China's development banks fall short on green energy finance despite coal financing pledge
A woman takes pictures of the China Development Bank booth
Despite China's commitment to cease overseas coal financing and boost green energy projects, the country's development banks have yet to channel funds into renewable initiatives, according to researchers at Boston University.
The report reveals that China's development banks, including the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM), did not provide any new energy sector loans for the second consecutive year in 2022. President Xi Jinping's 2021 pledge aimed to shift financial support away from overseas coal projects towards green and low-carbon energy projects in developing nations.
Cecilia Springer, Non-Resident Fellow at Boston University's Global Development Policy Centre (GDP Centre), emphasised that while support for overseas coal projects was already declining before President Xi's pledge, the commitment to ramp up support for green and low-carbon energy has not materialised as expected.
The GDP Centre’s report indicates that from 2000 to 2022, the CDB and CHEXIM provided a total of 331 loans worth $225 billion for energy projects, with a significant portion allocated to exploration and extraction activities. Almost three-quarters of the total lending supported coal, oil, and gas projects.
Despite a decline in financing from the two banks since 2016, the report highlights that China's support for energy projects still surpasses that offered by any other global lender, including the World Bank. The data stresses on the challenge of fully transitioning away from fossil fuel funding.
At the Belt and Road Summit last month, China introduced the Green Investment and Finance Partnership (GIFP) to promote green energy. President Xi Jinping announced a commitment of approximately $100 billion in annual financing to support the energy transition in Belt and Road countries. While acknowledging the significance of this commitment, Cecilia Springer noted that it remains a "drop in the bucket" compared to the goals of the Paris Agreement.
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The GDP Centre’s database reveals that China's fossil fuel lending commitments since 2013, coinciding with the Belt and Road project's announcement, amounted to $55.4 billion. Of this, $20 billion was allocated to coal-fired power generation.
(With inputs from Reuters)
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