Just weeks after China's coal ambitions brought tensions to climate talks between US Climate Envoy John Kerry and Chinese officials, President Xi Jinping pledged to end all its financing of coal-fired projects abroad and allocate more funding to green and low-carbon energy projects in developing nations. The move represents a turn-around for China's energy plans, and a step in the right direction in the global race to net-zero.

Why This Matters

China, which produces nearly 30% of global emissions, has announced $160 billion worth of coal-fired plants globally since 2014. To meet the goals of the Paris Agreement, however, the UN has reported that coal use in electricity generation must be cut by 80% by 2030. "Needless to say, adding some 200-plus gigawatts (GW) of coal over the last five years, and now another 200 or so coming online in the planning stage, if it went to fruition would actually undo the ability of the rest of the world to achieve a limit of 1.5 degrees," said Kerry earlier this month. "The stakes are very high." Now, with this announcement, 40 GW worth of planned coal power will likely be cancelled, helping to lower those stakes.

Dreams of Coal

According to the Centre for Research on Energy and Clean Air, China built more than three times the new coal capacity than the rest of the world combined in 2020. China is also the world's leading financier of coal abroad. "Accelerating the global phase-out of coal is the single most important step to keep the 1.5-degree goal of the Paris Agreement within reach," said UN Secretary General Antonio Guterres.

Still, this announcement does not apply to China's domestic coal production, the growth of which would offset the benefits gained by the nation's clean energy projects. Climate experts, advocates, and leaders say that without putting an expiration date on those projects, the world won't be able to limit global temperature rise. "This is an important step by the world’s biggest provider of overseas coal finance," said Simon Stiell, the Minister for Climate Resilience and Environment of the island nation of Grenada. "We look forward to seeing commensurate action domestically."

Ante Up

In addition to phasing out coal financing abroad, China also announced it would be allocating more funding to fight climate change in developing nations. President Biden also announced the US would increase its commitment to developing countries. In 2010, nations pledged $100 billion annually to fund climate action in poor and vulnerable nations, but the global community has yet to reach that goal. "We are weeks away from the UN climate conference in Glasgow, but seemingly light-years away from reaching our targets," said Secretary Guterres. "We must get serious. And we must act fast."