The Asia Miner

JAN-MAR 2019

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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the asia miner • volume 16 • issue 1 12 REGIONAL FOCUS: Central Asia & Mongolia A new report by the Insঞtute for Energy Economics and Financial Analysis (IEEFA), finds global renewable energy champion China is simultaneously funding over one-quarter of coal plants currently under development outside the country. The report, "China at a Crossroads: Conঞnued Support for Coal Power Erodes China's Clean Energy Leadership" examines China's expensive subsidisaঞon of largely imported coal plant investments across 27 countries, all while overtaking the US and Germany in becoming the number one exporter of cheaper greener environmental goods and services. Report co-author Melissa Brown, IEEFA Energy Finance Consultant, says funding coal plant projects leaves China and the 27 countries reliant on Chinese coal financing increasingly IEEFA: China's clean energy leadership eroded by support for coal power across Asia exposed to bad economic outcomes as naঞons move away from coal. "The Internaঞonal Energy Agency's most conservaঞve modelling forecasts declining global coal trade post 2018 for good reason. Coal power locks imporঞng countries into years of uncertainty about power prices as coal prices gyrate. By contrast, renewables are benefiমng from huge technology improvements and have a deflaঞonary impact on power prices," Brown said. "Many private global financial leaders, including most mulঞlateral development banks, have come to see thermal coal as a poor investment with growing stranded asset risks. The World Bank, Standard Chartered UK, Generali of Italy, and Nippon Life of Japan have all turned their back on coal power for solid financial reasons. China has commied or proposed approximately US$36 billion in financing for 102 gigawas of coal- fired capacity in 23 countries. This represents more than a quarter of all coal-fired capacity under development outside of China. "China is making great progress towards becoming a world leader in renewable clean energy at home, but outdated logic about power system design conঞnues to dominate China's overseas finance habits. China's leading financial insঞtuঞons lag their global peers in formally limiঞng investment in coal plants in internaঞonal markets, imposing stranded asset risks on countries that will struggle to adapt as coal power becomes obsolete." China is sঞll fuel-source agnosঞc in internaঞonal markets, effecঞvely exporঞng its now increasingly redundant thermal power capacity and experঞse. A unit-by-unit analysis of all global coal plants under development, based on the July 2018 Global Coal Plant Tracker, shows Chinese finance playing an increasingly significant role in supporঞng and funding new coal plants in internaঞonal markets. This funding comes as financial insঞtuঞons around the world are moving away from coal, including the World Bank, most mulঞlateral development banks, and the export credit agencies (ECAs) of the Organisaঞon for Economic Co-operaঞon and Development (OECD) countries. Addiঞonally, many private global financial leaders have come to see thermal coal as a poor investment with growing stranded asset risks. While the Chinese government has signalled it will restrict coal lending, the country has yet to formally limit its investment in coal plants. Instead, Chinese finance is increasingly stepping in as the lender of last resort for coal plants, as other banks take acঞve measures to restrict their funding. The IEEFA report finds that Chinese financial

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