It's definitely big news that China has pledged to exit coal financing overseas of all sorts, and the world hailed it. Chinese President Xi Jinping’s announcement at the United Nations General Assembly took the world by surprise, but the move was not completely out of the blue. Last year, the Chinese government had suggested that it would like to make its investments abroad ‘greener’. The Chinese environment ministry had also hinted at blacklisting coal power investments abroad back then.
Despite the significance of the pledge to stop funding overseas coal projects, there have been some critical reservations raised by experts and analysts. Will the private sector companies in China follow suit? The majority of the overseas investments are by private Chinese companies. Or will China put a halt to coal projects and investments inside China? Its local coal-fired output is ten times higher than its overseas projects. And its provinces are still planning over 150 gigawatts of new coal projects. And third, what will be the timeline and deadlines? These details are yet to be shared by the largest financier of coal projects overseas.
Nonetheless, China’s major announcement is setting the tone for COP26 to be held in November 2021 in Glasgow, which was already being considered an important year for gauging progress and promises.
How will China’s historic decision affect Pakistan that is among countries with over 10 operating + under construction + planned coal plants with Chinese financing? Chinese companies have been financing and/or building most of Pakistan’s coal plants through CPEC; however, recall that last year the Prime Minister announced that Pakistan will not be approving any more coal power plants in a bid to address the climate change catastrophe. Since then, no new investment has been made in any new imported coal power plants. While its too early to say what’s going to happen to 300MW imported coal power plant in Gwadar whose financial close is under process; but the lead analyst at the Centre for Research on Energy and Clean Air (CREA) has been reported to highlight that projects that haven't yet achieved financial close will struggle to be realized.