China pledges to end overseas coal investments

1 minute read

In response to President Xi Jinping's announcement yesterday to end coal investments overseas, Wood Mackenzie principal analyst Shirley Zhang said:

"China’s pledge to stop financing new coal-fired power projects overseas could affect both demand and supply in the seaborne market and pressure long term prices. Projects that aren’t financially committed and rely heavily on foreign investment such as projects in Indonesia and Vietnam would be most affected. In particular, our assumption of 29 GW generic coal projects in Indonesia after 2025 could be at risk due to China’s pledge, forcing more Indonesian coal supply to the export markets.

"Having said that, the key is no longer about the number of new coal projects that will be financed, but whether and when countries can afford to retire their existing fleets. Due to the relatively young coal plant ages in developing Asia and the lack of new coal financing, countries may be forced to extend the life of their existing coal fleets to accommodate a less disruptive transition."