China Forces Goodbye to Overseas Coal, But Will Generate More Fossil Megawatts

China has announced that it will stop building or financing new coal-fired power plants in 20 countries abroad, which would add up to 42,220 megawatts of polluting power in Asia, Africa, South America and Eastern Europe. These countries will be in the position of seeking new financing for their projects, something increasingly difficult, since a good part of the nations follow this same trend of abandoning coal, or joining the goodbye to this fossil fuel to bet on renewable initiatives. However, at the domestic level, the Asian giant already has plants under construction that will add 97,000 megawatts of energy from coal.

The intention, expressed by the President of the People’s Republic, Xi Jiping, came into force as of this Friday, October 1, and supposes a reduction in the world demand for coal about 30 million tons a year and up to 1,100 million tons of ore during the useful life of these 44 plants.

“The coal industry is going to feel a stream of cold water, of harsh reality from head to toe”

According to the first analysis of the measure, prepared by Global Energy Monitor, the cancellation of this financing of coal plants will mean a saving of more than 130,000 million dollars (just over 112,000 million euros), while avoiding the emission into the atmosphere of 8,000 million tons of CO_₂ during the lifespan of these plants.

To date, China was the largest financier of coal-fired power plants worldwide so numerous projects can be left without the financial support they need. The report sees it foreseeable that these plants will remain in the inkwell or will have to be reoriented, while the investment volume of the Asian giant will be used for other purposes, probably for cleaner energies.

Global Energy Monitor’s updated study ‘Global Coal Public Finance Tracker’ estimates the potential global impact of China’s pledge to the recent UN General Assembly in New York, followed a day later by the Bank of China’s confirmation that it will no longer finance new plants or coal mines outside the country as of October 1.

With almost a week in advance, the announcement has meant a jug of cold water for 44 plants in a score of countries that may see these energy projects at risk, despite the fact that the promise refers to “future initiatives of public financing”, starting this Friday. The study explains that if these coal plants are canceled, savings of 130,000 million dollars will be generated, about 50,000 for construction costs and another 80,000 for fuel costs and operating them throughout their useful life.

In Africa, the measure also affects the construction of a pipeline for the transport of coal from new plants in Kenya, Madagascar and Côte d’Ivoire. These countries will have to consider whether to join the No New Coal alliance, a UN proposal for countries to abandon the construction of new plants with this fuel that emits greenhouse gases and contributes, therefore, to climate change.

However, the countries most affected by the decision of the People’s Republic of China are Asian, in particular Bangladesh and Mongolia where coal plants will suffer a decrease of 90% respectively, and in this way they will also be forced to continue with their energy policy or abandon it and give the ‘I do’ to the ‘No New Coal’.

With the measure China will undoubtedly cause a wide impact on the coal markets because precisely all of these twenty countries import most of this fuel, so that together they added up to approximately 10% of coal imports in 2019, about 130,000 million tons.

Global Energy Monitor’s coal program director, Christine Shearer, predicts that China’s announcement is “the death knell” for public coal funding, as many projects will have to be canceled because there are no financing alternatives. In addition, he considers that “the good news” is that China’s move will prevent several countries from “spilling millions of dollars” in coal plants that will quickly be abandoned as a result of the decrease in the cost of renewable energy and public policies aimed at restricting fossil fuels.

Another of the researchers of this study center, specialized in analysis of coal mines, Ryan Driskell, assures that, until last week, the world coal producers had planned the opening of 390 new mines, but the announcement of China is a “stick in the wheel” to their aspirations. “The coal industry is going to feel a stream of cold water of harsh reality from head to toe,” he added.

Finally, Global Energy Monitor coal finance researcher Russel Gray celebrates that with his decision “China is taking a step in the right direction” as a result of his knowledge of the reality that investing in new coal plants does not make “financial sense”, since there are other forms of energy much cheaper.

If anything, he warns that for China’s initiative to have a real impact on climate change, the Asian giant needs to start phasing out its own coal plants as soon as possible and focus on renewable generation. He assures that he is still “far away” from this line, since in his own country he is building plants of this fossil fuel to generate 97,000 megawatts and plans to start up another 163,000 megawatts of polluting coal energy.

The UN Intergovernmental Panel on Climate Change (IPCC) calculates that in order to limit the increase in global temperature to 1.5 °C, as agreed in the Paris Climate Agreement, it is necessary to leave behind the energy from this fossil fuel before 2040. During the UN General Assembly held in September 2020, Xi Jiping promised that China will reach carbon neutrality by 2060.

Source: The Confidential