Friday, July 11, 2025
  • Login
Euro Times
No Result
View All Result
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology
Euro Times
No Result
View All Result

How China Can Retire Coal Early in Pakistan and Elsewhere Through the BRI — Global Issues

by Global Issues
October 26, 2022
in World
Reading Time: 7 mins read
A A
0
Home World
Share on FacebookShare on Twitter


Achieving the temperature goals of the Paris Agreement requires not only slowing new construction, but also retiring existing coal power plants early, worldwide. Credit: Wikimedia Commons
  • Opinion by Philippe Benoit (paris)
  • Wednesday, October 26, 2022
  • Inter Press Service

PARIS, Oct 26 (IPS) – With COP 27 approaching, pressure is mounting on wealthy countries to increase their support to poorer ones in the face of climate change. The recent floods in Pakistan have amplified this issue.  China, as the world’s second largest economy, will similarly face increasing pressure to help other developing countries on climate. 

At last year’s COP, the Asian Development Bank (ADB) unveiled an innovative program to fund the early retirement of coal power plants by mobilizing capital to buy-out the investors in these plants. This approach has an interesting, and potentially even easier, application to the coal plants financed by China in Pakistan and elsewhere overseas under its Belt and Road Initiative (“BRI”).  The key to unlocking this, somewhat surprisingly, lies in the dominance of China’s state-owned companies in BRI transactions.

In 2015, Beijing and Islamabad launched a program under the BRI to build a series of new power plants in Pakistan.  Over the next five years, five coal plants were commissioned and there are currently an additional four plants under construction. These plants are largely being developed by Chinese energy firms with loans from Chinese banks and financiers … companies that are all mostly owned by the Chinese Government.

Beijing has repeatedly been criticized for the BRI’s funding of new coal power plants considered to exacerbate the climate vulnerabilities of the countries where these projects are being built, like Pakistan.  Even as President Xi pledged last year to stop building new coal-fired power plants abroad, there has been an increasing understanding that achieving the temperature goals of the Paris Agreement — and reducing the type of climate devastation experienced by Pakistan – requires not only slowing new construction, but also retiring existing coal power plants early, worldwide.

In response to this challenge, the ADB announced the Energy Transition Mechanism which includes an initiative to buy out existing coal investors to shutter their plants early and thereby avoid the attendant future emissions. Typically, this would involve mobilizing international financing from multilateral development banks, climate funds, etc. to compensate the private sector investors in these plants.

Interestingly, the dominance in the BRI’s overseas projects of China’s state-owned companies creates the opportunity for the Chinese Government to apply the ADB mechanism in a streamlined manner — under what could be called the “BRI Clean Energy Transition Mechanism”. How might this work?  Some initial ideas follow.

As noted above, Chinese state-owned financial institutions are the major lenders to the BRI coal power projects in Pakistan. Similarly, Chinese government-owned energy firms are the dominant coal plant owners.  It is the financial interests of these various Chinese state-owned lenders and other enterprises (SOEs) that would be affected adversely by any early retirement.

Consequently, under the proposed mechanism, China would be compensating its own SOEs for the revenues they would lose in the future from the early plant retirements in Pakistan. In essence, China would pay itself.  This is a unique feature of this BRI coal retirement program that flows from China’s reliance on its own SOEs … and it presents several operational and financial advantages.

  1. The financial arrangements for early retirement should be easier to negotiate and execute since the parties are all affiliated — i.e., the Chinese government, its state-owned banks and other SOEs. This should also reduce transaction costs.
  2. In the ADB’s early retirement context, private sector investors would typically insist on some compensation being paid today for the loss of projected future revenues. In contrast, because the BRI context would involve compensation from the Chinese Government to its own SOEs, the Government could reasonably delay payments till the point at which the SOEs would actually be foregoing revenues. So, for example, if we assume early retirement in 2030 — an interval that would give Pakistan the time to replace the retired coal electricity generation with renewables in an orderly manner (see discussion below) – then the payments by the Chinese Government to its SOE lenders and energy firms could similarly be deferred till that time.
  3. The Government would also, as a practical matter, enjoy significant discretion regarding the level of compensation to be paid to its SOE lenders and energy firms in 2030 and beyond. Notably, the Government could impose a discount on these future payments — especially if it has implemented by that time financial disincentives targeting coal generation (e.g., a carbon price) to support its own carbon peaking and neutrality goals.
  4. The proposed BRI mechanism would resemble in various ways a debt-for-nature swap, notably from the perspective of China as a creditor/donor country.  In this BRI “debt-for-coal” swap, China would forego the payments due its SOEs in the future from the operation of these Pakistan coal plants in exchange for the reduced emissions generated by their early retirement. Significantly, this mechanism would produce emissions avoidance benefits without China providing any new overseas funding.

What are some possible motivations for Beijing to launch this type of initiative?

First, it provides a mechanism for China to respond to the increasing pressure it is facing as the world’s second largest economy to help poorer developing countries meet their climate and sustainability challenges. China’s status as the world’s largest emitter of greenhouse gases amplifies this pressure.

Second, the ability to launch an international climate program that does not require China to disburse funds for the next several years — and, when it does so, to pay its own SOEs — may appeal to the Government, particularly given the current domestic economic stress.  This is consistent with other debt-for-nature swap programs advanced by other donor countries where the financial cost to the donor is from foregone revenues, not new funding.

Moreover, the loss in revenues for China and its SOEs from the early BRI coal plant retirements would only take place in 2030 when China’s economy should be markedly larger and more capable of absorbing the expense.

Finally, there is an argument that to the extent the ADB and BRI approaches retire the same type of coal capacity with the same climate benefits, China’s inducements to its SOEs to retire BRI coal assets early should be counted as international climate financial support (e.g., a type of “synthetic carbon credit”) just as actual monetary transfers to private sector investors would be recognized with respect to an ADB coal retirement transaction.

Importantly, Pakistan and other BRI developing countries will need even more electricity to power their economic development. Consequently, the BRI Clean Energy Transition Mechanism needs to include additional funding for new renewables power generation capacity (as is the case under the ADB’s approach).

Helping BRI-recipient countries to transition from coal to renewables would also support international efforts to reduce emissions — efforts whose importance for Pakistan and various other developing countries has been made abundantly evident by the devastating weather they have been experiencing.

The extreme climate events of 2022 have increased awareness regarding the vulnerability of poorer countries to climate change and the consequent importance of reducing future emissions.  This article sets out a proposal for how China could retire BRI coal plants early in Pakistan and elsewhere that capitalizes on its use of state-owned companies, while supporting more renewables in these countries to reduce the climate change threat and promote sustainable economic growth.

Philippe Benoit has over 20 years working on international energy, climate and development issues, including management positions at the World Bank and the International Energy Agency. He is currently research director at Global Infrastructure Analytics and Sustainability 2050.

© Inter Press Service (2022) — All Rights ReservedOriginal source: Inter Press Service

Where next?

Related news

Browse related news topics:

Latest news

Read the latest news stories:

  • How China Can Retire Coal Early in Pakistan and Elsewhere Through the BRI Wednesday, October 26, 2022
  • War, Greed and Mass Manipulation Wednesday, October 26, 2022
  • Swat Women Wont Be ‘Duped’ by Militants This Time Wednesday, October 26, 2022
  • While Developing Nations Hang on to a Cliffs Edge, G20 & IMF Officials Repeat Empty Words at Their Annual Meetings Wednesday, October 26, 2022
  • Iranian Women Fight in the Streets, But Also from Home Tuesday, October 25, 2022
  • Broken Relationship with Nature Exposed as Global Wildlife Population Plummets Tuesday, October 25, 2022
  • Climate Change Brings New Pest & Disease Pressures Previously Unimaginable Tuesday, October 25, 2022
  • UNDP to support refurbishment of damaged public buildings in Ukraine Tuesday, October 25, 2022
  • Sudan: Justice for protesters against coup, key to ending cycle of violence Tuesday, October 25, 2022
  • Political solution still the only path to peace in Syria: UN Special Envoy Tuesday, October 25, 2022

In-depth

Learn more about the related issues:

Share this

Bookmark or share this with others using some popular social bookmarking web sites:

Link to this page from your site/blog

<p><a href="https://www.globalissues.org/news/2022/10/26/32249">How China Can Retire Coal Early in Pakistan and Elsewhere Through the BRI</a>, <cite>Inter Press Service</cite>, Wednesday, October 26, 2022 (posted by Global Issues)</p>

… to produce this:

How China Can Retire Coal Early in Pakistan and Elsewhere Through the BRI, Inter Press Service, Wednesday, October 26, 2022 (posted by Global Issues)



Source link

Tags: BRIChinaCoalearlyGlobalIssuesPakistanretire
Previous Post

Driller Weatherford’s DRE unit drives rev beat, stock up 9%

Next Post

Elon Musk visits Twitter headquarters ahead of deal close deadline By Reuters

Related Posts

Bangladeshi rap, memes helped oust Hasina — now they’re reshaping politics | Protests

Bangladeshi rap, memes helped oust Hasina — now they’re reshaping politics | Protests

by Euro Times
July 11, 2025
0

Dhaka, Bangladesh — On July 16, 2024, as safety forces launched a brutal crackdown on scholar protesters campaigning towards then-Prime...

Luxury £80m Brit superyacht bursts into flames in exclusive hols resort as crew members rescued from raging blaze

Luxury £80m Brit superyacht bursts into flames in exclusive hols resort as crew members rescued from raging blaze

by James Moules
July 11, 2025
0

An £80million British-made superyacht has gone up in flames in a luxurious French resort city.The Sea Girl II, which is...

U.K. and France Announce New Nuclear Defense Deal

U.K. and France Announce New Nuclear Defense Deal

by Euro Times
July 11, 2025
0

new video loaded: U.Ok. and France Announce New Nuclear Protection DealtranscriptAgaintranscriptU.Ok. and France Announce New Nuclear Protection DealPrime Minister Keir...

Canadian travel to the U.S. plummets — but Americans are staying home, too

Canadian travel to the U.S. plummets — but Americans are staying home, too

by John Paul Tasker
July 10, 2025
0

It is not simply Canadians who're holding again on cross-border journey amid a U.S. commerce warfare that has soured bilateral...

Things to know about the UN special rapporteur sanctioned by the US

Things to know about the UN special rapporteur sanctioned by the US

by ABC News
July 10, 2025
0

A U.N. particular rapporteur has been sanctioned by the USA over her work as an unbiased investigator scrutinizing human rights...

Court in Moldova Extends House Arrest of Gagauzia Head Gutsul for 30 Days

Court in Moldova Extends House Arrest of Gagauzia Head Gutsul for 30 Days

by Author
July 10, 2025
0

https://sputnikglobe.com/20250710/court-in-moldova-extends-house-arrest-of-gagauzia-head-gutsul-for-30-days-1122424978.htmlCourtroom in Moldova Extends Home Arrest of Gagauzia Head Gutsul for 30 DaysCourtroom in Moldova Extends Home Arrest of Gagauzia...

Next Post
Elon Musk visits Twitter headquarters ahead of deal close deadline By Reuters

Elon Musk visits Twitter headquarters ahead of deal close deadline By Reuters

‘Kill everyone’: Russian violence in Ukraine was strategic

'Kill everyone': Russian violence in Ukraine was strategic

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Corn Sticking Close to Unchanged at Midday

Corn Sticking Close to Unchanged at Midday

July 11, 2025
Apple iPhone 16e, Samsung Galaxy S24 Ultra, OnePlus Nord 5

Apple iPhone 16e, Samsung Galaxy S24 Ultra, OnePlus Nord 5

July 11, 2025
Bangladeshi rap, memes helped oust Hasina — now they’re reshaping politics | Protests

Bangladeshi rap, memes helped oust Hasina — now they’re reshaping politics | Protests

July 11, 2025
Google’s Veo 3 in Gemini Upgraded With Image to Video Generation Capability

Google’s Veo 3 in Gemini Upgraded With Image to Video Generation Capability

July 11, 2025
Remixpoint CEO to Receive Entire Salary in Bitcoin

Remixpoint CEO to Receive Entire Salary in Bitcoin

July 11, 2025
OpenAI Faces IRS Complaint Over Alleged Tax Violations

OpenAI Faces IRS Complaint Over Alleged Tax Violations

July 11, 2025
Euro Times

Get the latest news and follow the coverage of Business & Financial News, Stock Market Updates, Analysis, and more from the trusted sources.

CATEGORIES

  • Business
  • Cryptocurrency
  • Finance
  • Health
  • Investing
  • Markets
  • Politics
  • Stock Market
  • Technology
  • Uncategorized
  • World

LATEST UPDATES

Corn Sticking Close to Unchanged at Midday

Apple iPhone 16e, Samsung Galaxy S24 Ultra, OnePlus Nord 5

  • Disclaimer
  • Privacy Policy
  • DMCA
  • Cookie Privacy Policy
  • Terms and Conditions
  • Contact us

Copyright © 2022 - Euro Times.
Euro Times is not responsible for the content of external sites.

No Result
View All Result
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology

Copyright © 2022 - Euro Times.
Euro Times is not responsible for the content of external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In