from coal and fossil fuels, said of Xi’s promise.

Guterres welcomed Xi’s move on coal and Biden’s pledge on helping developing nations deal with climate change.

“Accelerating the global phase out of coal is the single most important step to keep the 1.5-degree goal of the Paris Agreement within reach, he said in a statement.