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IN what is considered one of the most important developments on the climate front this year, China pledged to end public funding for overseas coal-fired power plants ahead of the United Nations summit on the climate change COP26 which will start in November. The announcement is in line with global efforts to reduce dirty energy sources in order to cut carbon emissions and stop global warming.
China has been under tremendous pressure in recent years to improve its game in order to help the world control climate change. The pressure mounted after Japan and South Korea, the other two main backers of overseas coal-fired power projects, announced they would stop funding such projects earlier this year. . China has pledged not only to suspend its financing of coal-fired electricity abroad, but also to help developing countries develop green energy production. This is good news as China has now become a leader in cheaper solar and wind technologies.
What implications will Beijing’s decision to turn off its coal-faucet taps have for several countries, including Pakistan, where it has already committed heavy funding of $ 50 billion for ongoing and planned projects?
Read: Why is Pakistan opening new coal-fired power plants, even as the world is saying goodbye to coal?
The answer is unclear at this time as details of China’s plans are not available. It is also not clear whether the ban also applies to Chinese private investment in coal abroad. China is Pakistan’s largest investor and entrepreneur of energy projects, most of which are coal-fired plants. Priority CPEC electrical schemes total 11.1 GW of capacity and $ 18.6 billion in investment, with nearly three-quarters or 8.22 GW based on coal implying $ 8.7 billion in debt with banks Chinese. The main repercussions are likely to affect CPEC and non-CPEC projects totaling 4.1 GW in Gwadar, Thar, Jamshoro and Arifwala involving Chinese and local investments of more than $ 5 billion.
Even though the new Chinese policy does not affect these future investments in coal energy, it has given Pakistan the opportunity to renegotiate these agreements with Beijing to convert them into clean and cheaper energy projects. Islamabad is expected to raise this issue with China since Prime Minister Imran Khan has already pledged to phase out coal-fired power and switch to greener power generation by 2030. He announced a moratorium on the coal at the Climate Ambition summit held to mark the fifth anniversary of the Paris Climate Agreement in December last year, where the world pledged to stronger climate action. His statement had received an international reception but nothing has been done so far on this front at home.
The emerging global situation and China’s exit from coal provide a big window for Islamabad to start implementing the promised phase-out. Renegotiating to replace coal-fired power contracts with green power deals may not be easy. But it will not be impossible to convince Chinese companies. After all, it will also be a test of their commitment to the world.
Posted in Dawn, le 27 September 2021
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