China Halts Decades Of Coal Financing

China takes a step to limit global carbon emissions.

China will not build any new coal-fired power projects abroad, announced President Xi Jinping in his September speech to the United Nation’s General Assembly.

His decision signals China’s commitment to green and low-carbon energy and its ambition to play an influential role as the world shifts away from fossil fuels. Experts expect that China also will accelerate its conversations regarding climate collaboration before the United Nations November COP-26 climate talks in Glasgow, Scotland. The US and China, the world’s two biggest carbon emitters, are working toward a joint leadership role in global energy transformation to combat climate change.

The announcement comes just three months after the Industrial and Commercial Bank of China (ICBC), the country’s largest bank, withdrew from the $3 billion Sengwa coal project in northern Zimbabwe. Its withdrawal marked the first time that a Chinese bank proactively walked away from a coal-fired power project, and sent it a significant message regarding China’s overseas energy-financing prospects.

Financing from a Chinese bank was Zimbabwe’s last hope for the coal-fired power project, which remains in limbo as Western and South African banks face increasing pressure not to fund projects that contribute to climate change.

As the largest funding provider for overseas coal power plants, China had plans of supporting more than 40 Gw of new projects across Asia. The China Development Bank and the Export-Import Bank of China funded more than $50 billion in such projects over the past 20 years alone.

In his September speech, President Xi also addressed China’s plans to assist less wealthy countries with their energy transformation. Besides its goal to achieve carbon neutrality by 2060, China’s green transformation agenda will include support for developing countries building green and low-carbon energy projects for a zero-emissions future.