Chinas president Xi Jinping has pledged tostop backing new coal power plants overseasin a move that would cut off a key source of financing for projects involving the fossil fuel.
China will step up support for other developing countries in developing green and low-carbon energy, and will not build new coal-fired power projects abroad, Xi told the United Nations General Assembly.
Whiletheleader did not lay out a timeline to end that financing, he noted that Beijinghas not directed any funding from itsBelt and Road Initiativetoward coal power plants so far this year.
Xi did not addresseitherthe domestic situation, wherecoalcomprisesa majority ofthe countrys electricity mix.Dozens ofnew coal-fired power and steel plantsacross the nationwere announced during the first half of 2021. If built, they would alone add 150 milliontonnesin annual carbon dioxide emissions, according toresearchgroupGlobal Energy Monitor.
Thepledgeby China,worlds largest emitter of greenhouse gasesand the main financier of coal-fired power plants around the world, was cautiously welcomed by experts.
This is the announcement China could deliver right now and the one that the U.S. wanted. Investment already trending in this direction, Joanna Lewis, an associate professor at Georgetown University and an expert on Chinese climate policy,tweeted.
Climate advocacy movement 350.org called Xis declaration huge, saying it could be a real game-changer depending on when it takeseffect.
China was the last man standing. If theres no public finance of coal from China, theres little to no global coal expansion, said Justin Guay, the director of global climate strategy at the Sunrise Project, a group advocating for a global transition from coal and fossil fuels.
Beijinghassupported coal projects in developing countriesincluding Indonesia and Bangladesh and has been under heavy diplomatic pressure to put an end to the financing to help the world meet the goals of the Paris climate agreement to reduce carbon emissions.
Weve been talking to China for quite someperiod of timeabout this. And Im absolutely delighted to hear that President Xi has made this important decision,US climate envoy John Kerrysaid in a statement.
Down but not out
With countries across the globe enduring power availability shortages, BMOCapitalscommodities analyst Colin Hamiltonsaiditwasclearthat thermal coal will likely remain a key source ofenergyforforeseeablefuture.
China will continue to finance energy projects overseas, with a push toward developing green and low-carbon energy projects, which could give rise to further nuclear power installations in addition to renewable power, he wrote.
Chinas pledge could affect both demand and supply in the seaborne market and pressure long term prices,energy and mining consultancyWood Mackenziewarned.
According toWoodMacanalyst Shirley Zhang,projects that arent financially committed and rely heavily on foreign investment such as projects in Indonesia and Vietnam would be most affected.
In particular, ourassumption of 29 GW generic coal projects in Indonesia after 2025 could be at risk due to Chinas pledge, forcing moreIndonesian coal supply to the export markets, she said in an emailed statement.
Chinas policy change,part of a goalto reach peak coal consumption by 2030 and carbon neutrality by 2060,comes on the heels of similar pledges by Japan and South Korea earlier this year.
The pledge, which could wipe out nearly $50 billion of investment, is expectedtobring momentum to the global climate talks this November in Glasgow, Scotland.