Up in the Air: Potential Implications of Xi Jinping’s Green Energy and No-Overseas-Coal Announcement

In September 2021, Chinese leader Xi Jinping announced at the 76^th United Nations General Assembly that China would increase support for low-carbon energy in developing countries and not build new coal-fired power projects abroad.

Since then, much debate has ensued as to the exact policy details of the announcement. In considering the words ‘build’ and ‘new’, what types of projects are likely to be included and how much CO₂ emissions could be avoided as a result? What interpretation of the announcement would lead to the greatest curtailment of emissions? And what areas of renewable energy are prime for increasing Chinese support?

A new policy brief by Cecilia Han Springer and Xinyue Ma explores the potential implications of the announcement, finding that if all overseas coal plants with Chinese capital participation and construction arrangements that are under construction and under planning are canceled as part of the announcement, 594 million tons of annual CO₂ emissions could be avoided, more than Canada’s current annual fossil CO₂ emissions.

Main findings:

• Chinese capital participation investment tracked in this policy brief is associated with 23.5 GW of coal plants under construction and 18.4 GW of coal plants under planning.
• The capacity associated with construction arrangements is greater than for that associated with capital participation, representing 26.8 GW of coal plants under construction, and 32.1 GW under planning.
• A total of 101 GW of coal-fired generating capacity could be affected under the most encompassing interpretation of Xi’s announcement.
• If all overseas coal plants with Chinese capital participation and construction arrangements that are under construction and under planning are canceled, annual CO₂ emissions of 594 million tons could be avoided, which is roughly equal to Canada’s current annual CO₂ emissions.

Policy recommendations:

• In order to avoid 594 million tons of future annual CO₂ emissions, Chinese policymakers should ensure Xi’s announcement applies to both capital participation and construction arrangements.
• Working closely with host countries, Chinese financiers and companies abroad should provide opportunities for transition, especially to renewable energy, to mitigate the economic effects of canceling coal projects that are already under construction.
• To take Xi’s announcement a step further, Chinese policymakers can include concrete provisions for shifting foregone coal support towards renewable energy and expand the announcement to cover the major coal-consuming industries that Chinese entities are financing and building overseas.

In all, taking the most expansive interpretation of Xi’s announcement could dramatically reduce CO₂ emissions associated with future Belt and Road Initiative development. Additionally, examples of Chinese banks and companies adopting similar voluntary policies demonstrates that it is politically and economically feasible for Chinese companies and financial institutions to shift away from overseas coal.

*This policy brief was updated on November 10, 2021 to account for updated analysis.