2 years later: China’s ban on overseas coal power projects and its global climate impacts

At the 2021 United Nations General Assembly, China’s President Xi committed to halting financing and construction of new coal-fired power plants overseas. This announcement from the world’s largest builder of coal plants was met with global acclaim. At the time, it would have meant the halting of the construction of 103 coal plants in 28 countries, with a combined capacity of 104 gigawatts, which were either planned, considered, or already in construction under Chinese financing or engineering procurement and construction (EPC) agreements, potentially avoiding approximately 480 million tonnes of carbon emissions annually.

As of August 2023, some 36 gigawatts (GW) overall of coal project capacity has now been cancelled, avoiding 4.1 billion tonnes of carbon emissions, demonstrating the potential impact of China’s pledge when implemented.

Meanwhile, there are still concerning trends in China’s overseas coal projects. Although progress has been made in cancelling and shelving coal projects, the number of operational coal plants financed by China has increased.

In August 2023, some two years after China’s pledge, 18.1 gigawatts of overseas China-backed coal plants were in operation that had been commissioned since President Xi’s pledge. Furthermore, 7.2 gigawatts of China-backed capacity have been revived after being initially cancelled or shelved over the past two years, and some are even beginning to operate despite the commitment. Additionally, captive coal plants continue to expand, totalling 3.1 gigawatts of capacity by the end of August 2023.

Key findings

  • Despite China’s promise not to build new coal-fired power projects abroad, there has been significant progress in the operationalisation of coal plants in several countries.
  • Approximately 103 coal plants – 104 gigawatts (GW) – in 28 countries were planned, considered, or under construction, with either Chinese financing, or engineering, procurement, and construction (EPCs) agreements at the time of the announcement back in September 2021, out of which one coal plant has advanced significantly in its progress.
  • If the coal capacity currently planned were to be cancelled, it could result in an annual emission avoidance of 227 million tons of CO2 – just short of Pakistan’s total carbon emissions in 2021. This total avoidance would rack up to an estimated 5.9 billion tonnes of cumulative lifetime CO2, assuming a retirement year of 2050, and align with the Paris Agreement’s goal of keeping the rise in the mean global temperature to well below 2°C below pre-industrial levels.
  • A year after the promise, 2.1 billion tonnes of cumulative carbon emissions from China-backed plants were avoided.
  • Between September 2022 and July 2023, 17.65 GW of projects were cancelled, resulting in a total avoided 4.1 billion tonnes of carbon emissions since 2021. 
  • A year after the announcement, in 2022, 7.6 GW capacity of China-backed plants were in operation. As of August 2023, this number increased to 18.1 GW.
  • Another 7.2 GW of China-backed capacity has been pushed on or revived from being cancelled or shelved in the last two years.
  • Captive plants remain a grey area, totalling 3.1 GW at the end of August 2023.

Paolo Gonzalez, CREA; Jincheng Dai, CREA; Tom Xiaojun Wang, People of Asia for Climate Solutions (PACS)

Partners: People of Asia for Climate Solutions (PACS)

Bosnia and Herzegovina, China, Europe, India, Indonesia, Iran, Philippines, Vietnam