Chinese Overseas Development Financing of Electric Power Generation: A Comparative Analysis

Global power generation must rapidly decarbonize by mid-century to meet the goal of stabilizing global warming below two degrees Celsius. To meet this objective, multilateral development banks (MDBs) have gradually reduced fossil fuel and increased renewable energy financing. Meanwhile, globally active national development finance institutions (DFIs) from Japan and South Korea have continued to finance overseas coal plants. Less is known about the increasingly active Chinese DFIs.

In a new study published by One Earth, Kevin P. Gallagher, Director of the Global Development Policy Center, along with Xu Chen and Denise Mauzerall of Princeton University, constructed a new dataset of China’s policy banks’ overseas power generation financing and compared their technology choices and impact on generation capacity with MDBs and Japanese and South Korean DFIs. The authors found that Chinese DFI power financing since 2000 has dramatically increased, surpassing other East Asian national DFIs and the major MDBs’ collective public sector power financing in 2013. As most Chinese DFI financing is currently in coal, the authors argue that decarbonization of their power investments will be critical in reducing future carbon emissions from recipient countries.

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