SHANGHAI: China has become a key backer for coal-fired power globally, funding more than a quarter of all new plants being developed outside its borders even as it clamps down on the polluting fuel at home, a study published on Tuesday said.
The top destinations are Bangladesh, Vietnam, South Africa and Pakistan, and about a quarter of the proposed capacity would use technology no longer allowed in China, the report by the Institute for Energy Economics and Financial Analysis (IEEFA), a US-based think-tank, said.
“China is taking very forceful steps to slow down the increase in coal-fired power facilities in China, but is looking to take that capacity and sell it overseas,” said Melissa Brown, IEEFA’s energy finance consultant and an author of the report.
China, the world’s biggest energy consumer, has been investing heavily in alternative fuels in order to cut its dependence on coal, a major source of smog as well as climate-warming carbon emissions.
It has closed down ageing mines and power plants, with the aim of cutting the fuel’s share of total energy consumption from 69 per cent in 2011 to 58pc by next year.
But even as it slashes coal use within its borders, its financial institutions have committed or offered funding of $35.9bn for 102 gigawatts (GW) of coal-fired power now being developed outside the country, the report said.
While overseas financial institutions like the World Bank aim to restrict new coal investments, Chinese state-owned enterprises and policy banks are becoming “lenders of last resort” for coal-fired power, it said.
State firms facing caps on coal production and targets to reduce consumption in smog-prone regions have responded by heading overseas. The Xuzhou Mining Group is now running projects in Pakistan and Bangladesh after closing collieries in eastern China’s Jiangsu province.
China is involved in nearly 14 GW of planned coal-fired capacity in Bangladesh and 13 GW in Vietnam, the report said, adding that 23pc of the 102 GW of China-invested capacity was classified as high-emission “subcritical” technology no longer in use at home.
“Ironically, many of the equipment types would no longer be suitable for use in China,” said Brown, noting that many recipient countries “have lower environmental standards and are highly motivated to take investment in any form.” China brought its total renewable and nuclear generation capacity up to 749 gigawatts last year, raising its share of total power capacity from 34 percent to 40pc in just three years, but Brown said China’s role in financing coal-fired power could overshadow its clean energy contributions.
“There are a number of countries that would welcome China as a leading global developer of industrial-scale renewables, but what we’ve seen is that many Chinese companies have essentially exported technology for which there is increasingly no demand in China,” she said.
Published in Dawn, January 23rd, 2019