12.8 GW of Chinese overseas coal project cancelled, but 57 GW could still go ahead

China’s “no new coal overseas” policy has already had a significant impact on the coal power pipeline in the rest of the world. The newly released guidelines for greening the “Belt and Road Initiative” (BRI) from China’s National Development and Reform Commission (NDRC) provide clearer guidance on the scope of President Xi’s pledge.

CREA analysed the potential impacts of these guidelines on the massive Chinese-backed overseas coal pipeline. The key findings of the Briefing include:

  • Approximately 12.8 GW (15 plants) of China-backed overseas coal projects that have received either financial backing or equipment, procurement and construction (EPC) support from Chinese firms were shelved or cancelled since September 2021, as a result of revised energy policies in host countries and withdrawal of support from Chinese firms.
  • The newest NDRC Guidelines have the potential to stop 37 GW (32 plants) of overseas Chinese-backed coal projects in the pre-construction phase. There is also a recommendation that projects under construction proceed with “caution,” which should encourage the reexamination of 30 GW (36 plants) of plants already under construction.
  • The guidelines also encourage upgrades to currently operating coal plants in line with “international green rules and standards,” which should encompass 17 GW (18 plants) of operating plants with Chinese equity. Overseas power plants have generally followed lax host country standards, emitting levels of pollution far higher than China’s domestic allowances.
  • 19.2 GW (18 projects) remain in a grey area of the pledge and could still go ahead. Of this, 11.2 GW are projects that have secured financing and the necessary permits but have yet to enter into construction. Another 8 GW are proposed captive coal projects linked to BRI nickel and steel complexes in Indonesia and considered a government priority. Chinese firms were awarded EPC contracts on two new captive power plants linked to BRI industrial complexes in Indonesia in 2022; this highlights a potential loophole, where EPCs on BRI industrial projects are treated as an exception. 

Transparency during implementation will be vital in assessing the depth of not only China’s ambitions to promote green and sustainable developments, but also host countries’ commitment to transitioning their domestic power mix to net-zero by 2050.

Key building blocks are already available for host countries and developers to smoothen the renegotiation process and avoid developing sunken assets, especially given the increasing number of withdrawals from Chinese firms who once pledged support on planned coal projects. Mechanisms such as early retirements and shifts to support overseas renewable energy will be necessary to meet country and global goals for a clean energy transition.

Isabella Suarez, Southeast Asia Analyst, CREA

Bangladesh, China, Indonesia, Vietnam