New Chinese coal policy scuttles Zim’s energy plans
IF there is a country likely to be hurt the most by Chinese
President Xi Jinping’s decision for Beijing to stop building new power plants
overseas, it is Zimbabwe.
Among several African countries with large deposits of coal,
it is heavily dependent on China after it had sanctions imposed on it by the
United States and some European countries because of former President Robert
Mugabe’s human rights abuses and a policy of seizing land from white farmers.
Zimbabwe was planning to build several coal-fired power
plants costing a total of US$15 billion, with Chinese lenders initially
committing to fund them.
Private funding was not forthcoming, partly because of
growing opposition from environmental campaigners.
But on Tuesday, in a pre-recorded speech to the United
Nations General Assembly, Xi sounded a death knell for several coal projects,
including in Zimbabwe, for which Chinese lenders were expected to provide
financing.
Chinese cash funds African coal plants despite environmental
concerns. The southern African nation’s demand for power exceeds its supply,
causing it to seek to build more plants.
Its electricity shortage means it cannot attract
power-intensive manufacturing companies.
Xi’s pledge could halt dozens of coal power projects in
Africa, although there had already been a notable slowdown in new financing
since Xi last year announced a target for net-zero emissions by 2060.
China is the single largest financier of coal-powered plants
overseas as well as the largest producer and consumer of coal.
But Beijing has not funded any coal projects abroad in the
first half of this year and the country’s largest financier of such projects,
Industrial and Commercial Bank of China, said it would start phasing out coal
from its portfolio.
The bank in July declined to fund the US$3 billion Sengwa
coal project, in Zimbabwe’s north, as pressure grew from activists and
communities.
Independent climate change think-tank E3G says Zimbabwe is
among the laggards — also including Botswana and Mozambique — who continue to
pursue coal-fired plants, bucking the global trend of retiring or not funding
the environmentally destructive energy source.
The Zimbabwean government has been vocal in its continued
pursuit of new coal, even as Chinese financiers pull out, E3G said in its
latest report about the collapse of the global coal pipeline.
The country has 990 megawatts of coal power plants under
construction and 4,5GW in the pipeline, but the Chinese government’s freeze on
funding them is likely to force it to seek alternative sources of financing or
shift to solar and hydro power.
What is China doing about climate change?
Besides Zimbabwe, Botswana and Mozambique, other countries
that may be forced by China’s decision to stall their coal plant plans include
Kenya, Djibouti, Madagascar, Malawi and South Africa.
Xi’s statement means “existing and agreed projects will be
honoured but new projects will be off the table”, according to Yun Sun,
director of the China programme at the Stimson Centre in Washington.
Groundwork, an environmental justice organisation working in
South Africa, welcomed Xi’s statement, calling it a victory for the thousands
of community activists in countries including Zimbabwe, Kenya, Ghana, Senegal,
Ivory Coast and South Africa who had “challenged their governments and China
and said no to coal”.
“We challenge President Xi to end support from all Chinese
institutions … that keep Africa’s coal mines, plants and other infrastructure
under construction or planned,” Groundwork said.
Lauri Myllyvirta, the lead analyst at the Centre for
Research on Energy and Clean Air, said the announcement signalled a major
policy shift for China and “leaves no international financing for new coal”.
“Making any new financing or equity investment commitments
to coal power projects overseas would be toxic for any Chinese bank or power
company,” Myllyvirta said.
“For projects that haven’t yet achieved financial close,
that’s likely to be the end of the story.”
However, Myllyvirta said it was not yet clear what forms of
involvement in coal power projects had been ruled out, and where the line would
be drawn for projects that were already initiated.
According to Boston University Global Development Policy
Centre, the Chinese State has funded coal projects worth US$43 billion since
2000, mainly in Asia and southern Africa.
“Now that the world’s major governments have led by example
and banned overseas coal plants, it is time for the private sector, which
finances 87% of overseas coal, to follow suit,” said Kevin Gallagher, the
centre’s director.
“We will not meet our global climate and development goals
if the private sector continues to finance overseas coal.”
Chinese cash funds African coal plants despite environmental
concerns Christoph Nedopil Wang, the founding director of the Green Belt and
Road Initiative Centre, said Chinese financial institutions and engineering
companies had historically been an important source of financing and
engineering capacity for overseas coal development.
“The door has been shut to [governments] in coal-rich
countries to ask for Chinese financing and engineering in new coal projects,”
Wang said.
But he said there was not yet clarity on whether the
announcement would halt already announced coal-fired projects.
Rishikesh Ram Bhandary, a climate finance and international
climate negotiations expert, said China’s decision was “likely to bolster the
voices calling for a greater focus on renewables within these countries”.
However, he said it was unlikely to have an immediate impact
on South Africa and Zimbabwe.
“As our database shows, the coal-fired power plants funded
by the Chinese policy bank are already under construction or in operation,” he
said.
“Of course, we need further details from the Chinese
government to fully understand what the announcement includes and excludes.
“With the last source of major public finance for coal-fired
power plants being removed, countries such as South Africa and Zimbabwe will
need to think carefully about the policies they need, and the infrastructure
required to significantly scale up renewables.”
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