Has China quit overseas coal financing?
China did not fund any overseas coal projects in the first half of 2021, the International Institute of Green Finance said. This marks a milestone in the greening of China’s Belt and Road Initiative, which since its inception in 2013 had included generous funding of coal every year.
Less than a year ago, fighting climate change appeared to still be a relatively low priority in Beijing, taking a back seat to economic stability and even more localized environmental concerns like air pollution. That changed when Chinese leader Xí Jìnpíng 习近平 announced in September that China would peak its carbon emissions before 2030, and aim for carbon neutrality by 2060.
Xi followed up on that pledge in an address this April, in which he said China would “strictly limit increasing coal consumption” in the next five years, then “phase it down” in the following five years.
But there was an apparent loophole: Even if China’s newly ambitious goals for its domestic emissions were roughly in line with Paris Agreement pledges, would it matter if Beijing continued to generously fund the construction of coal power plants overseas? For years, China has been the largest public financier of overseas coal projects, even if the picture is more mixed when accounting for private funding sources.
That loophole now appears closed, as for the first time since Beijing expanded its overseas investments under the Belt and Road umbrella in 2013, China did not fund any overseas coal projects in the first half of 2021, the International Institute of Green Finance said in a report today.
- That doesn’t mean every investment is green, of course, but it appears to mark an intentional and lasting shift among major Chinese financial institutions.
- Last month, China’s largest commercial bank, ICBC, announced that it would begin to phase out coal project financing. Two weeks later, it pulled out of a major $3 billion coal power plant project in Zimbabwe.
- Last week, the Chinese Ministry of Commerce and the Ministry of Environment and Ecology jointly published fresh guidelines encouraging overseas enterprises to invest in greener projects and dump environmentally risky ones.
- Jīn Lìqún 金立群, the president of the Asian Infrastructure Investment Bank (AIIB) and once China’s vice finance minister, said in May that he had advised Chinese officials that “if China can clearly declare that the Belt and Road Initiative will not engage in coal power and only support clean energy, it will greatly enhance the reputation of the BRI.”
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