China's Crossroads: Continued Support for Coal Power Erodes National Clean Energy Leadership

Key Chapter Title List

1. Executive Summary
2. Introduction
3. China's Coal Power Financing
4. Country Profiles
5. Bangladesh
6. Vietnam
7. South Africa
8. Pakistan
9. Indonesia
10. Expansion of China's Green Finance
11. Conclusion
12. About the Authors

Document Introduction

In 2017, China emerged as a top global lender in overseas clean energy investment while establishing a world-leading position in advancing its domestic decarbonization agenda. However, this process of clean energy financing stands in significant tension with China's continued investment in fossil fuels, particularly coal-fired power, placing China at a critical crossroads in its energy strategy.

Based on data from the July 2018 "Global Coal Plant Tracker Report," this report analyzes global coal power projects under construction on a project-by-project basis, revealing China's central role in international coal power financing. The research shows that Chinese financial institutions and enterprises have committed to or proposed financing totaling approximately 35.9 billion USD for 102 GW of coal power projects in 27 countries. This accounts for over one-quarter (26%) of the total global coal power capacity under construction outside China, rising to 35% if India is excluded.

The report details the funding sources, project distribution, and technical characteristics of China's coal power financing: financing primarily comes from policy banks such as the China Development Bank and the Export-Import Bank of China, as well as state-owned commercial banks like the Bank of China and the Industrial and Commercial Bank of China. The main executing entities are state-owned enterprises such as State Grid and China Energy Engineering Group, involving various cooperation models including Engineering-Procurement-Construction (EPC), joint ownership, and Build-Operate-Own (BOO). Technically, ultra-supercritical technology accounts for 38%, supercritical technology for 35%, and subcritical technology for 23%. Although this represents an improvement over the 2001-2016 period dominated by subcritical technology, it still lags behind the technical standards of strictly regulated markets.

In terms of country distribution, Bangladesh is the country with the largest capacity supported by China's coal power financing, followed by Vietnam, South Africa, Pakistan, and Indonesia. Most projects are in the pre-construction stage, facing multiple risks such as permitting approvals, community opposition, and exchange rate fluctuations. Meanwhile, global financial institutions are accelerating their retreat from the coal sector. The World Bank, most multilateral development banks, and export credit agencies of OECD countries have restricted or terminated coal power financing. Japan and South Korea have also signaled their withdrawal from coal power, leaving China increasingly isolated in the field of coal power financing.

The report points out that China's energy investments under the Belt and Road Initiative exhibit duality: on one hand, they have driven 8 billion USD in solar equipment exports, helping China become the largest exporter of environmental products and services; on the other hand, from 2014 to 2017, 36% of the financing in the Belt and Road power sector flowed to coal power, with only 11% invested in solar and wind energy. The International Energy Agency predicts that by 2022, renewable energy will account for 60% of the world's new power generation capacity and will dominate in the next two decades. China's continued support for coal power projects not only risks trapping host countries in a structural dilemma of high costs and high carbon dependency but also misaligns with the climate commitments of the Paris Agreement.

Based on the above analysis, the report recommends that China re-evaluate its financing strategies for coal-related mines, power plants, and supporting railway and port infrastructure. It should fully leverage its global leadership in the renewable energy sector, align with the global energy transition trend, and achieve synergistic development in its energy strategy.