Beijing is to end support for overseas coal-fired power projects and plans to up investment in low-carbon energy. It's big news ahead of the November climate summit, but private investors need to follow suit.
China's international coal exit is welcomed - but massive domestic emissions are yet to be addressed Image: Getty Images/K. Frayer
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China gave unexpected hope in the push to decarbonize the global energy supply when President Xi Jinping committed to ending support for new coal power projects overseas.
Speaking at the United Nations General Assembly in New York, Xi's statement regarding the need to "actively respond to climate change and create a community of life for man and nature" reiterated China's commitment to carbon neutrality by 2060 — and to peak emissions before 2030.
But the further vow to end China's investment in overseas coal-fired power plants could be a groundbreaking moment in the leadup to the pivotal COP26 climate conference in November.
After Japan and South Korea also ended support for overseas coal projects in the last year, China was by far the world's largest coal financer, especially in Asia where some 600 new coal plants are slated to be built.
US climate envoy Kerry: 'Great contribution'
While the scope of the announcement remains vague regarding the timeline, the ending of state versus private financing, and whether existing projects will be affected, it was met with universal support by climate activists and policymakers.
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"It's an extremely welcome decision," US climate envoy John Kerry told DW in New York as the world's two highest emitters continue to collaborate on climate action. "I'm absolutely delighted that president Xi has made this important decision, it's a great contribution, it's a good beginning to the efforts we need to achieve in Glasgow," he added, referring to the November COP26 climate summit that will address the Paris targets.
"It's certainly a positive step forward," said Li Shuo, Beijing-based policy adviser with Greenpeace East Asia. "It's going to contribute to the ongoing global trend to move away from coal. It will also bring momentum to the COP26 summit."
"China's pledge shows that the firehose of international public financing for coal is being turned off," said Helen Mountford, Vice President for Climate and Economics at the World Resources Institute. "China's commitment, coming on the heels of recent pledges by South Korea and Japan, represents a historic turning point away from the world's dirtiest fossil fuel."
Will private investors get on board?
But even as China joins the global exodus from coal investment by nation states, the private sector continues to finance 87% of overseas coal, notes Dr. Kevin P. Gallagher, director of the Boston University Global Development Policy Center.
"Now that the world's major governments have led by example and banned overseas coal plants, it is time for the private sector … to follow suit," he said, adding that global climate goals will not be met if "the private sector continues to finance overseas coal while leading governments have stopped."
WRI's Mountford agrees that Chinese companies and banks need to "embrace this new direction, in line with the goals of the Paris Agreement."
Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air, believes the announcement will be an immediate disincentive to private investors.
"This high-level statement makes it immediately clear that making any new financing or equity investment commitments to coal power projects overseas would be toxic for any Chinese bank or power company," she said. "For projects that haven't yet achieved financial close, that's likely to be the end of the story." It will mean that planned projects in Vietnam, Bangladesh and Indonesia will struggle to be realized.
Indeed, Chinese mineral resources giant Tsingshan has already stated in the wake of the statement that it will stop building coal power plants in Indonesia — China's largest overseas coal market — and other overseas markets.
Tom Baxter, China energy analyst and climate author for China Dialogue, noted in a Tweet that the company stated that its decision to end coal investment "will proactively implement the spirit of the important speech of Chairman Xi Jinping."
China's domestic coal emissions far higher
While welcome, the overseas coal announcement does not address the elephant in the room: Domestic coal-fired power output is around 10 times higher than China's foreign coal projects — or 1,200 GW capacity within China versus under 100GW abroad, according to Li Shuo of Greenpeace East Asia.
Domestic emissions are a "much bigger problem" that are yet to be addressed, said Shuo.
Yet he is hopeful that that the announcement from the Chinese leader will lead to "more progress on the domestic front," especially combined with Xi's commitment to fund green and low-carbon energy abroad.
"This announcement is a strong sign of coal's global collapse," said Durand D'Souza, data scientist at Carbon Tracker. "However, China could go further and also focus its efforts internally by cancelling its plans to build 163GW of new coal. Now is the time for China to move away from being the largest coal power producer and continue its shift to lower cost renewables."
In pictures: Deadly extreme weather shocks the world
From the Mediterranean to Germany to California and beyond, dramatic pictures of the severe impacts of extreme weather have been dominating the news this summer. Is the climate crisis to blame?
Image: Jon Nazca/REUTERS
Rainfall best ally for Spanish firefighters
A wildfire that burned through at least 7,780 hectares (30 square miles) in about a week and devastated forests in southern Spain was brought under control thanks to steady rains. The downpour helped the firefighters, who were backed by some 50 aircrafts. The blaze was one of the most difficult to combat in recent times in Spain. Some 2,600 people were forced to flee their homes.
Image: Jon Nazca/REUTERS
Fierce flash floods in Europe
Unprecedented flooding — caused by two months' worth of rainfall in two days — has resulted in devastating damage in central Europe, leaving at least 226 people dead in Germany and Belgium. Narrow valley streams swelled into raging floods in the space of hours, wiping out centuries-old communities. Rebuilding the ruined homes, businesses and infrastructure is expected to cost billions of euros.
Image: Thomas Lohnes/Getty Images
Europe on fire
While half of Europe is drowning, elsewhere areas are going up in flames: Large fires raged, particularly in Greece, Italy and Turkey. They have caused unforeseeable monetary damage, while thousands of people in Europe have lost their homes and their belongings.
Image: ANGELOS TZORTZINIS/AFP
Record heat in Italy
In addition to deadly wildfires, Italy also battled record heat temperatures, with the Italian Health Ministry issuing the maximum possible heat warning level for many cities. On the island of Sicily, 48.8 degrees Celsius (almost 120 degrees Fahrenheit) was measured on August 11 — a new European heat record. The heat could make existing fires worse, or lead to new ones.
Image: Andrew Medichini/AP/picture alliance
Still out of control
Meanwhile, the Dixie Fire continues smoldering in California. It's California's largest fire on record, and among the most destructive in the state's history — it wiped the town of Greenville off the map. Although it's about 60% contained, the fire continues to burn two months in. Meanwhile, hot and dry conditions continue in the region, spreading fears of more fire.
Image: DAVID SWANSON/REUTERS
Extreme rainy seasons
Earlier this summer, record floods also hit parts of India and central China, overwhelming dams and drains and flooding streets. The downpours have been particularly heavy, even for the rainy season. Scientists have predicted that climate change will lead to more frequent and intense rainfall — warmer air holds more water, creating more rain.
Image: AFP/Getty Images
Greece melts down amid heat waves
As nations flood in northern Europe, Mediterranean countries like Greece were in the grip of several heat waves. In the first week of July, temperatures soared to 43 degrees Celsius (109 Fahrenheit). Tourism hot spots like the Acropolis were forced to shut during the day, while the extreme heat also sparked forest fires outside Thessaloniki, which helicopters tried to douse.
Image: Sakis Mitrolidis/AFP/Getty Images
Sardinia scorched by 'unprecedented' wildfires
"It is an unprecedented reality in Sardinia’s history," said Sardinia's Governor Christian Salinas of the ongoing wildfires that have scorched the historic central western area of Montiferru. "So far, 20,000 hectares of forest that represent centuries of environmental history of our island have gone up in ashes." Around 1,500 people were evacuated from the island by the end of July.
Image: Vigili del Fuoco/REUTERS
Heat records in the US, Canada
Intense heat is becoming more common, as seen in late June in the US states of Washington and Oregon and the Canadian province of British Columbia. Scorching temperatures under a "heat dome," hot air trapped for days by high pressure fronts, caused hundreds of heat-related deaths. The village of Lytton recorded a high of 49.6 Celsius (121 Fahrenheit) — and burned to the ground the next day.
Image: Ted S. Warren/AP/picture alliance
Wildfires sparking thunderstorms
Heat and drought are fueling one of the most intense wildfire seasons in the West Coast and Pacific Northwest regions. Oregon's Bootleg Fire, which burned an area the size of Los Angeles in just two weeks, was so big it created its own weather and sent smoke all the way to New York City. A recent study said the weather conditions would have been "virtually impossible" without climate change.
Image: National Wildfire Coordinating Group/Inciweb/ZUMA Wire/picture alliance
Amazon nearing a 'tipping point'?
To the south, central Brazil is suffering its worst drought 100 years, increasing the risk of fires and further deforestation in the Amazon rainforest. Researchers recently reported that a large swath of the southeastern Amazon has flipped from absorbing to emitting planet-warming CO2 emissions, pushing the rainforest closer to a "tipping point."
Image: Andre Penner/AP Photo/picture alliance
'On the verge of starvation'
After years of unrelenting drought, more than 1.14 million people in Madagascar are food-insecure, with some now forced to eat raw cactus, wild leaves and roots, and locusts in famine-like conditions. With the absence of natural disaster, crop failure or political conflict, the dire situation in the African nation is said to be first famine in modern history caused solely by climate change.
Image: Laetitia Bezain/AP photo/picture alliance
More people fleeing natural disasters
The number of people fleeing conflict and natural disasters hit a 10-year high in 2020, with a record 55 million people relocating within their own country. That's in addition to some 26 million people who fled across borders. A joint report released by refugee monitors in May found that three-quarters of the internally displaced were victims of extreme weather — and that number is likely to grow.
