Out-Law News 1 min. read

China to end construction of overseas coal plants


China has announced it will no longer build new coal-fired power projects overseas and instead support developing countries to move into renewable energy.

“China will step up support for other developing countries in developing green and low-carbon energy and will not build new coal-fired power projects abroad,” China’s president Xi Jinping said, in a speech addressing United Nations General Assembly.

Finance expert Kanyi Lui of Pinsent Masons, the law firm behind Out-Law, said: “Historically, China has been one of the largest sources of financing for coal projects in developing countries. Maturing renewables technology and quickly falling costs means many developing countries now have viable alternatives to coal power. China stepping up support for the transition will likely hasten the process.”

“This important announcement, together with the proposal of Organisation for Economic Co-operation and Development (OECD) to limit financing for unabated coal, could signal the beginning of the end for coal. With its pledges for 2030 carbon emission peak, 2060 carbon neutrality pledge and now this, China is really taking a leadership role in combating climate change,” he said.

China has already begun limiting investment in new coal-fired power plants in developing countries. The Industrial and Commercial Bank of China (ICBC) and Asian Infrastructure Investment Bank (AIIB) have each indicated they will no longer support coal. In July, ICBC dropped plans to fund a $3 billion coal-fired power plant in Zimbabwe.

A Reuters report said the move “could significantly limit the financing of coal plants in the developing world”.

If low carbon alternatives prove to be unaffordable in relation to coal-fired electricity generation in some developing countries, donor countries should mobilise funds to bridge the gap in financial costs, the OECD suggested in July.

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