Webinar Summary: Tracking China’s Global Power Plants, 2022 Update

By Christina Duran

On Thursday, October, 27, the Boston University Global Development Policy (GDP) Center hosted a webinar discussion and demonstration of the China’s Global Power (CGP) Database, 2022 update.

First launched in 2020, the CGP Database tracks China’s overseas power plants financed through Chinese foreign direct investment (FDI) and loans from China’s two state-owned policy banks, the Export-Import Bank of China (CHEXIM) and the China Development Bank (CDB). Researchers Cecilia Springer, Yangsiyu Lu and Hua-ke (Kate) Chi, who updated the CGP Database, first summarized the findings. Afterwards, experts Lihuan Zhou, an Associate with World Resources Institute and Xizhou Zhou, Vice President and Managing Director of the Global Power and Renewables for S&P Global Commodity Insights, provided commentary and reactions. Oyintarelado (Tarela) Moses, Data Analyst and Database Manager of the GDP Center’s Global China Initiative, moderated the discussion.

For several decades, China has financed electric power plants around the world. Given the country’s involvement in the global power sector in the context of the Belt and Road Initiative (BRI), continued attention has been given to the social, environmental and economic impacts of China’s overseas economic activity. In order to understand this phenomenon, the researchers tracked the physical and financial characteristics of the plants and estimated their coal emissions.

Overall, they found that China’s policy banks and companies have financed 171.6 GW of generation capacity across 1,423 power units (representing 648 individual power plants) in 92 countries. Coal represents the largest share of energy capacity, at 34 percent, of all Chinese-financed overseas power plants, followed by hydropower and gas. Fossil fuel projects, particularly coal and gas, account for more than half of all the operational capacity, and the researchers expect this trend to continue, given the number of plants currently under construction.

Chinese policy banks contributed to most of the coal and hydropower generating capacity, while FDI accounted for most of the overseas investment in gas, solar and wind power plants. Asia has received the most Chinese loans and investment in power generation capacity (90GW), followed by the Americas (34 GW) and Africa (25GW). Asia has the largest capacity of fossil fuel power plants, particularly in coal. The majority of hydropower plants are distributed between the Americas, Asia and Africa, with the Americas receiving the highest investment. Chinese investments in Europe and Oceania are largely concentrated in natural gas, nuclear and other non-hydro renewable projects. 

The research team also tracked the estimated annual CO₂ emissions of Chinese-financed overseas power plants for those in operation, under construction and under planning. Currently operating units are emitting 245 million tons of CO₂ per year, roughly as much carbon dioxide per year as the energy-related emissions of the countries of Spain or Thailand. Lu noted that those under construction and planning that will eventually become operational are predicted to add another 100 million tons of CO₂ emissions per year. Springer added that the median year of commission for fossil fuel powered plants is 2016, meaning half of the plants are six years into their lifespan or less.

Generation capacity and CO₂ emissions are concentrated among the top ten countries receiving Chinese financing, representing over two-thirds of the total capacity and producing about 82 percent of the total CO₂ emissions. Brazil and Pakistan lead in energy generating capacity from Chinese-financed power plants. Brazil also notably low CO₂ emissions from its fleet of Chinese-financed plants, due to the concentration of Chinese investments in hydropower and wind power in the country. The top ten companies providing FDI for overseas power plants are all Chinese state-owned enterprises (SOEs) and make up about 76 percent of total FDI-supported generation capacity and 71 percent of FDI-supported CO₂ emissions. Aside from the SOEs, the researchers note there are a couple of private enterprises exclusively investing in renewable energy.

Based on these findings, the researchers recommend that Asia should focus on decarbonization, as the region receiving the most generation capacity, particularly for coal, and that has the greatest emissions. They suggest exploring policy options for canceling future coal plants and the retirement of existing coal power plants. Finally, they suggest further research to examine how China’s policy banks and companies could change their global power portfolios in order to meet Chinese leader Xi Jinping’s “no overseas coal” announcement and other green BRI guidelines.

Following the presentation, Lihuan Zhou noted the limitations in data sources due to worsening transparency from China’s two policy banks. Last year, the China Development Bank stopped disclosing outstanding loan balances after their 2018 annual report. Thus, Zhou and his colleagues had to rely on other sources to create a comprehensive picture of Chinese overseas energy investments. Zhou hopes the CGP research can drive “greater transparency and disclosure from the Chinese government and the financial institutions.”

Xizhou Zhou, at Global Power and Renewables for S&P Global Commodity Insights, offered a wider picture of the state of global energy. Summarizing a recent trip, Zhou noted that for the first time in two years, he traveled to Asia. There, he noted greater concern for energy security as coal and gas prices soared. According to Zhou, for the first half of the year extremely high fuel prices contributed to a decline in global demand for coal and gas. As people can no longer afford basic fuel, developing countries are no longer generating power, and sometimes power plants go unused, potentially leading to the problem of stranded assets. While some countries are turning from coal to natural gas, gas prices are also rising, leaving countries with limited options. What technologies can be made available for these countries, especially those without potential hydropower resources?

After the discussion, Tarela Moses posed several questions to the panelists. Considering financial innovations and policy practices to prepare them, Lihuan Zhou proposed scaling up investments with an emphasis on de-risking and mobilizing private and commercial finance to renewable energy, particularly in developing countries. Zhou noted that many investments from China’s policy banks or other enterprises are commercial, with expectations of a reasonable return; however, developing countries usually face bigger risks, from political to foreign exchange risks. He argues China, with its now established foreign aid agencies, can learn from traditional donors, like Europe and the US, to mobilize Chinese foreign aid to support renewable energy overseas. Xizhou Zhou added that local government regulatory structure is important as financial institutions decide whether an investment will receive government support, as ultimately, they seek to make a return on their investment. He suggests greater understanding of local policy drivers in developing countries should inform the terms of investment.

The discussion concluded with a Q&A session from the audience, where panelists considered data on new investments in coal in relation to China’s “no overseas coal” announcement, other greenhouse gas emissions and prospects for new energy technologies. Regarding China’s announcement, there is still a pipeline for coal-fired power plants and some ambiguity remains as to which plants will continue forward and which should be canceled. However, the panelists emphasized the need to assess local contexts and de-risk investments.

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