CHINA'S OVERSEAS COAL BAN RAISES PRESSURE ON DEVELOPING COUNTRIES TO GO GREEN

 The Washington Post 22 October 2021 - by Christian Shepherd

© Barry Lewis/Corbis via Getty Images Woman scavenge coal from a puddle of water near a mine in Cam Pha, northern Vietnam.

For Vietnam’s central planners, the timing was terrible when China announced it would no longer build coal-fired power projects abroad.

In early September, an updated energy blueprint for the Southeast Asian nation unexpectedly sacrificed renewables through 2045 in favour of continued heavy reliance on coal, the single largest source of greenhouse gases that cause global warming.

Critical letters to Vietnam’s leaders followed. The World Bank and United Nations labelled the draft at odds with the government’s stated goals of promoting sustainable power sources. Local environmental groups wrote that the plan, if approved, would leave Vietnam isolated and “will be very unfavourable for the Vietnamese delegation at this year’s COP26 forum.”

Amid this debate, China, a leading source of public financing and construction know-how for coal-fired generators, pledged to no longer build coal projects overseas, undercutting a pipeline of dozens of power plants in developing countries, including Vietnam.

The announcement by Chinese President Xi Jinping has been hailed as a breakthrough ahead of critical climate negotiations by world leaders from Oct. 31 to Nov. 12 in Glasgow, Scotland. But it has also renewed attention on the thorny question of how to coax economies that had bet on fossil fuels to power development toward a faster adoption of wind, solar and other renewable sources.

Even as richer nations look to drive down carbon emissions to net zero, many low- and middle-income nations remain hesitant to set similarly stringent targets, in part because doing so would mean abandoning often the most readily available source of electricity: coal.

© BAY ISMOYO/AFP/Getty Images A barge carries coal from a mining area in Samarinda, Indonesia’s East Kalimantan province. Many developing nations are hesitant to set stringent emissions-reduction targets.

That reluctance is a problem for any hopes of a global solution to the climate crisis in Glasgow. In a May report, the International Energy Agency made clear that an immediate phaseout of coal would be essential for reaching net zero by the middle of the century, a goal seen as necessary to keep global temperature rises below 1.5 degrees Celsius over preindustrial levels.

The envisioned global moratorium will depend largely on China, which consumes more than half the world’s annual output of the black rock. As part of goals to peak carbon dioxide emissions before 2030 and reach carbon neutrality by 2060, Xi has said China will “strictly control” coal use and begin a phase-down after 2025 but has stopped short of banning projects.

Beyond China’s borders, its institutions have supported coal’s continued use by becoming the lender of last resort for plants abandoned by Japanese and South Korean banks.

In Vietnam, after Mitsubishi pulled out of the 2-gigawatt third stage of the Vinh Tan power station in Binh Thuan province on the southern coast, state-backed media reported talks with China Southern Power Grid to take over.

The project is among nearly 19 gigawatts of planned coal capacity under Vietnam’s current draft plan that are at high risk of not coming to fruition, according to the Institute for Energy Economics and Financial Analysis, a nonprofit.

© Getty Images/Getty Images A worker rides past a coal plant in Hanchuan, China's Hubei province.

The mounting financial difficulties for projects meant that official sign-off on Vietnam's power plan, expected in mid-October, never came. Climate activists expect that criticism and Xi’s decisions had made reliance on fossil fuels no longer tenable.

While the timing of China’s move was a surprise, the trend of reduced investment in coal had long been clear, said Nguyen Thi Hang, manager of the just energy transition program at Green Innovation and Development Center, a Vietnamese nonprofit.

© VCG/Getty Images Coal is unloaded from a cargo ship at Lianyungang port in China’s Jiangsu province. China consumes more than half the world’s annual output of coal.“Transition in the power sector can only happen if it goes together with the transformation of the whole economy,” but as yet Vietnam lacks the political will and social consensus to put green development first, Nguyen said. “It will definitely take place, the question is just when.”

Similar debates about how to replace coal with renewables are taking place in other countries that have been leading recipients of Chinese energy finance. Since China’s Belt and Road infrastructure investment program was announced in 2013, low- and middle-income nations have taken ready advantage of easier access to Chinese financing to upgrade their power sectors.

Even before Xi’s announcement, the poor economics of coal, combined with the pandemic slowdown, meant that China for the first time since the program was launched made no new investments in coal in the first half of 2021.

Now that Xi has formalized the end of coal, Beijing’s partners like Pakistan, Bangladesh and Indonesia are waiting to find out what will happen with unfinished projects. There are at least 40 planned coal-fired power plants with Chinese financing or contractors in limbo, according to Global Energy Monitor (GEM), a San Francisco-based nongovernmental organization that tracks global fossil fuels infrastructure.

© BAY ISMOYO/AFP/Getty Images Environmental activists protest Standard Chartered bank's financing of Indonesia’s Java 9 and 10 coal-fired power plants, in Jakarta on March 19.

“The risk with China’s announcement is that if coal plants are not funded, countries might just turn to gas,” said Christine Shearer, program director for coal at GEM. “New gas plants running for 30 or 40 years is also not compatible with the Paris climate agreement.”

Although the developed world is responsible for most historic greenhouse gas emissions, the ability to avoid further warming will largely depend on what happens in countries where emissions are still rising. One projection holds that, in the worst-case scenario, the mostly developing countries along China’s Belt and Road initiative could account for two-thirds of global emissions by 2050, up from about 26 percent in 2019.

“We are talking about countries that are still building up the power systems. They are asking, ‘If we want to go the route of just solar and wind, what are the examples?’ And there really aren’t any,” Shearer said.

In the last year, China’s international development strategy has shown signs of shifting away from a previous stance of support for whatever model of infrastructure development the recipient country preferred. In July, Beijing released voluntary guidelines to promote “green” foreign investment, following the launch of a green Belt and Road partnership.

“Xi’s new pledge should rebalance the situation so that China defines more about what is good for that country,” said Angela Tritto, adjunct professor for public policy at the Hong Kong University of Science and Technology.

As Beijing promises to embed sustainability in its overseas investment, the richest nations have come under pressure to do more to help the poorest ones address the climate crisis.

Coordinating these competing plans to accelerate energy transitions in developing countries like Vietnam will be a critical part of climate negotiations in Glasgow, said Christoph Nedopil Wang, director of the Green Finance and Development Center at Fanhai International School of Finance, Fudan University in Shanghai.

“International collaboration for sustainable development is becoming challenging due to a quagmire of different finance initiatives,” Nedopil Wang said. “Having competition can be good if the countries in need of energy transition have the ability to shop around. Where it becomes difficult is when countries receive mixed messages that make planning difficult.”

Pei Lin Wu in Taipei contributed to this report.