China’s Coal Projects Spur Call for Legal Limits

As China presses ahead with coal-fired power projects outside its own borders, environmental critics are calling for legal controls.

Writing for the environmental web site last month, advocates argued that China’s draft energy law, which has held it’s place in the works since 2007, does not do enough to stop pollution in countries that participate in China’s massive Belt and Road Initiative (BRI) to build infrastructure and boost trade.

While the far-reaching law is intended to make the basis for regulating and reforming the vitality sector, it might leave the entranceway open for “carbon leakage” from exports of polluting fuel technologies and coal-fired power projects funded by the U.S. $1-trillion (707-billion yuan) BRI program, the advocates said.

“The priority of the draft energy law is improving the regulation of energy exports and imports, like the management and import of ‘clean’ and ‘advanced’ energy technologies.

“But the bill falls short on exports, as there are no provisions for the screening of fossil fuel products or technologies,” said Wawa Wang, senior adviser at the Danish nonprofit VedvarendeEnergi (Renewable Energy), and environmental lawyer Zhang Jingjing.

“Changes to the draft energy law are essential to introduce binding climate and export screening criteria for all Chinese exports of fossil fuel projects,’ they said.

Domestic coal resurgence

The criticism of the pending energy law comes as China can be under fire for approving new coal-fired power plants at home despite low usage of existing generators.

The new domestic projects are noticed as an indication that China is easing its decarbonization drive since it seeks to bring back its economy from the pandemic slump.

At the start of this season, China had 180 gigawatts (GW) of new coal-fired generating capacity in the look stage, representing over one-third of the coal-powered projects to be built global, the International Energy Agency (IEA) said in a study last month.

“The case for building this planned new coal capacity … needs to be carefully weighed against the implications for local air pollution and global climate goals,” the IEA said.

A survey released a week ago by the Global Energy Monitor and the Center for Research on Energy and Clean Air said that China has been bucking the trend toward fewer new coal-fired projects in countries around the world.

“Where new coal plants are still pursued globally, they are most often bankrolled by Chinese financiers, exposing the country to overcapacity risks elsewhere in the world, in addition to the massive overcapacity at home,” the survey said.

China Dialogue pointed to several recent coal-fired projects that China is sponsoring in BRI countries which could add to the total, including a 700-megawatt (MW) power plant in Ivory Coast that could be the first of its kind in West Africa, based on Le Monde.

In April, Bloomberg News reported that China Gezhouba Group Corp. would also help build the two,800-MW Sengwa coal power project in northern Zimbabwe at approximately cost of U.S. $3 billion (21.2 billion yuan).

The advocates also cited reports that as much as 4.1 GW of coal-power generation may be built-in Europe with state financing from China, including projects in Bosnia and Herzegovina, and Serbia.

Environmental groups have already been raising concerns over the BRI program from the time it was announced by President Xi Jinping in 2013 as the Silk Road Economic Belt and the 21st Century Maritime Silk Road, subsequently renamed as One Belt-One Road (OBOR) after which BRI.

Speaking at the Second Belt and Road Forum for International Cooperation in Beijing a year ago, Xi voiced support for “green” standards in BRI development abroad.

“The principle of extensive consultation, joint contribution and shared benefits should be upheld, said Xi, stressing open, green and clean approaches, as well as goals of high-standard, livelihood-improving and sustainable development,” the official Xinhua news agency quoted him as saying.

“The joint development of the Belt and Road Initiative is to build an open development road, which must be a green development road at the same time,” Xi said.

Environmental concerns

But through the years and name changes, the environmental criticisms of BRI have remained much the same, emphasizing the infrastructure-intensive program being an unrestrained supply of carbon emissions beyond China’s national climate change goals.

In a report cited by The New York Times in January, the Institute of International Finance in Washington said that “85 percent of Belt and Road projects involved high emissions of greenhouse gases linked to climate change. These projects have included at least 63 coal-fired power plants.”

BRI has allowed China’s state-owned enterprises (SOEs) to keep focusing on coal-fired projects overseas while opportunities on the domestic market are limited, creating hundreds of thousands of contracting jobs.

The advocates argued that China has held SOEs to a lower environmental standard for petroleum and pipeline projects in BRI countries than for similar development in the home.

“This is because China does not require companies or banks financing projects to disclose environmental and social impact assessments for overseas projects,” they said.

China should address the shortcomings by requiring impact assessments and regulatory approvals for transboundary energy projects and Chinese loans, they said.

Although better regulation of China’s BRI projects may be needed, Philip Andrews-Speed, a China energy expert at National University of Singapore, disagreed that the draft energy law released in April is the right venue for dealing with the problem.

“China’s draft energy law is aimed at the governance of the domestic energy sector, as are similar laws in other countries.

“That being said, it can be argued that there should be a law covering outward foreign investment of all types,” Andrews-Speed said.

“The government has issued various guidelines at different times. More importantly, the major state-owned banks are reported to be developing environmental standards. If implemented, these might have some effect,” that he said.

The call for legal limits on BRI projects comes as global pressures rise, reducing trade volumes and energy investment as a result of pandemic.

In May, China’s Ministry of Commerce said that the country’s trade with BRI nations in the very first four months of the entire year increased 0.9 % to 2.76 trillion yuan (U.S. $389.9 billion), showing more growth compared to 4.9-percent decline in China’s total trade global.

BRI trade accounted for 30.4 % of China’s total, Xinhua reported without specifying how many countries counted in the calculation. The BRI official website currently lists 143 nations that cooperate with the initiative.