President Xi Jinping’s pledge this week at the United Nations General Assembly that China will not build new coal-fired power plants overseas is good news; however, Asia’s transition to low-carbon energies remains in urgent need of policy reform.
“China will step up its support to other developing countries in developing green and low-carbon energy and will not build new coal-fired power projects abroad,” Chinese President Xi Jinping said via a video recording at the annual United Nations General Assembly summit, which this year follows a hybrid virtual-physical presence format after being hosted almost entirely online a year ago.
China is using its so-called “Belt and Road Initiative” (BRI) to finance and build several infrastructure projects in developing countries, including power plants, ports and roads.
The announcement is good news because it has the potential to significantly reduce greenhouse gas emissions in developing countries. However, Xi Jinping’s pledge didn’t include enough details to see climate activists celebrating yet. Specifically, it remains to be seen when China’s commitment will take effect, whether it includes old coal plants that have been approved but not yet built, and whether funding for coal plants to be built by any others remains on paper.
For many, the news of China’s recent engagement came as no surprise. For example, about a year ago the Prime Minister of Pakistan said that Pakistan would stop commissioning new coal-fired power plants. While the announcement does not include existing projects under development, the decision nonetheless demonstrated that China’s BRI partners do not have to accept what China offers.
Likewise, a report published in January by the Global Energy Monitor (GEM), a nonprofit funded by the Ford Foundation based in the United States, the German Institute for International Cooperation and the European Climate Fund, revealed that since 2014, the coal project pipeline of major coal-fired power-producing countries has shrunk by about two-thirds. Of these countries, only South Africa is not in Asia.
An immediate energy transition is far from certain
Despite promising market trends and China’s commitment to stop building new coal-fired power plants overseas, the transition from coal to low-carbon energy sources will not necessarily be immediate.
pv magazine recently published an article examine the factors that inhibit solar energy in Asia. The analysis showed that these factors include the lack of an adequate business and regulatory infrastructure to help small businesses develop and deliver PV installations and associated supply chains; institutional inertia, with many institutions in developing countries (eg large electric utilities) showing an outdated commitment to fossil fuel investments; and the availability of financing, given that new investments in coal-fired power plants in Asia are mainly supported by financing from export credit agencies.
What we urgently need is a package of reforms in Asian and other developing countries to bring competition to their electricity markets and thus enable their countries to seize the new opportunities offered by low-cost renewable energies such as solar photovoltaic energy.
China’s commitment to stop building new coal-fired power plants abroad will also make no sense if it continues to fund coal-fired power plants built by others.
A few months ago, Michael Grubb, professor of international energy and climate change policy at University College London (UCL), and lead author of several reports of the Intergovernmental Panel on Climate Change ( IPCC) – the United Nations body responsible for assessing the science related to climate change – says pv magazine that China finances “a lot of everything” and it is unclear whether the country’s leaders have come to a decision on whether they favor coal over renewables.
“Still, I’m going to predict one thing: almost any country keen to host China-funded coal-fired power plants will eventually regret it – and so will China,” he said.
It seems that China has realized that building coal-fired power plants abroad is not a smart business. Now it remains for other nations to realize that coal is an economically and environmentally disastrous business; as well as China to stop building coal plants at home.
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