China's President Xi Jinping declared Tuesday that China would no longer finance coal projects in overseas countries. This could have profound implications for the world's ability to reach its climate goals.
China will support other developing countries to develop green and low-carbon energy, Xi stated in prerecorded comments to the United Nations General Assembly.
Experts believe this could signal the end of coal's role as the primary source of energy for the world. 2., behind oil. However, China and many other countries remain dependent on coal.
Durand DSOuza, a data scientist at Carbon Tracker, said that this announcement was a strong indicator of coals global collapsing. China is the world's largest financier of new coal power, and it is a welcome recognition.
The Belt and Road (BRI), a Xi initiative, has been a significant part of coal-fired power stations. This is a modern version of the Silk Road. China has funded hundreds of coal projects across the globe, from Egypt to Pakistan. China's previous financing of coal plants abroad, especially in countries with poor electricity reliability, has been defended by the Chinese state media.
However, a shift is already taking place; China has not funded any coal projects in the world during the first half 2021. Xis' announcement will make this a formal policy.
According to Li Shuo (a senior global policy advisor for Greenpeace Beijing), many developing countries still face serious energy security problems. China should be encouraged to join the solution by today's announcement.
China still relies on coal
China is still heavily dependent on coal power for its domestic needs and is the largest emitter of greenhouse gasses in the world. According to Ember, China generated more than 53% global coal-fired electricity in 2020.
According to a report by the Centre for Research on Energy Clean Air (CREA), a Helsinki-based research group, and the U.S. group Global Energy Monitor(GEM), China plans to build 43 new coal fired power plants and 18 blast furnaces. This would add about 1.5% to its annual emissions.
Continue reading: China is financing green energy projects around the world
China must now work harder to curb its dependence on domestic coal given the new direction for overseas coal, according to Li of Greenpeace.
Xi stated in April that the country would reduce its coal use starting in 2026. Beijing has also set climate targets, pledging to bring down its carbon emissions by 2030 and make the country carbon neutral in 2060.
Carbon Tracker's DSouza says that China could focus more internally and cancel its plans to build 163GW of coal power. China is a leader in renewable energy, accounting for approximately 50% of global growth in renewable energy capacity by 2020. The country is the world's most populous and has a leading position in key green technologies like solar power, electric vehicles, and batteries.
DSouza says that China must stop being the world's largest coal producer and shift to cheaper renewable energy.
Xi Jinping, the Chinese president, addresses virtually the 76th session of the UN General Assembly in New York, September 21st 2021. Spencer PlattPOOL/AFP/Getty Images
This announcement could have significant ripple effects
There are many questions about when and how the announcement will be made, as well as whether it will apply only to state-run banks. Experts however believe that the Xis promise is a positive sign.
Li claims that the announcement will lead to better quality growth in countries who are part of China's Belt and Road Initiative. He also believes that the announcement will help to shift away from coal globally, which is a crucial signal ahead of COP26.
John Kerry, U.S. climate ambassador, called the Glasgow climate summit (which will be held in November) the last hope for the world to come together in the right direction.
Continue reading: What's at Stake in the U.S. John Kerry, Climate Envoy, Travels to China
Antonio Guterres (United Nations secretary general) responded to the Xis announcement by saying that accelerating global coal phaseout is the most important step in achieving the 1.5-degree Paris Agreement goal.
In 2015, the Paris climate agreements called on countries to cut their emissions so that global temperatures are less than 2C above preindustrial levels. Preferably, no more than 1.5C in order to avoid the worst effects of climate change.
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Amy Gunia can be reached at amy.gunia@time.com
