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China has pledged to reack peak emissions by 2030. Photo: Xinhua

Bank of China pledges to end funding for foreign coal mining and power plants

  • Lender is the first state-owned commercial bank to make such a pledge after recent Xi Jinping speech to UN
  • Chinese president promised country would stop building overseas coal-fired plants

The Bank of China has said it will no longer provide financing for new coal mining and coal-fired power projects overseas from next month.

It is the first of the four Chinese state-owned commercial banks to make such a commitment after President Xi Jinping told the United Nations General Assembly this week that China would stop building coal-fired power plants abroad.

The bank is also one of the biggest bankers of coal mining and coal power companies, according to the Banking on Climate Change 2020 report.

It said in a statement that it had recently drawn up an action plan to help China meet its target of reaching peak carbon emissions by 2030 and achieving carbon neutrality by 2060.

It will also reduce lending to high-emission industries and increase its credit support for green technologies, including those designed to reduce emissions.

China stopping coal funding could power down Zimbabwe’s energy plans

The Chinese authorities have yet to clarify whether Xi’s latest pledge would include the financing as well as the construction of coal-fired projects, nor whether it applies to the private sector.

“If Xi’s pledge includes China’s commercial banks too, this is more ambitious than anything the West has done,” Kevin Gallagher, director of the Boston University Global Development Policy Centre, posted on Twitter.

According to a data analysis by the centre, Chinese public and commercial institutions financed 13 per cent of the total coal power capacity, equivalent to 68.8 gigawatts, that was operating, under construction or being planned outside China between 2013 and 2019.


What is China doing about climate change?

What is China doing about climate change?

Some of the projects that had been at the planning stage were later shelved or deferred, including plants in Egypt and Pakistan.

China’s investment in overseas coal-fired power projects has dropped sharply in recent years and it did not finance or invest in any coal projects in Belt and Road Initiative countries in the first half of 2021.

Some state-owned and commercial banks have also expressed a willingness to phase down or end support for overseas coal projects.

Chinese coal plant approvals slum after Xi climate pledge

Liu Guiping, deputy governor of the People’s Bank of China, told a press conference in April that China would implement green investment principles for the Belt and Road Initiative and strictly supervise overseas investment in new coal power projects.

Zhou Yueqiu, chief economist of the Industrial and Commercial Bank of China, said in May that the bank would draw up a timetable for the gradual withdrawal of coal financing.

The bank, one of the world’s biggest supporters of coal, is the first major Chinese financier to announce such a plan. In June, the bank said it would not fund the 2,800-megawatt Sengwa coal project in Zimbabwe.