Historically one of the major providers of finance to overseas coal power projects, China, in a major announcement at the UN General Assembly, said it will not build new coal fired power plants abroad.
This basically means the last coal financier of the world has now decided to stop financing overseas coal.
Also it marks a shift in policy around its sprawling Belt and Road infrastructure initiative, which had already begun to drawdown its coal projects, believe climate experts. But concerns remain over domestic emissions.
“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,” Chinese President Xi Jinping said remotely.
The world’s largest carbon emitter China, which still hosts over half of the world’s operating coal fleet, on Tuesday joined Korea and Japan in putting an end to coal financing overseas.
The coal produces significant heat-trapping emissions.
Responding to a big announcement, UN Secretary-General Antonio Guterres on Wednesday hailed China’s announcement and a US commitment to increase climate financing for developing countries.
“I welcome @POTUS Joe Biden’s announcement to increase international public climate finance to $11.4 billion a year.
“I also welcome President Xi’s announcement that China will end financing of coal fired power plants abroad & redirect support to green & low carbon energy,” Guterres tweeted.
China financing the overwhelming majority of new coal plants and with a major shift now aims to eliminate about 75 per cent of plants in the design stage in 20 countries, UN climate change summit (COP26) President Alok Sharma says 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 tweeted, adding “At #COP26, we must consign coal to history.”
Warning that the Paris climate targets would go up in smoke, the UN chief this week reiterated “governments must shift subsidies away from fossil fuels and progressively phase out coal use”.
“If all planned coal power plants become operational, we will not only be clearly above 1.5 degrees, we will be well above 2 degrees. The Paris targets would go up in smoke,” the Secretary-General said, who is seeking phasing out coal by 2030.
Quoting the Intergovernmental Panel on Climate Change (IPCC) latest report that says the 1.5-degree goal is still in reach, Guterres said: “We need a dramatic improvement in Nationally Determined Contributions from most countries.”
In response, Kevin P. Gallagher, Director of the Boston University Global Development Policy Center and Professor of Global Development Policy at Boston University, told IANS: “It is time for the private sector –which finances 87 per cent of overseas coal — to follow suit. We will not meet our global climate and development goals if the private sector continues to finance overseas coal while leading governments have stopped.”
A report this month by climate change think tank E3G finds that China accounts for 55 per cent of the world’s pre-construction pipeline (163GW), in addition to hosting over half of the world’s operating coal fleet.
China has, however, seen a 74 per cent reduction in the scale of its project pipeline, with 484GW of cancellations since Paris. Project cancellations outnumber newly operational capacity by 2.4:1, a much lower figure than in the rest of the world.
Coal is the single largest contributor to climate change.
The recent UN report (IPCC) says the use of coal needs to fall 79 per cent by 2030 on 2019 levels to meet the pledges countries signed up to in the 2015 Paris Agreement.
E3G report’s author Chris Littlecott, Associate Director at E3G, said: “The collapse of the global coal pipeline and the rise of commitments to ‘no new coal’ are progressing hand in hand. Ahead of COP26, governments can collectively confirm their intention to move from coal to clean energy.
“The economics of coal have become increasingly uncompetitive in comparison to renewable energy, while the risk of stranded assets has increased. Governments can now act with confidence to commit to ‘no new coal’.”
India is home to 7 per cent (21GW) of the global pipeline, which is 56 per cent of South Asia’s total, with the country moving slowly away from coal at a national level, however considerable progress is being made at the state level.
E3G finds between 2019 and 2021 public officials from the states of Gujarat, Chhattisgarh, Maharashtra, and Karnataka announced their intention to not build new coal power plants.
According to the analysis by Ember and Climate Risk Horizons, 27 GW of pre-permit and permitted new coal power plant proposals in India are now superfluous to its electricity requirements.
These coal project proposals could jeopardise the achievement of India’s widely-praised renewable energy target of 450 GW by 2030.
These surplus ‘zombie’ plants, assets that would be neither dead nor alive, would require Rs 247,421 crore ($33 billion) of investment, yet are projected to lie idle or operate at uneconomic capacity factors due to surplus generation capacity in the system, says the analysis.
(Vishal Gulati can be contacted at firstname.lastname@example.org)