China’s dominance in global coal loans is overstated, study finds

The study, by the university’s Global Development Policy Centre, said 87 per cent of total financing for overseas coal power projects came from entities outside China, mostly from Japan, the US and Britain.

Only 13 per cent of coal power capacity that was operational or under development outside China between 2013 and mid-2019 was funded by Chinese entities – dramatically lower than previously cited estimates, which had put the number as high as 70 per cent, the study authors said.

The study coincides with a growing push to dump coal power financing. In May, climate and environment ministers from the G7 countries said “international investments in unabated coal must stop now”. The G7 also committed to “take concrete steps towards an absolute end to new direct government support for unabated international thermal coal power generation by the end of 2021”.

Despite the lack of consensus on a coal exit date, the G7 countries used their commitment to put pres­sure on China to also stop financing coal power generation.

Researcher and project leader with the university’s policy centre Xinyue Ma said that, while China was the biggest public financier of international coal power generation and needed to accelerate its phase-out policies in the sector, “the lion’s share of the world’s newly added power coal generation outside China is financed by the commercial sector outside China and there is a need for greater data transparency”.

Export-Import Bank of China and the China Development Bank alone accounted for US$15.6 billion – half of all global public finance commitments in overseas coal-fired power plants that reached financial closure between 2013 and 2018. By generation capacity, the figure falls to 40 per cent.

But the private sector from the G7 and other advanced economies made up most overseas coal power finance in the world economy, the study said, while admitting that clear and official estimates were lacking.