China has cancelled 67% of its overseas coal power projects planned in 2021, marking progress toward its climate commitments. However, experts warn that regulatory loopholes enable ongoing investments in coal abroad, complicating global efforts to reduce fossil fuel reliance.
- China cancelled 67% of overseas coal projects planned in 2021
- Regulatory gaps allow continued coal investments despite Xi’s pledge
- Southeast Asia’s energy demand challenges coal phase-down efforts
What happened
In 2021, Chinese President Xi Jinping announced at the United Nations General Assembly that China would stop funding overseas coal-fired power plants. This pledge aimed to curb global carbon emissions and align China’s international investments with its climate goals. A recent report by CREA and PACS reveals that China has since cancelled two-thirds of the coal power capacity it initially planned to build abroad, underscoring a tangible commitment to this promise.
Despite this progress, some Chinese companies have reportedly exploited regulatory loopholes to continue investing in coal projects overseas. While this undermines the pledge in part, the cancellations stand out as a rare positive development in a global context where the phase-down of coal remains sluggish. This mix of policy progress and gaps highlights the complexity of enforcing China’s international climate ambitions.
Why it matters
China plays a pivotal role in shaping the future of global energy, particularly in Asia and Africa, where it is a major funder of infrastructure projects. Its leadership in renewable technologies like electric vehicles, solar panels, and wind turbines positions the country as a key driver of the energy transition. The commitment to stop funding overseas coal projects signals a potential shift toward cleaner energy sources in the Global South.
However, Southeast Asia’s growing energy needs and energy security concerns following recent geopolitical conflicts have increased demand for coal-fired power, complicating the phase-down efforts. The region’s heavy dependence on imported fossil fuels creates a tension between meeting immediate energy needs and adhering to long-term climate goals. How China balances these factors will significantly influence regional and global climate outcomes.
What to watch next
Observers will be closely monitoring how effectively China closes regulatory loopholes that currently enable investments in overseas coal plants to ensure full adherence to Xi’s 2021 pledge. Greater transparency and stricter enforcement could strengthen China’s climate leadership and accelerate the global coal phase-down.
Additionally, developments in Southeast Asian energy policies — including investments in renewable energy, electric vehicles, and nuclear power — will reveal whether the region can shift toward sustainable energy while addressing its urgent energy security challenges. China’s future overseas energy financing decisions will play a critical role in shaping this transition.