Our analysis of China-backed overseas coal projects suggests that the appetite for coal in recipient countries has waned considerably. Comparing the status of Chinese-backed coal projects between 2017 and 2021, we found that a wave of cancellations has hit China-backed coal investments – 4.5 times as much capacity has been shelved or cancelled than entered into construction.
This trend in cancellations can be attributed to weakening economic competitiveness, public opposition and environmental and social impact concerns, and overcapacity in recipient countries.
A huge number of coal plants are still in the pipeline, mainly in Asia, but issues around air pollution and CO2 emissions intensity, as well as changing policy – both of which are analyzed in the Briefing – could challenge and further delay coal development.
Moving forward, recipient countries must be vigilant in ensuring that overseas projects lean green, lest they run the risk of misallocating investments. Policy change around coal will hasten the turning tide, but recipient countries must also send clear market signals around their interest in developing and backing renewable energy technologies.
Following through on commitments to green its Belt & Road Initiative, China has the opportunity to proactively shift its investments in the same direction as the market and interest of recipient countries, rather than move forward with coal projects that have no assurance of returns.
The shrinking market for new coal outside of China means any potential reward from hanging on to high-emissions projects is fading rapidly.