China has canceled 67% of the overseas coal power capacity it planned to build in 2021, according to a report released to coincide with the United Nations General Assembly and New York Climate Week. The reduction follows a pledge made by Chinese President Xi Jinping at the U.N. in 2021 to stop financing coal power plants abroad, marking a significant shift in Beijing’s international climate strategy.
Global Climate Commitments and the 2021 Beijing Pledge
When President Xi announced the moratorium in 2021, it marked the first time Beijing extended its emerging climate ambitions beyond its borders. According to Li Shuo, director of the Asia Society Policy Institute’s China Climate Hub, that move reshaped international energy finance. China had previously stood as the world’s largest overseas coal financier. By abandoning these projects, the new report by the Centre for Research on Energy and Clean Air (CREA) and the People of Asia for Climate Solutions (PACS) estimates that Beijing has avoided 6.4 billion tons of lifetime carbon dioxide emissions through the cancellation of 61.5 gigawatts of planned capacity.
While Xi skipped the U.N. meetings to attend a summit with U.S. President Donald Trump, sending Chinese Vice President Han Zheng to New York instead, the broader global climate framework remains under pressure. The U.N. climate agency declared in 2021 that coal was consigned to history, but subsequent energy shocks stemming from the Russia-Ukraine war and the Iran war have altered energy security priorities, particularly across Southeast Asia.
Energy Security Pressures in Southeast Asia
Southeast Asia accounts for one-fifth of the world’s growing energy demand and has historically depended on fossil fuel imports from the Middle East. The closure of the Strait of Hormuz disrupted those supplies, forcing regional governments into energy triage and prompting several nations to temporarily ramp up coal use. Li Shuo noted that the intense desire to secure reliable supplies risks triggering another wave of coal reliance across the region, testing the strength of Beijing’s overseas moratorium.
At the same time, the crisis has accelerated investments in alternative energy sources across the region, including rooftop solar, electric vehicles, and nuclear exploration. China itself remains the dominant global manufacturer of electric vehicles, solar panels, and wind turbines, setting a massive pace for domestic clean energy rollouts even as it continues to build out domestic coal infrastructure.
Regulatory Loopholes and Captive Coal in Indonesia
Despite the cancellation of most planned state-backed projects, experts warn that private Chinese companies are utilizing regulatory loopholes to continue investing in foreign coal. CREA industry analyst Syahdiva Moezbar pointed out that the 2021 pledge left room for private firms to invest overseas.
Indonesia leads the region in continued Chinese coal investments, accounting for 17.1 gigawatts of planned capacity. Much of this development involves “captive coal”—plants built directly to power heavy industries, such as nickel and aluminum smelting, without connecting to the national power grid. Vietnam and Pakistan trail as a distant second and third, each with fewer than 4 gigawatts of coal capacity in development, according to the CREA and PACS findings.