Vietnam to Indonesia: the Asian countries hit hardest by China’s clampdown on new coal-fired power plants overseas

Xi Jinping has pledged to the UN that China will no longer build coal-fired power plants overseas, leaving projects across Asia at risk of cancellation

While the decision will be disruptive for some, it will have a positive long-term effect as Asian countries will have to find greener sources of fuel sooner rather than later

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A bird flies past smoke from the chimney of a coal-fired power station. Photo: AP

Published: 1:30pm, 9 Oct 2021Updated: 5:42pm, 10 Oct 2021

Chinese President Xi Jinping’s pledge to the United Nations that China will no longer build coal-fired power plants overseas will leave many projects awaiting financial closure at risk of cancellation.

Countries that have included significant new coal capacity in their near-term national power supply plans are likely to be hit hardest. Among these countries are Vietnam, Indonesia, Pakistan, Bangladesh and Cambodia.

Vietnam

Although Vietnam has shelved around half of its planned coal power plants since 2016, it recently increased its installed coal capacity target for 2030 in its latest draft power supply plan, which was released before Xi’s address to the UN General Assembly on September 21.

According to data compiled by the Green Innovation and Development Centre (GreenID) in Vietnam, 18 proposed coal power projects – with installed capacity totalling 20.4GW – are now unlikely to reach financial closure after China’s moratorium.

Coal power projects in Vietnam have faced delays, propelling the government to bring in renewable energy to meet the power demand boom. Power demand in Vietnam grew on average 9.2 per cent per year from 2016 to 2020, according to IHS Markit.

Chinese financiers, contractors and investor firms are active in both the fossil fuel and clean energy sectors in Vietnam.

“Vietnam has gradually taken over some of mainland China’s manufacturing owing to rising Chinese costs. In 2018, the power shortage was pretty severe in Vietnam. A lot of solar came online in 2019, and that helped. But the supply was still very tight,” said Xizhou Zhou, vice-president of Global Power and Renewables at IHS Markit.