Private projects keep Chinas overseas coal alive despite green pledge

The state of play in 2025

Chinas promise to stop building coal power projects beyond its borders has reshaped the global energy map, but it has not shut the door. Four years after President Xi Jinping announced an end to new overseas coal projects, the pipeline has shrunk and cancellations have surged. Yet new plants are still moving forward, especially those tied to industrial parks and mineral processing hubs that operate outside national grids. This mixed picture sits alongside rapid growth in Chinese wind, solar, batteries and grid storage that is now changing power markets at home and abroad.

New analysis from research groups tracking Chinas projects shows real progress. Since 2021, cancellations of Chinese backed coal power overseas have reached 59.3 gigawatts. Over the lifetime of those plants, that equals about 6.1 billion tons of carbon dioxide that will not be emitted. As of July 2025, the total capacity of coal projects still in planning stages abroad has fallen to 31.4 gigawatts, down by more than a third from last year. Yet the number of projects in operation ticked up by 4.1 gigawatts this year because plants that were already under construction reached completion. There are still 14 projects under construction expected to add about 12.1 gigawatts when they come online.

Most of the activity centers on so called captive power, the term for plants built to serve a specific industrial facility rather than providing electricity to a national grid. These plants are usually owned by private Chinese companies that operate mines, metals smelters or industrial parks. They appear in countries where power demand is rising quickly and grid electricity is limited or unreliable. Recent years have seen these projects concentrated in Indonesia, India, Laos, Zimbabwe and Zambia.

Researchers who track these projects warn that this category undercuts the spirit of the pledge.

This loophole casts a growing shadow over the progress made in ending Chinas overseas coal investments.

Chinese officials point to the countrys expanding clean energy leadership and long term climate objectives. In February, Foreign Ministry spokesperson Guo Jiakun addressed Chinas approach to climate action and timelines.

China has always been a doer in climate response and is firmly committed to green and low-carbon development. We will continue our effort of honoring the pledged goals on carbon peak and carbon neutrality in our own way and at our own speed.

The stakes are global. China accounts for more than 30 percent of annual carbon emissions, while the United States accounts for about 12 percent. At the same time, China is the largest builder and exporter of solar panels, wind turbines and lithium batteries, and its factories set prices for much of the clean energy supply chain. Decisions about where Chinese capital and engineering go next will have outsized effects on regional power systems and on progress toward climate targets.

What Xis no coal pledge actually covers

In September 2021, Xi Jinping announced that China would stop supporting new coal power projects overseas and would increase support for clean energy abroad. The pledge has been followed by a visible drop in new state backed coal deals. Databases that track Chinese development finance and foreign direct investment show no new coal funding commitments after 2021. Most state lenders, contractors and large state owned enterprises have shifted toward wind, solar, hydro and grid projects in developing markets.

The pledge, however, did not spell out how to treat privately financed captive plants built to serve minerals, metals and manufacturing projects, nor did it create an enforcement body to police the boundary between grid projects and off grid industrial power. As a result, plants that are embedded in industrial sites and claim not to sell electricity to a grid have continued to move forward. These projects are often structured with local partners, commercial bank financing and corporate equity, and they do not require a headline loan from a Chinese policy bank.

Analysts say that once a coal plant begins construction, cancellation becomes rare. That dynamic explains why operational capacity rose this year despite the shrinking pipeline. It also underscores the need for clearer rules about what is permitted, who approves it and what alternatives should be evaluated before coal is greenlit for industrial zones.

The captive coal loophole and why it matters

Captive coal plants are designed to power a single operation, such as a nickel smelter, copper mine, cement line or integrated steel facility. In countries with weak grids, long permitting for new transmission lines, or volatile electricity prices, owners opt to build a dedicated power source behind the factory gate. In Indonesia, for example, Chinese firms are involved in several gigawatts of coal power that run nickel processing, a cornerstone of the global battery supply chain. Similar patterns are visible in India, Laos, Zimbabwe and Zambia, often around mining or metals clusters.

From a climate perspective, these plants matter because they can run for decades and are sized to match energy intensive industrial production. Research groups estimate that Chinas existing captive coal projects abroad have already added about 1.5 billion tons of lifetime carbon dioxide, equal to roughly half of the emissions from all Chinese backed coal power currently in operation overseas. If the projects now under construction are completed, they could add another 3.4 billion tons of lifetime emissions.

Project sponsors argue that industrial power needs round the clock reliability and that grid upgrades lag behind. In many locations, renewable alternatives could already displace a substantial share of coal use when paired with storage, demand management and a connection to the grid. The gap is often not technology, but project preparation, land access, transmission and power market rules that allow new clean capacity to feed industrial demand at predictable prices.

Where coal projects are still advancing

The current cluster of Chinese backed overseas coal projects sits largely in fast growing economies or resource producers where industrial demand is rising. The projects are concentrated in a handful of countries:

• Indonesia, where coal plants linked to nickel and other metal smelters supply industrial parks on the islands of Sulawesi and elsewhere.
• India, where some Chinese invested industrial projects rely on captive coal to assure stable power for heavy manufacturing.
• Laos, where industrial parks and mining projects use captive power in parallel with large hydropower exports to neighbors.
• Zimbabwe, where additions to coal power support mining and metal processing as the grid expands slowly.
• Zambia, where mining and mineral processing require dedicated power and grid capacity remains constrained.

These projects are often marketed as transitional steps that will shift to cleaner fuels over time. Contract terms and plant design will determine whether that claim holds. Without firm retirement schedules and provisions for integration of renewables, they risk locking in emissions well beyond the 2030s.

Chinas domestic coal paradox

Inside China, coals role is changing even as construction of new capacity surged last year. Developers started work on roughly 95 gigawatts of coal power in 2024, the highest yearly figure since the middle of the last decade. At the same time, coals share in electricity generation fell to about 51 percent in the first half of 2025, the lowest on record, as wind and solar output climbed and storage expanded quickly.

The apparent contradiction has roots in energy security concerns after power shortages in 2020 and 2022, combined with rigid grid dispatch rules and slow interprovincial trading reforms. Local governments in several provinces approved new coal plants as a form of insurance, even though many coal units across China still run at around half of their potential hours. Wider deployment of batteries, pumped hydro and improved market rules has already helped meet summer peaks without broad blackouts.

Xi Jinping has framed the solution this way in public remarks on energy policy: energy security depends on developing new energy. The idea is that renewables, storage and flexible demand provide resilience, while coal shifts toward a supporting role rather than serving as a constant baseload source. New coal capacity does not automatically translate to higher coal burn if clean energy keeps covering all new demand. In recent periods, coal generation has been flat or declining even as some new capacity connected to the grid.

For overseas markets, that experience offers a practical lesson. Investments in transmission, regional power trade, and storage can substitute for new coal capacity and meet industrial demand with a cleaner mix. The challenge is aligning contract structures, pricing and regulations so that clean resources can provide firm power when factories need it.

Finance is shifting to renewables, but scale still lags

Chinas overseas energy finance has tilted toward clean power since 2021. In 2022 and 2023, more than two thirds of new capacity funded by Chinese financiers and investors went to wind and solar projects, a sharp change from the previous two decades. That shift reflects both policy direction and the competitiveness of Chinese clean energy manufacturers. Costs for solar modules, inverters and batteries have fallen steeply, and Chinese firms dominate supply chains.

The scale of finance, however, has not yet matched the size of the opportunity. In 2022 and 2023, only about 3 gigawatts of wind and solar capacity were funded through Chinese overseas finance channels, far below the annual levels seen during the peak years of the Belt and Road Initiative. Some of the gap has been filled by Chinese commercial contracts and private investment, but many developing countries still face hurdles to mobilize bankable clean energy projects.

On the construction side, 2024 marked a record year for Chinese companies building power projects in Belt and Road countries, with about 24 gigawatts installed. More than half of that capacity was renewable, led by large additions of solar and hydro. Thermal projects made up the remainder, including legacy coal and new gas plants. Coal still represents a meaningful share of the future project list, yet industry analysts expect more cancellations as host countries pursue cleaner and cheaper alternatives.

The regional picture is uneven. Asia receives the majority of Chinese overseas power investment, and it also hosts most of the coal projects. The Americas and parts of Africa see more hydropower, with a smaller slice of wind and solar. Africa remains under served by clean energy finance from all sources, although Beijing has pledged new support that includes dozens of low carbon projects. Translating pledges into shovel ready investments will require feasibility studies, risk guarantees, grid planning and strong environmental and social standards.

How to close the gaps, according to experts

Research groups that track Chinas overseas energy portfolio propose a set of practical steps that would align action with the 2021 pledge and accelerate the shift to clean power.

• Make clear that captive coal is covered by the overseas coal ban, regardless of grid connection or ownership structure.
• Require serious consideration of renewable or hybrid alternatives, with storage and demand management, before any new coal plant is approved.
• Mandate best available technology, strict environmental standards and time bound retirement plans for plants already under way.
• Redirect state backed finance toward solar, wind, hydro, storage and grid modernization in priority markets.
• In host countries, support project preparation, land acquisition, transmission access and power market reforms that let clean energy reach industrial users at stable prices.
• Designate an agency to enforce the pledge, coordinate across ministries and intervene when projects breach rules or operate irresponsibly.

These steps would speed up cancellations where viable alternatives exist and improve the economics of clean power in countries that need new capacity fast.

What it means for the next five years

The decline in the pipeline of overseas coal projects suggests momentum is shifting, but the plants already in construction are likely to finish. Research groups note that cancellations become uncommon once ground is broken. The 12.1 gigawatts now being built will add to emissions for decades unless early retirement or fuel switching is built into contracts.

At the same time, Chinese industry is exporting more coal amid slowing demand at home. In the first five months of 2025, coal exports rose by about 13 percent, with Japan, Indonesia and South Korea among the top buyers. Inside China, wind and solar already supply more than a quarter of electricity in some months, which helps explain why coal prices have softened and why imports dipped during a period that usually sees stockpiling.

In a subset of fast growing economies that sit within or alongside the BRICS bloc, new coal capacity still outpaces new solar and wind by a wide margin. Analysts warn that a build out of coal, gas and oil in those markets risks locking in high emissions and crowding out cleaner options. In these countries, Chinese firms and state owned enterprises are involved in a large share of generation projects under construction. The balance could shift with clearer rules on captive coal, more blended finance, and stronger power market reforms that reward flexibility and clean dispatch.

Back in China, expert surveys point to a possible peak in fossil fuel use around 2028 and cautious confidence about meeting the 2030 emissions target. The central government is signaling greater focus on grid flexibility, storage and market reform. If that approach is extended to overseas engagement and if the captive coal loophole is closed, the remaining coal projects in the pipeline could shrink further while clean energy accelerates.

The next few years will show whether policy follows technology. Clean power is often the cheapest new source of electricity, and battery storage costs continue to fall. Countries that pair rapid renewable additions with practical grid upgrades can cut reliance on coal without sacrificing reliability or industrial growth.

Quick Facts

• Since 2021, cancellations of Chinese backed overseas coal projects reached 59.3 gigawatts, avoiding about 6.1 billion tons of lifetime CO2.
• As of July 2025, the coal project pipeline abroad fell to 31.4 gigawatts, down roughly 37 percent from 2024.
• Operational capacity rose by 4.1 gigawatts in 2025 as plants already under construction were completed.
• Fourteen projects remain under construction overseas, totaling about 12.1 gigawatts, mostly captive plants for industry.
• Captive coal projects to date add an estimated 1.5 billion tons of lifetime CO2, with current builds potentially adding 3.4 billion tons more.
• Inside China, developers started roughly 95 gigawatts of coal power in 2024, while coals share of electricity fell to about 51 percent in early 2025.
• In 2022 and 2023, more than two thirds of new Chinese overseas power capacity funded by financiers and investors went to wind and solar.
• Chinese firms installed about 24 gigawatts of power capacity in Belt and Road countries in 2024, over half from renewable sources.