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For the first time, China has invested more in solar and wind energy projects abroad than in coal-fired power plants, marking a significant shift in its international energy financing strategy. Between 2022 and 2023, nearly 70% of China’s foreign power investments were directed toward renewable energy sources, such as solar and wind, surpassing fossil fuels for the first time since Beijing began supporting overseas power projects in the early 2000s .
Key Findings from the Global Development Policy Center’s Report
According to a new analysis by the Global Development Policy Center at Boston University, this transition aligns with China’s 2021 pledge to cease financing new overseas coal-fired power plants and to increase support for renewable energy projects. The report, titled No New Coal: A Shift in the Composition of China’s Overseas Power Plant Portfolio?, evaluates the implementation of this pledge and provides an overview of China’s overseas power plants’ carbon dioxide emissions, capacity, energy composition, and investors .
Investments in Renewable Energy
The analysis indicates that from 2022 to 2023, 68% of China’s overseas energy finance was directed toward green energy projects. Notably, there have been no new coal-fired power plant investments since 2021. However, the total volume of energy investments has declined, and the existing portfolio remains heavily carbon-intensive. Coal plants that were in the pipeline before the pledge continue to come online and will emit carbon dioxide for decades to come .
Challenges and Considerations
Despite the shift toward renewable energy, the overall scale of financing remains relatively small. In 2022 and 2023, only three gigawatts of wind and solar capacity were funded, compared to an average of 16 gigawatts annually between 2013 and 2019. Additionally, China’s overall foreign direct investment has decreased since its peak in 2016 .
Conclusion
China’s recent shift in overseas energy investments reflects a growing commitment to supporting the global energy transition. While challenges remain, such as the continued operation of previously planned coal plants and the relatively small scale of new renewable investments, the trend indicates a positive move toward sustainable energy development.
