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. The Expansion of China's Green Finance
11. Conclusion
12. About the Authors

Document Introduction

In 2017, China became one of the world's top lenders in overseas clean energy investment while establishing a leading global position in advancing its domestic decarbonization agenda. However, this clean energy financing process has created significant tension with China's continued investment in fossil fuels, particularly coal 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 for 102 GW of coal power projects in 27 countries. This accounts for over a quarter (26%) of the total global coal power capacity under construction outside China, and rises to 35% if India is excluded.

The report details the funding sources, project distribution, and technical characteristics of China's coal power financing: funding 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). On the technical front, ultra-supercritical technology accounts for 38%, supercritical technology for 35%, and subcritical technology for 23%. Although this represents an improvement over the subcritical-dominated landscape of 2001-2016, it still lags behind the technical standards of markets with stringent regulations.

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 departure from the coal power sector. The World Bank, most multilateral development banks, and OECD country export credit agencies have restricted or terminated coal power financing. Japan and South Korea have also signaled their exit 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 a duality: on one hand, they have driven $8 billion in solar equipment exports, helping China become the largest exporter of environmental products and services; on the other hand, between 2014 and 2017, 36% of power sector financing under the Belt and Road went 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 global new power generation capacity and will dominate in the next two decades. China's continued support for coal power projects not only risks locking host countries into a structural dilemma of high costs and high carbon dependency but is also misaligned 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.