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China’s coal gambit

Chinese President Xi Jinping surprised many when he announced last week at the UN General Assembly that China would ‘not build new coal-fired power projects abroad.’

As the world’s largest investor in infrastructure, China’s actions on this front stand to carry real weight. But much remains unclear about how such an announcement will translate into an on-ground reality. To better understand Xi’s statement, we spoke with Beijing-based Tom Baxter, editor of Panda Paw Dragon Claw—a website focused on China’s overseas footprint.

You wrote in this magazine about the forthcoming end of coal in Southeast Asia, pointing to both domestic factors and changes on the funding side (from Japan and South Korea). Many painted Xi’s announcement as a surprise. Did you see it as an eventual inevitability?

That China’s support for coal power plants has finished is not a particular surprise. As I wrote in that article, economic trends and policy decisions being made in Belt and Road countries were all squeezing the space for coal power investments, to the point that in the first half of this year there were already zero Chinese investments in coal power plants.

What was somewhat surprising, however, was Xi’s choice of occasion and wording to formally end Chinese support of overseas coal power plants. For the second time in as many years he has used a speech on the international stage to cut through the technocratic and incrementalist culture of the Chinese bureaucracy; last year’s UN General Assembly saw Xi announce that China will peak carbon emissions by 2030 and reach carbon neutrality by 2060. The pronouncements he makes on the international stage also have large market impacts. His eight words on ending the building of new coal power plants overseas could put up to 44 proposed power plants in 20 countries on the line, according to recent calculations.

Why is it in China’s interest to stop funding coal plants overseas?

This is cause for some debate. Climate-related policies have certainly become one of, if not the, only area where China has a positive reputation globally. China has been under some pressure—from NGOs, other governments and even Chinese researchers—to curb coal power investments. With the government elevating the image of a ‘green Belt and Road’, dirty coal investments became a reputational risk. A number of particularly controversial coal power plants, such as Lamu in Kenya, Celukan Bawang in Indonesia and Banshkhali in Bangladesh, also hit global headlines, in some cases requiring the Chinese embassy to proactively take damage control measures. All in all, coal power plant investments were becoming a liability.

However, as I’ve written elsewhere, there are also a number of elements in the relationship between China and developing countries which could be seen to deter China from making such an announcement. Chinese government departments have in fact consistently defended the right of developing countries to use coal power to address energy needs due to their ‘national conditions’, a narrative that will now have to be re-written. One can also only wonder what the response in the corridors of energy planning departments in countries such as Vietnam and Indonesia this week. The two countries’ plans to keep expanding coal power capacity over the next five to 10 years were essentially dependent on Chinese financing and construction. Replacement support will be extremely hard to find.

Some have pointed out that China still has dozens of domestic coal plants in construction. Do you anticipate a change in domestic policy as well?

This is a burning question and in the short time, no, I don’t think we will see a major change in domestic policy. China has already made clear its intention to peak emissions by 2030 and reach carbon neutrality by 2060, a pledge reiterated at the UN General Assembly this year and being fleshed out in detail by Beijing’s economic planners. At some point China will have to halt the construction of coal power plants domestically and cancel or retire plants early. The sooner such decisions are taken, the less painful they will be. But the domestic energy sector consists of a complex political-economic web of powerful actors. Cutting through that will make ending overseas coal investments look easy.

What questions remain unanswered following this announcement? What should we watch for in the coming months and years?

The nature of Xi’s announcement—just eight words—inevitably opens up as many questions as it answers. Some of the most pressing include: What exactly is meant by ‘will not build’? Does that include financing and loans? Does it include equipment supply? Secondly, how many ‘in-pipeline’ projects will be affected by the announcement? Potentially it could be all planned projects that have not reached financial close, 44 in total, according to Global Energy Monitor.

Asked to clarify on these issues at the Ministry of Foreign Affairs regular press conference on 22 September, spokesperson Zhao Lijian simply reiterated Xi’s words, perhaps indicating a lack of clarity within the government system too. He referred journalists to ‘the competent authorities’, though with China’s overseas investment policy divided between numerous ministries, it is far from clear who the relevant authority—other than Xi himself—for the announcement is. There is also a question over whether the ‘green and low carbon’ investments Xi also mentioned in his speech will include non-coal fossil fuels such as gas (judging by China’s appetite for gas in its own low carbon domestic energy transition, the answer is probably yes). Replacing coal infrastructure for gas infrastructure along the Belt and Road would ultimately do little to solve the climate crisis Xi is apparently concerned with.

 

From the archives

Waterland

Peter A. Coclanis

There’s an old story (with many variations) about a security guard posted at a construction site, who day after day watched a worker leave the site after his shift pushing a wheelbarrow lightly loaded with used coffee cups, scrap packaging, a bit of construction debris and dirt. After a few weeks of this, the guard sidled up to the worker outside the wire-mesh fencing surrounding the site and said: “Look, every day I’ve been watching you leave at quitting time pushing that wheelbarrow carrying nothing but junk. I know you’ve got some kind of scam going, but can’t figure it out. Between you and me, what are you stealing?” The worker tersely replied: “Wheelbarrows.”

This story came to mind in reading Unruly Waters, Sunil Amrith’s ambitious and absorbing study on the importance of water in shaping Asia’s past, enabling its present and threatening its future. Despite the centrality of rains, rivers, coasts and seas in the region, water — hiding in plain sight, as it were — until relatively recently has received little sustained attention from scholars, who have more or less taken it for granted or subsumed its consideration under other topics, agriculture, most notably. It is unlikely that scholars or anyone else will do either of these things again, for among Amrith’s many accomplishments is to make crystal clear the case for water’s importance.

In making his case, Amrith, who teaches history at Harvard, joins a talented cohort of scholars in the process of reconstructing the environmental history of Asia and its constituent parts. Continuing and extending the work done by pioneering figures such as John Richards, Michael Adas, Peter Boomgaard, Richard Grove and Mike Davis, this cohort has taken environmental history from the fringes of historical scholarship to the very centre of the field — none too soon either, given the huge environmental problems we face and the uncertainties as we move deeper into the Anthropocene.

Read more here

 

Check it out:

Created by several Cambodian universities in partnership with DC-Cam, the Mapping Memories Cambodia project is aimed at using geolocation and multimedia storytelling to preserve sites of importance from the Khmer Rouge era. On 30 September, at 8 am Cambodia time, project manager Bunsim San will be hosting a webinar discussion on how such projects can help historical memory for younger generations. Register and tune in here.

 

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