Even as China struggles to curb domestic coal-fired power and the deadly pollution it produces, the world’s top carbon emitter is aggressively exporting the same troubled technology to Asia, Africa and the Middle East.
The carbon dioxide emissions from Chinese-backed plants could cripple global efforts to rein in global warming caused by the burning of fossil fuels — especially coal, analysts said.
“China is a world leader in terms of embracing the policy and investment needs to progressively decarbonize its economy,” Institute for Energy Economics and Financial Analysis (IEEFA) director of energy finance studies Tim Buckley said. “But internationally, China continues to invest in a range of coal project in direct contradiction to its domestic energy strategy.”
Globally, coal use accounts for 40 percent of carbon dioxide emissions and is on the rise after declining slightly from 2014 to 2016. More than two-fifths of the world’s electricity is generated by coal-fired power, nearly double the share of natural gas and 15 times as much as solar and wind combined.
One-quarter of coal plants in the planning stage or under construction outside China are backed by Chinese state-owned financial institutions and corporations, according to research by the IEEFA, an energy finance think tank based in Cleveland, Ohio.
Remove India from the picture and the share of coal development supported by China rises to more than one-third.
“The risk is locking these countries into something that won’t be good for them in the long run and that is incompatible with the Paris climate agreement’s temperature goals,” said Christine Shearer, an energy analyst for CoalSwarm and lead author of the research, which is slated for publication later this month.
Many of the recipients of China’s largesse — Egypt, Nigeria, Kenya, Senegal, Zimbabwe and a half-dozen others — have little or no coal-fired power and no coal to fuel future plants.
“That means they will have to build import infrastructure, or even coal mines,” Shearer told reporters.
The 2015 Paris treaty calls for capping global warming at “well under” 2°C and a landmark report by the UN’s climate science panel last month said that even the 2°C target might not be ambitious enough to avert catastrophic impacts.
With only one 1°C of warming so far, the planet has seen a crescendo of lethal heat waves, flooding, drought and storm surges made worse by rising seas.
Yet, Chinese banks and investment agencies have committed more than US$21 billion to developing 31 gigawatts (GW) of coal-fired capacity in a dozen countries, and an additional US$15 billion is on offer to support projects that would generate 71GW in 24 nations, for a total of more than 101GW, the IEEFA found.
Worldwide, there are nearly 2,500 30 megawatt or larger coal-fired stations in operation, with a combined capacity of about 2,000GW, according to the Global Coal Plant Tracker.
“A glut of new coal infrastructure would bury our chances of keeping global warming well below 2°C,” Heffa Schuecking, director of Urgewald, an environmental non-governmental organization based in Germany that tracks the coal sector, told reporters. “The Chinese government needs to stop bankrolling new coal plants both at home and abroad.”
Any pathway to a 1.5°C world — even one that allows for “overshooting” the target and depends heavily on extracting carbon dioxide from the air — requires the near elimination of coal from the energy mix by mid-century, the UN has said.
A “sustainable development” scenario laid out by the International Energy Agency sees coal power dropping 60 percent by 2040.
Coal use within China — nearly half the world total — has declined slightly in the past few years, as has carbon dioxide emissions, although both are likely to tilt upward this year.
However, in the rest of Asia, soaring demand for electricity has translated into a sharp jump in coal consumption.
For example, in Vietnam, Bangladesh and the Philippines, electricity generation shot up more than 20 percent from 2014 to last year — triple the global average — with China-backed coal powering a significant part of the increase.
China is not alone in peddling the most carbon-intensive of fossil fuels beyond its borders.
As of last month, South Korea and its export credit agencies were positioned to back 12GW of coal-fired power abroad and Japan was behind another 10GW, Natural Resources Defense Council international energy policy manager Chen Han (陳寒) said in a research note.
From 2013 to this year, South Korea and Japan financed 8GW and 20GW respectively.
However, their shares were dwarfed by China’s, whose financing covered as much power generation as Japan and South Korea combined. The three East Asian rivals supported 90 percent of the 135GW built since 2013 or in the pipeline.
“China is winning more bids and Chinese firms are more willing to consider countries and markets with high risk profiles,” Chen told reporters.
All this external funding comes at a time when financial institutions in the rest of the world are starting to shy away from coal.
Cheap solar and wind energy, combined with mounting concern about climate effects, have cast a shadow over coal-fired power, raising the specter of stranded assets.
At least 19 major insurers with more than US$6 trillion in assets — 20 percent of the global total — have divested from coal, up from US$4 trillion a year ago, the Unfriend Coal Scorecard, which tracks divestment in the insurance sector, reported last week.
Insurers Generali, Lloyd’s, Hannover Re, AG2R La Mondiale and Groupama all announced new divestment policies this year.
Investors, pension funds, export credit agencies and multilateral development banks — including the World Bank — have also pulled back, as have many private banks.
An analysis by the Washington-based World Resources Institute of China’s energy sector financing under its Belt and Road Initiative — which seeks to boost US$6 trillion in infrastructure across 68 nations — showed that very little went toward renewable energy sources.
“Most Chinese deals from 2014 to 2017 in energy and transportation” — totaling US$250 billion in loans and financing — “were tied to carbon-intensive sectors,” said lead author Zhou Lihuan (周立歡), an associate at the World Resources Institute’s Sustainable Finance Center.
China is acutely aware of mounting criticism of its drive to export coal-fired power, said Laurence Tubiana, CEO of the European Climate Foundation and — as France’s top climate negotiator — one of the main architects of the Paris agreement.
“Every conference, every discussion is about how to green the Belt and Road Initiative,” she told reporters upon returning from a round of meetings in Beijing.
Domestically, the barriers to rapidly drawing down coal use — despite a cap on coal production — are evident.
“China has built up an enormous coal-power generation industry — workers, companies, technology manufacturing — and now they have a lot of surplus,” energy analyst Shearer said.
At the same time, China’s juggernaut economy is slowing, which has left these state-run behemoths “looking for new markets.”
However, a dozen experts said that said outside its borders — Beijing could opt for a different path.
“They do have a choice,” Institute for Sustainable Development and International Relations senior research fellow Oliver Sartor said in Paris. “It looks hypocritical to clean up at home and then be investing in coal abroad.”
“China’s dynamic private sector — which is very much involved in renewables, electric vehicles — would be a perfect vehicle for outside influence,” Tubiana said.
“China has to choose whether it will offload abroad what it is trying to leave behind at home, or secure a far bigger market share over the next few decades in clean energy,” Institute for Climate and Sustainable Cities executive director Renato Redentor Constantino said in Manila.
“I think it will choose clean energy, but it won’t do it alone,” he said. “Pressure has to come from other countries and civil society.”
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