China Cuts Planned Overseas Coal but Uses Loopholes

China has cancelled 67% of the overseas coal power capacity it planned in 2021, a move that avoids an estimated 6.4 billion tonnes of lifetime carbon dioxide emissions. Despite this reduction, a report from the Centre for Research on Energy and Clean Air and People of Asia for Climate Solutions warns that private Chinese companies are utilizing regulatory loopholes to maintain overseas coal investments.

Xi Jinping, the President of China, pledged in 2021 to stop funding overseas coal power plants, but the new report indicates continued expansion in Indonesia, Vietnam, and Pakistan. In Indonesia, 17.1 gigawatts of China-backed capacity is planned, primarily for captive coal plants that power heavy industries such as aluminum and nickel smelting.

This trend is driven by energy security concerns in Southeast Asia following energy shocks from the Russia-Ukraine and Iran wars, as well as the closure of the Strait of Hormuz. While China leads in renewable energy manufacturing, it continues to build domestic coal infrastructure. In other diplomatic developments, President Xi skipped the UN General Assembly in New York to meet with US President Donald Trump, sending Vice President Han Zheng to represent China.