Coal phase-out in the Belt and Road Initiative

An analysis of Chinese-backed coal power from 2014-2020

One constantly sees claims in the Western media that China is massively expanding coal fired power plants around the world. The facts, as always, are not quite what the handful of Western regimes claim.

On 16 June 2021, the Green BRI Center released a study of overseas coal power investments in the BRI with Chinese participation identified significant cancellation or suspension of such plants, and analyzed the broader implications of this trend, for the financial institutions.

China is considered the largest financier of overseas coal for the past yearsAs coal-combustion contributes to over 40% of global energy-related emissions, coal-related investments have come under scrutiny with many countries announcing a phase out coal investments in order to protect the world from a climate catastrophe.

To reduce its impact, relevant Chinese institutions have been engaged in re-evaluating investments in overseas coal fired power plants in cooperation with international partners. 

In December 2020, the BRI Green Development Coalition (BRIGC) under China’s Ministry of Ecology and Environment put all coal-related investments on a “restricted” project list through the Traffic Light System.

With the global tide turning ever faster against coal investments, numerous coal-related investments had come under scrutiny and were delayed or cancelled, while other coal-plant investments were mothballed during construction.

Highlights

Some facts:

  • Between 2014 and 2020, about USD160 billion of Chinese-backed coal-fired power plants were being planned or announced outside of China;
  • More than USD65 billion of Chinese-backed coal-fired power plants have been either shelved, mothballed or cancelled since 2014, with more projects seeing delays in construction;
  • In 2019 and 2020, Chinese backed coal-fired power plants worth USD22 billion and USD25 billion respectively have changed status to become either cancelled, mothballed or shelved; 
  • Since 2015, of the power plants 23 Chinese-backed coal-fired plants were shelved and a further 14 were cancelled, while 20 new Chinese-backed coal-fired power plants went into operation;
  • Several coal-fired projects were announced prior to 2014. Forty coal-fired power plants with Chinese participation were in the pre-approval phase between 2014 and 2020, of which 4 went into operation, 9 were shelved and 5 were fully cancelled. For the 34 coal-fired power plant projects that had been under construction since 2014, only 19 went into operation, while 4 had been shelved. Of the 32 shelved projects since 2014, 9 were cancelled altogether.
  • Between the second half of 2014 and the end of 2020, 52 coal-fired power projects with Chinese financial participation outside of China had been announced. Of these announced projects, only 1 has gone into operation: the 1.3 GW Payra Patuakhali coal power station in Kalapara, Bangladesh, in the first half of 2020. At the same time, 25 of the projects announced since 2014 had been shelved and 8 were cancelled
  • No new Chinese-backed coal-fired power plant was announced in 2020; in contrast, new coal-fired projects in 2020 were announced with backing by India’s Adani group in India, by Korea and Thailand in Vietnam’s Sekong Power Station, and by Korea in Indonesia;
  • The coal-exit is likely driven by increasing competitiveness for solar- and wind-power: solar-power costs have dropped by 80% in 10 years;
  • At the same time, financing cost for coal-fired power plants have increased by 38% compared to 10 years ago, while 64 carbon pricing initiatives around the world make coal-financing ever less competitive;
  • Recent biddings show that the price of electricity from new coal-fired power stations is about 500% more than from new solar-power plants;
  • Multiple BRI countries (e.g., Pakistan, Bangladesh) have announced to phase-out new coal investments;

Source: Green BRI Center, International Institute for Green Finance, Beijing, China:

Brief: Coal phase-out in the Belt and Road Initiative (BRI): an analysis of Chinese-backed coal power from 2014-2020

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