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12.8GW of coal energy halted after China pulls out of overseas energy projects

China’s decision to halt the funding of overseas coal plants has led to the cancellation of 15 coal plants or around 12.8GW of energy production, the Centre for Research on Energy and Clean Air (CREA) has said.

President Xi Jinping announced to the United Nations General Assembly in September last year that his country would end overseas coal projects as part of its contribution to the global effort to cut climate-warming greenhouse gas emissions.

The projects identified by CREA, which have all been shelved or cancelled since that announcement, had already received either financial backing, equipment, or procurement and construction support from Chinese firms.

The cancellations represent a big dent in global energy production from coal. As a point of comparison, Germany, which is the largest coal-fired energy producer in Europe, had about 40GW of generation capacity in total at 84 plants across the country in 2019.

The Natural Resources Defense Council (NRDC), a non-profit attempting to reduce the world’s reliance on fossil fuels, said that China has the potential to stop an additional 37GW of overseas coal projects (32 plants) that are currently in the pre-construction phase.

It recommends that projects under construction proceed with “caution,” which could encourage the re-examination of 30GW (36 plants) of plants already under construction.

Coal is the most carbon-emitting fossil fuel per GWh of energy generated, and climate experts believe the world needs to eliminate its usage as soon as possible in order to mitigate the worst impacts of climate change.

China’s motivations may not be entirely due to environmental concerns – another CREA report found that the five years up to 2021 saw more China-linked coal-fired power capacity shelved or cancelled than commissioned, with two-fifths of the world’s coal power stations operating at a loss.

But China has been ramping up its investment in domestic coal plants as it looks to rapidly expand electricity production at home.

CREA called for more early retirements of coal plants and urged China to shift to supporting overseas renewable energy facilities in order for global goals on a clean energy transition to be met.

“China's new directive is the first of its kind – a large emitter with a major global carbon footprint committing to enable low-carbon transitions overseas," said Kevin P Gallagher, director of Boston University's Global Development Policy Center, which tracks China's coal investments.

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