Chart of the Week: How Chinese Policy Banks and Multilateral Development Banks Differ on Gas Commitments by Subsector
By Amanda Brown
As many multilateral development banks (MDBs) seek to align their financing with the Paris climate agreement and move away from fossil fuels, there is a question of whether China’s policy banks would move to fill a gap in fossil fuel financing left by MDBs, as they had with coal. This concern is especially important in financing of natural gas, a type of fossil fuel which accounts for 23 percent of global energy consumption and almost one-third of energy demand growth over the past decade.
MDBs began to harmonize their lending portfolios with the Paris Agreement on climate change through actions such as the joint framework at the 24th United Nations Climate Conference (COP24). These pledges to combat climate change through adjustments in their financial flows are major steps, but they are not unanimous and different institutions take varying stances on natural gas. China, on the other hand, has not yet issued green commitments for natural gas financing, preferring instead to follow host country guidelines or international or Chinese best practices.
A recent policy brief by Cecilia Springer, Luma Ramos and Rishikesh Ram Bhandary charts lending and commitments from two Chinese policy banks, the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM), as well as eight major MDBs for overseas natural gas projects, comparing the scope of policy frameworks and the scale and composition of development finance.
This Chart of the Week, Figure 2 from the policy brief, represents the gas commitments of Chinese policy banks and MDBs by subsector between 2008-2021.
Figure 1: Chinese Policy Banks and Selected Multilateral Development Banks Gas Commitments by Subsector

Overall, the MDBs financed $63.7 billion in gas commitments compared to China’s $47.8 billion. The chart also demonstrates that Chinese policy banks and the MDBs are focused on different gas subsectors. CHEXIM and CDB have concentrated most of their lending in exploration and extraction projects, while the MDBs centered just over half of their disbursements on transport, distribution and storage. The MDBs focused a small amount of their lending on energy efficiency projects, but the Chinese policy banks did not finance energy efficiency at all. Looking at downstream subsectors, the MDBs financed substantially more gas power plants at $17 billion compared to China’s $3 billion. China instead focused on gas chemicals-related projects.
The different subsector focuses for the MDBs and the Chinese policy banks are likely related to varying commitments and policy frameworks. For example, most of the MDBs restrict upstream gas development related to exploration and extraction. Alternatively, China has not issued commitments restricting policy bank support for upstream, midstream or downstream natural gas development overseas. Further, China is motivated to engage in the natural gas sector in part to secure energy supplies rather than to build a globally competitive domestic natural gas industry, as natural gas makes up 10 percent of China’s total energy supply with demand for imports rising.
The authors determine that China is unlikely to fill the natural gas financing gap left by MDBs as domestic drivers in China will limit development finance for overseas gas. The authors make key policy recommendations, calling on the MDBs to lead China on natural gas policies, paying more attention to the role of the private sector in gas finance and increasing support for alternative energy as gas restrictions continue. China’s Belt and Road Initiative has already begun to support green energy technologies, paving the way for a future with cleaner energy alternatives. However, it is unclear how the MDBs will respond following the Group of 7 (G7) agreement to temporarily allow public finance in natural gas due to energy security concerns. Looking forward, key decisions will need to be made about the future of natural gas financing.
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