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China's domestic and international energy investment is getting greener, but it faces some huge challenges, with a pair of new reports first sharing with Semafor.
At home, China's huge energy demand growth in recent years means that even if it builds renewable energy at a world-leading rate, it is responsible for the vast majority of new coal-fired power plants developed globally. But as the country's political and economic winds increasingly oppose coal, clean energy may be built quickly enough by 2030 to cover all growth in domestic energy demand.
Meanwhile, new data on China's belt and road plans suggest that the country is making leader Xi Jinping's 2021 commitment to stop raising new coal-fired power plants overseas: in 2022 and 2023, the first time in the past two decades for the Chinese government and private sector, no new coal plants have been approved. Instead, renewable energy accounts for two-thirds of the new planned projects in terms of power generation capacity, according to a study by the Center for Global Development Policy at Boston University.
Tim's opinion
The U.S.- The temporary ceasefire in the China trade war agreed on the weekend, which is good news for exporters of Chinese batteries and other cleaning technologies and their customers. But these two studies together illustrate how China navigates moments of external volatility by falling on its huge domestic market.
The end of overseas coal financing is not surprising, because no matter what, there are few new coal projects developed anywhere in the world. Diego Morro, the lead author of the BU study, said many of the top candidates for coal investment in New China (e.g., Bangladesh or the Philippines) also had rising sovereign debt problems and were not keen on taking on any form of huge new energy loans. He said that due to China's economic slowdown, overall the upcoming channels for BRI project capital have also declined overall.
For climate, there are fewer China's coal-fired power plants under construction around the world. But overall energy investment has also declined, as renewables have not yet filled the gap. China has supported more than 30 new overseas power projects in 2016; in 2023, it is about a gigawatt. This is eliminating the important funding source for low-carbon energy projects in developing countries, which makes them worse from an emissions and energy security perspective. In the previously announced Chinese-backed overseas energy projects under development, coal still accounts for about 20% of the pipeline, meaning it will remain an integral part of China's global energy footprint for the foreseeable future.
Ember analyst Muyi Yang said the fact that domestic energy, wind and solar adoption are accelerating every year is accelerating so much every year – for example, increasing utility-scale solar, tripled in the past three years, suggests that the global dominance of these industries remains a priority for Beijing and remains a tough space in some aspects of Beijing, and in some ways both clear and space. In the West. The problem is that China is still underinvesting investment outside of traditional wind, solar and batteries, Yang said. Without a more comprehensive energy system plan, the grid will run out of space to accommodate more traditional renewable energy sources, he said.
The scenery of the United States
What’s interesting about China’s overseas coal retreat is that it also means that energy now represents a much smaller share of China’s overall foreign investment, and is therefore a less important aspect of its geopolitical power projection, a gap that the United States may exploit. The recent decision by the U.S. Export International Bank to resume financing for overseas coal projects will test whether China will leave funds on the table or escape from the sunset industry in due course.
