China can't wean itself off overseas coal

The world's largest greenhouse gas emitter has made significant progress in cutting emissions at home, but continues to be the biggest funder of coal projects abroad, reports Purple Romero from the Innovate4Climate event in Singapore last week.

china coal abroad
China is currently the world’s largest investor both in fossil fuels and renewable energy. Image: Asia Sentinel

Even as China has slashed its domestic carbon emissions faster than other countries, the absence of a strategy to divest from coal projects abroad and the lack of a clear definition on what constitutes green finance threaten to undercut its contribution in fighting the global climate crisis.

“China has yet to publish a climate strategy to shift its investment in coal overseas,” Bai Yunwen, executive director of Greenovation Hub, a Chinese think-tank on environmental governance said at the World Bank’s Innovate4Climate (14C) forum in Singapore on June 5. “If we do not cut overseas flow in coal, we will lose the war.”

The world’s biggest emitter of greenhouse gases, China is working hard to reduce its carbon emissions. The world must cut emissions by about 45 per cent between 2010-2030 and reach net zero in 2050 order to limit global warming to 1.5°C. The Intergovernmental Panel on Climate Change said in its 2018 special report that capping global warming to 1.5°C could reduce risks to food security, economy and health.

paper published in May 2019 by the Breakthrough National Center for Climate Restoration in Australia said that failure to drastically cut emissions gives rise to a scenario where about a billion people could be displaced by 2050. 

“Green finance” v. “climate finance”

China, however, plays the conflicting roles of being the world’s largest investor both in fossil fuels and renewable energy.     

While its renewable energy investments have reached US$44 billion in 2017, China has also invested US$35.9 billion in coal operations in 27 countries including Indonesia, Philippines and Vietnam, according to the Institute for Energy Economics and Financial Analysis.

“US$21.3 billion has been committed to over 30GW of coal-fired capacity across 12 countries, and an additional US$14.6 billion has been proposed in funding for over 71GW across 24 countries, adding up to US$35.9 billion in funding for 102GW of coal plant projects over 27 countries in total,” the IFEA said in its report “China at a Crossroads: Continued Support for Coal Power Erodes Country’s Clean Energy Leadership”.

While its renewable energy investments have reached US$44 billion in 2017, China has also invested US$35.9 billion in coal operations in 27 countries including Indonesia, Philippines and Vietnam.

Published in January, the report also said that the “country with the most coal-fired capacity supported by Chinese finance is Bangladesh, followed by Vietnam, South Africa, Pakistan, and Indonesia”.

Most of these countries are part of China’s Belt and Road initiative (BRI), a highly-ambitious infrastructure project in the world which targets the development of roads, railways, bridges and ports which will connect China to Asia, Europe and Latin America.

The BRI summit in April 2019 indicated possible green investments, however as it encouraged green finance including the issuance of green bonds, according to this Reuters report.

But even this can be a cause of worry sans a clear definition of “green finance.”

“We need a clear definition of green finance and climate finance,” Bai said. “In 2015 we already are the largest green bond market. There are a lot of activities labelled “green,” but are these projects compatible with the climate [target]?”

She added there were projects that support greenwashing, such as “clean coal and clean gasoline.”

“With no official definition, it will be hard to tell if the private sector will be part of the problem or will be part of the solution”.

China has only recently started to tackle removing coal from its new standards for green bond issuance, according to a report by Reuters in March 2019.

Bai furthered in an interview at the sidelines of the I4C forum that China should instead tap the clean energy market in the BRI countries.

“China has done a lot within China because we are facing air pollution, but we see a big demand from some Asian countries along the BRI for energy access and clean energy. It’s a big opportunity for the Chinese financial sector”.

Purple Romero is a longtime contributor to Asia Sentinel. This article was republished from Asia Sentinel as part of the Innovate4Climate 2019 Media Fellowship organised by the World Bank Group and Eco-Business. 

Did you find this article useful? Help us keep our journalism free to read.

We have a team of journalists dedicated to providing independent, well-researched stories from around the region on the topics that matter to you. Consider supporting our brand of purposeful journalism with a donation and keep Eco-Business free for all to read. Thank you.

Most popular

Featured Events

Publish your event

More from Innovate4Climate 2019

I4C
Suggestions by delegates at the World Bank's recent Innovate4Climate event in Singapore included: Supporting developing countries in their efforts to conserve the forests, and launching more incubators for climate-friendly solutions. 
a coal-fired power plant 1
The time is running out to turn the tide on climate change. Carbon pricing could drive the transition to a low-carbon economy, but how can governments in developing Asia do this most effectively to ensure that economic growth and climate protection go hand in hand?
A view of Orchard Road, Singapore
About four out of every five people impacted by sea-level rise by 2050 will live in East or Southeast Asia, creating an urgent need climate-smart solutions for cities. This year’s Innovate4Climate summit will look at the climate-smart solutions the region needs.
media fellowship ecobusiness
Although the climate crisis is slowly gaining media attention, journalists from across Asia still face an uphill task of reporting on the environment. This year, World Bank Group and Eco-Business brought together over 20 journalists for the Innovate4Climate 2019 Media Fellowship to learn how to best report on the biggest story of our time.
leaf background pattern

Transforming Innovation for Sustainability Join the Ecosystem →

Strategic Organisations

Reneum
Danfoss
Trucost
ESG Book
Olam
City Developments Ltd