China’s dirty recovery hampers crackdown on international finance

The fate of coal power was sealed in 2021 as investors sought cleaner investments and governments pledged to work for a controlled decline in fossil fuels.

Countries agreed during the COP26 climate talks to relentlessly reduce coal power, but without a timetable or consensus for a complete phase-out.

Asia has turned against the financing of coal. First South Korea, then Japan and finally China, the world’s largest coal donor, ended their support for new coal-fired power projects abroad, drying up liquidity. international coalitions relentlessly.

But that could be a long goodbye. Plans to phase out coal-fired power in the country have proven to be a more difficult conversation for coal-dependent governments, including China, India, Russia and Australia.

And the promises made throughout the year are yet to be backed up by concrete policies and the accelerated deployment of green alternatives. A carbon-intensive recovery from the Covid pandemic, particularly in China, has driven global coal-fired power generation to an all-time high in 2021.

Here are the biggest moments.

January

Data emerged showing that China’s largest coal-producing province, Inner Mongolia, had approved power and industrial facilities in 2020 that would lock in an annual coal use the size of Germany. This was the most striking example of Beijing’s coal recovery in the face of the pandemic.

February

Central government inspectors criticized China’s energy authority for pushing the expansion of coal power without considering Beijing’s environmental goals. The highly critical report has been hailed as “groundbreaking” and a spectacle of Beijing’s challenges to reflect President Xi’s climate ambition in all planning decisions.

In Bangladesh, the government has announced its intention to scrap nine coal-fired power plants. The high cost of imported coal, declining financial support from foreign investors and Bangladesh’s role as chair of the Climate Vulnerable Forum were cited as reasons for this decision.

Plans to build the UK’s first deep coal mine in 30 years for coking coal have been put on hold after the government was accused of “outright hypocrisy” for giving the project the green light while calling for global climate action.

March

UN chief António Guterres has called on the G7 group to quit coal by 2030 and “cancel all ongoing global coal projects,” pressuring Japan and the United States to quit coal. ‘They are making exit plans.

In its economic development plan until 2025, China did not plan to stop the expansion of coal but promoted “the clean and efficient use of coal”. Analysts said Beijing’s climate policy was “creeping” toward carbon neutrality.

Ordos in Inner Mongolia has some of China’s largest coal reserves (Photo: Robert James Hughes / Flickr)

April

The traditional coal funder, South Korea, pledged to end its funding of coal to other countries at a leaders’ summit hosted by newly elected Joe Biden in April. President Xi Jinping said China will “gradually reduce” its coal consumption from 2026 to 30 – suggesting a peak date of 2025.

Can

The Asian Development Bank has drawn up a policy to end all funding for coal mines and power plants, thereby accelerating the phase-out of coal across Asia.

British Cop26 President Alok Sharma used the momentum to move away from coal globally to announce that the Glasgow summit in November “will lock coal into history”.

In its first 1.5C-aligned scenario, the International Energy Agency (IEA) warned that the expansion of fossil fuels had to end this year if the energy sector was to achieve net zero emissions. by 2050.

After initial resistance, Japan accepted a G7 pledge to end its unrelenting support for coal power abroad by the end of 2021, leaving China isolated as the last major donor. coal funds abroad.

June

The head of the Climate Investment Fund, Mafalda Duarte, dragging a $ 2 billion plan to support coal-dependent developing countries in the transition to clean alternatives, in an interview with Climate Home. These included reducing the risks of private capital and helping governments create alternative jobs and social security schemes in mining areas.

A woman watches over her grazing sheep near a coal-fired power station in Jepara, central Java (Photo: Kemal Jufri / Greenpeace)

July

China’s largest bank, Industrial and Commercial Bank of China (ICBC), has said it will no longer finance a 2.8 GW coal-fired power plant in Zimbabwe, citing “environmental concerns” amid a wave cancellation of coal projects supported by China.

South Africa’s climate advisers have urged the government to step up its climate ambition to 2030 by accelerating the phase-out of coal and ending new coal-fired power projects.

But Indonesia has submitted a long-term strategy to the UN showing that the amount of coal used for primary energy will continue to grow until at least 2050.

At the G20, climate and energy ministers, including from Indonesia, found themselves at an impasse over phasing out coal-fired electricity, with China, Russia and India resisting a deadline for phasing out fossil fuels.

August

Brazil has defied the Italian G20 Presidency’s call for a phase-out of coal and released a plan to invest in coal mining and allow the burning of fossil fuels until 2050.

The Sri Lankan government has ruled out building another coal-fired power station.

A Greenpeace report found that China only approved 5.2 GW coal projects in the first half of 2021 – a 79% drop in coal capacity that was approved in the same. period in 2020. Campaigners said policymakers were receiving “mixed signals about coal. As local governments slowed down approvals of new projects but “still awaited financial support.”

September

President Xi Jinping announced at the United Nations general assembly that China will stop supporting new overseas coal-fired power projects, thus relentlessly draining international liquidity for coal. The move came 10 months after China’s environment ministry launched a proposal to ban investments in overseas coal-fired power.

The decision was made amid a severe power shortage across China caused by soaring coal prices and supply constraints as well as skyrocketing coal consumption across the country. Local media attributed the power shortages to environmental policies, which analysts said could spark a backlash against climate action.

Women and children walk past NTPC coal-fired power stations in Sipat, in the central Indian state of Chhattisgarh (Photo: Sri Kolari / Greenpeace)

October

Increasing demand for energy and soaring coal prices triggered India’s electricity crisis, with coal stocks shrinking to four days at one of the lowest points.

At a meeting of G20 leaders in Rome, some members, including China and India, were reluctant to set a timetable for phasing out coal. But with China by its side, the group has pledged to end international public funding for relentless coal-fired power generation by the end of 2021.

November

The future of coal dominated the Cop26 talks in Glasgow, UK.

More than 40 countries have signed A declaration agreeing to phase out coal-fired power, including 18 countries promising for the first time to phase out or stop investment in new coal-fired power plants nationally and internationally. Australia, China, India and the United States were all absent from the agreement.

Despite a last-minute weakening of China and India, the Glasgow Climate Pact called on countries to “accelerate the phase-out of coal-fired power” – an important first in the UN process on climate change.

An $ 8.5 billion transition program to help South Africa wean off coal has been hailed as a model to support the transition of other major emerging economies to cleaner energy sources. But questions remain on how it will be delivered.

Indonesia, India, the Philippines and South Africa have been named as beneficiaries of the $ 2 billion climate investment fund pilot program to support the transition from coal to clean.

At the end of the month, Germany’s newly formed coalition government announced a plan to “ideally” phase out coal by 2030 – eight years ahead of schedule.

December

Despite a significant policy shift from coal-fired power, the amount of electricity produced from coal jumped 9% in 2021, with global demand for coal heading to an all-time high in 2022, the IEA analysis found.

This strong rebound, led by China and India, follows two years of decline in global electricity production from coal in 2019 and 2020 and threatens net zero climate plans, the IEA has warned. The demand for electricity is growing faster than the low-carbon supply and soaring fossil gas prices are cited as explanations.