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Is China shunning coal in its Belt and Road Initiative?

A leaked letter apparently sent by a diplomatic official states Beijing will no longer consider coal-related investment in Bangladesh, firing speculation that policy could be applied along all of the vast twin trade routes.

pv magazine has seen a copy of the letter reportedly sent from the Chinese embassy in Dhaka to the government of Bangladesh which implies officials behind the continent-spanning Belt and Road Initiative (BRI) could be set to refuse to finance coal-fired activity.

English-language Bangladeshi newspaper The Daily Star made headlines in February when it published details of an apparently leaked letter sent to the government by Liu Zhenhua, an economic and commercial counsellor at the Chinese embassy in Dhaka.

Although the thrust of the letter concerned the Bangladeshi government’s interest in securing soft loans–which it says were offered by China–for different infrastructure projects than those originally discussed, it is the fifth paragraph of the message which captured the attention of environmentalists.

Key paragraph

Liu, from the economic and commercial counsellor’s office of the Chinese embassy–according to the letterhead–writes: “The Chinese side shall no longer consider projects with high pollution and high energy consumption, such as coal mining, coal-fired power stations, etc.”

Given the infrastructure projects referred to are the subject of memoranda of understanding signed between the governments of the two nations because of Bangladesh’s membership of China’s huge, East-Asia-to-Europe-via-Africa infrastructure program, the message sparked speculation such an anti-coal stance might be applied to all the 130-140 countries which have signed up for BRI investment.

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However, Christoph Nedopil Wang, director of independent policy and research body the Green Belt and Road Initiative Center, told pv magazine hopes for coal-free energy and infrastructure development along the overland and maritime trade routes which make up the BRI may be overblown.

Wang said such a policy diktat would have to come from higher levels of government and added, although his center is seeing more opportunity for renewables finance–in tandem with demand and supply side changes in coal project planning–clean energy spending may not be a simple affair.

For renewables, “financing models are different and Chinese FIs [foreign investors] do not necessarily have the experience,” said Wang, who added: “energy systems in BRI countries are not necessarily able to deal with RE [renewable energy investment],” and “vested interests continue to favor coal.”

pv magazine has contacted the Chinese embassy in Dhaka to ask about the authenticity of the letter and about China’s BRI coal investment policy.

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Source: pv magazine