Pollution from Chinese-funded power plants is equivalent to the UAE's annual emissions

Pollution from Chinese-Financed Power Plants

 Pollution from Chinese-funded power plants is equivalent to the UAE's annual emissions

A recent analysis has examined investments in Chinese-funded power plants abroad and their impact on efforts to reduce carbon dioxide emissions.

According to the findings of the Washington-based Energy Platform, Chinese financing is crucial to expanding access to supply and accelerating the transition to renewable energy sources to achieve emissions reduction goals and achieve carbon neutrality. Indeed, financing for coal-fired power plants abroad has been halted, fulfilling a promise made by President Xi Jinping at the United Nations in 2021.

However, coal-fired power generation still dominates Beijing's projects, and it is estimated that the emissions from Chinese-funded power plants in 2023 alone are equivalent to those of an entire country, such as the UAE or Malaysia.

Chinese-Financed Power Plants

The analysis on Chinese-funded power plants was prepared by the Global Development Policy Center at Boston University. The researchers found that China, through development finance institutions and investors, financed 177 gigawatts of power plants over the 23-year period between 2000 and 2023.

This capacity is equivalent to approximately 6% of China's power plant capacity. Specifically, it built 1,542 units in 745 power plants in 96 countries around the world. According to a statement obtained by the specialized energy platform, 75% of this capacity has entered production, while another 25% is still under construction or planning.

The report's authors explained that investors and development finance institutions (DFIs) have retreated from investing in the electricity sector in overseas markets after reaching their peak in 2016. In particular, DFIs contributed 69% of total coal-fired power generation capacity and 40% of hydropower capacity.

Financing for 97% of wind power projects and 96% of solar power plants came from foreign direct investment (FDI), either through greenfield investments or mergers and acquisitions. The greenfield investment sector also led the construction of overseas power plants between 2022 and 2023.

China-Financed Power Plant Emissions

Between 2000 and 2021, coal dominated China's overseas investment at 33.2%, followed by hydropower at 30.6%, and natural gas at 16.8%. Wind power plants accounted for 7.3%, solar power 5.3%, nuclear power 4.5%, oil 1.6%, and other renewable energy sources 0.7%.

Between 2022 and 2023, solar power accounted for more than half of China-funded power plant capacity at 53.6%, followed by natural gas at 30.6%, wind power at 14.5%, and hydropower at 1.3%. According to the report obtained by the specialized energy platform, the share of renewable energy in China's global portfolio reached 68% between 2022 and 2023, compared to only 13% between 2000 and 2021.

The share of solar power jumped to 54% from 5%, and wind power from 7.3% to 14.5%. Hydropower's share declined after 2021, with only one project in Madagascar receiving Chinese financing. Although hydropower does not directly emit carbon, the submersion of plants and organic matter in reservoirs releases carbon and methane, two greenhouse gases that cause global warming.

Despite significant growth, Chinese financing for renewable energy power abroad remains small, with only 3 GW of financing between 2022 and 2023. Fossil fuels still dominate, accounting for 56% of China-funded power plant capacity abroad and 34% of projects yet to come online.

In 2023, annual carbon dioxide emissions from these plants reached 287 million tons, equivalent to the emissions of an entire country such as the UAE or Malaysia. If the power projects under construction or planned come online, they would add 53 million tons of carbon emissions, equivalent to the annual emissions of Austria.

Chinese-Financed Power Plants by Region

Chinese-financed power plant investments are concentrated in Asia and the Americas, while Africa represents only 4% of total investments.

In particular, the largest investments in terms of capacity are concentrated in Asia, where coal-fired power generation dominates, while hydropower dominates financing in the Americas and Africa. According to the report, investors in new assets have avoided Africa, limiting the expansion of renewable energy at a time when it is most needed.

In 2024, China pledged to invest $51 billion over the next three years, including the construction of 30 new clean energy power plants. Many countries in Africa are suffering from debt pressures, making them less willing to borrow from the Export-Import Bank of China (CHEXIM) and the China Development Bank (CDB) to finance large power plants.

Therefore, the report says, new investments from development finance institutions could play a role, particularly in the construction of small-scale wind, solar, and hydroelectric power plants, as well as the Green Investment and Finance Partnership initiative.