Tuesday, June 15, 2021

Who Is Helping Finance China's Coal Infrastructure Build-Out?

 If you guessed HSBC you may already be a winner.

Or you may be a coal financier with knowledge of the business.

China has no intention of stopping their own coal development or that of their client states in Asia and Africa.* They make lovely, soothing speeches about climate and stuff and build $30 billion dedicated coal hauling railways.

From The Third Pole (water and environment in Asia), June 14:

Europe and the US keep investing in Chinese coal
Despite ambitious climate targets, China is still developing fossil fuel infrastructure, and it has investors from all over the world backing it

In 2020, Southeast Asia was the region with the highest deforestation rates. The area is home to half of the world’s mangroves, which act as natural carbon sinks. These extraordinary forests are on the brink of irreparable degradation, in part due to the expanding coal industry. Southeast Asia is a hotspot of new coal power, with 71 GW in construction or being planned across Indonesia, the Philippines, Vietnam and Thailand. Chinese companies are among the drivers behind these new coal plants. These companies are not only bankrolled by China, but by financial players from all over the world.

COP 15, the United Nations Convention on Biological Diversity, will take place in October 2021, hosted online by the city of Kunming, in China. The talks’ goal is to achieve a ‘Global Deal for Nature’. This would bring governments together to fully protect 30% of the planet’s surface, and sustainably manage another 20%. As all parties reiterated at US President Biden’s climate summit, the same commitment to cooperation applies to mitigating climate change. At a national level, China seems to be playing its part: it has had a climate change law since 2007 and in 2020 President Xi announced China’s emissions will be carbon neutral by 2060. During the recent summit, Xi even promised that China’s coal consumption will reach a peak in 2025.

But China’s booming coal industry makes both goals a distant prospect. Producing and burning coal harms the environment, putting biodiversity at risk. Moreover, burning coal is still the largest source of CO2 and is responsible for about one-third of the global temperature increase so far. Coal still accounts for about 60% of China’s present electricity consumption and, with over 1,000 GW of installed capacity, China operates half of the world’s coal-fired power plants. In 2020, 38.4 GW of new coal-fired capacity was also commissioned. A further 247 GW is under construction or planned, representing 49% of the global coal-fired power plants under development. This is in stark contrast to the repeated pleas of the UN’s secretary-general Antonio Guterres that “no new coal plants should be approved”.

The banks funding Chinese coal

What is wrong is the common belief that the west is unable to change anything in China’s policies and has nothing to do with the direction of China’s energy production. It is well known that China is the EU’s largest trading partner; therefore, many European goods are produced using Chinese coal power. Less obvious are the global financial flows: even though China’s coal companies are mainly domestically funded, foreign financiers also support the Middle Kingdom’s coal industry. According to research by the non-profit Urgewald, 467 international financial institutions have financed Chinese companies listed on the Global Coal Exit List (GCEL), which tracks all businesses operating across the thermal sector.

One-tenth of the money that has flowed into the Chinese coal sector in the last two years has come from abroad. Forty-eight international banks have provided USD 21.7 billion for the Chinese coal industry. The lion’s share of this sum was provided in the form of underwriting, namely by issuing shares and bonds.

By far the largest foreign financiers are from the UK and the US. English banks such as HSBC and Standard Chartered have lent USD 5 billion. US banks such as JPMorgan Chase and Citigroup are close behind with USD 4.9 billion. Banks from Japan, Switzerland and France have also sunk over USD 2 billion each into the Chinese coal sector.

The highest sum was pumped into China Petrochemical Corporation (Sinopec). China’s biggest oil and gas company, which also mines thermal coal, received USD 4.6 billion from foreign banks. In a very recent exploration in March 2021, Sinopec found abundant flows of natural gas and crude oil in northwest China’s Xinjiang Uighur Autonomous Region. Three million metric tons of oil were discovered and are planned to be explored....

....MUCH MORE

* China Does Not Plan To Stop Burning Coal

"Report: China emissions exceed all developed nations combined" 

"China has ‘no other choice’ but to rely on coal power for now, official says"

China's Electricity Derived From Thermal (coal, oil, etc) Up 21.1% Q1 2021 vs. Q1 2020

One of our sources said the growth in thermal plant capacity* (not production) in 2020 was 38.4 gigawatts. This is the equivalent of adding a large (1,000 megawatt) coal plant every nine days. Every nine days.
Continuing that trend, coal plant capacity additions just in the first quarter of 2021 were 10,600 megawatts....

See also March 18's "China Energy Stats and Policy" 

"China's new coal power plant capacity in 2020 more than three times rest of world's"

"China generated 53% of the world’s total coal-fired power in 2020"

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