China’s development banks yet to channel funds into renewable initiatives despite coal financing pledge

In spite of China’s pledge to halt overseas coal financing and enhance green energy projects, the country’s development banks have not directed funds toward renewable initiatives, according to researchers at Boston University.

The report discloses that China’s development banks, including the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM), did not issue any new energy sector loans for the second consecutive year in 2022. President Xi Jinping’s 2021 commitment aimed to redirect financial support from overseas coal projects to green and low-carbon energy projects in developing nations.

Cecilia Springer, Non-Resident Fellow at Boston University’s Global Development Policy Centre (GDP Centre), emphasized that although support for overseas coal projects was already diminishing before President Xi’s pledge, the commitment to increase support for green and low-carbon energy has not materialized as expected.

The GDP Centre’s report reveals that from 2000 to 2022, the CDB and CHEXIM provided a total of 331 loans amounting to $225 billion for energy projects, with a substantial portion allocated to exploration and extraction activities. Almost three-quarters of the total lending supported coal, oil, and gas projects.

Despite a decrease in financing from the two banks since 2016, the report underscores that China’s support for energy projects still exceeds that of any other global lender, including the World Bank, emphasizing 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.

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.