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How China fuels Southeast Asian coal boom

Radio Free Asia

Coal is falling out of favor across the developed world because of concerns over pollution and climate change, but it remains a growing energy choice in many parts of Southeast Asia driven by Chinese investment.

RFA Graphics

While many markets, including the United States, Europe, and East Asia, shift away from coal, Chinese banks, energy and construction companies remain committed to financing and building dozens of plants in Indonesia, Vietnam, Cambodia, and Laos.

That’s despite growing concerns about environmental degradation, electricity oversupply, and air pollution. Coal is widely considered the dirtiest fossil fuel for electricity generation, with the highest greenhouse gas emissions, and widespread air, water, and soil quality issues due to mining, burning, and coal waste. 

“It’s definitely true that China is the main investor for coal in Southeast Asia,” said Isabella Suarez, a Philippines-based analyst for the Center for Research on Energy and Clean Air (CREA). “If you look at overseas investment portfolio for Chinese coal, Indonesia and Vietnam are second- and third-highest in the world.”

Coal accounts for 56 percent of electricity generation in Indonesia, 34.3 percent in Vietnam and 29.3 percent in Cambodia.

Hanoi smog.jpg
A thick blanket of smog covers the Hanoi skyline, Sept. 27, 2019. The city – along with Jakarta – is regularly ranked as one of the most polluted in the world. Credit: AFP

China dominates overseas coal

Increasingly, China is the only country actively pursuing coal investments. Chinese financial institutions including China Construction Bank, Bank of China, ICBC, and the Agricultural Bank of China, are ranked as the top 11 financiers of coal-fired power and the top 10 financiers of coal mining. That’s according to Banking on Climate Chaosa report released in late March by a coalition of international NGOs including Rainforest Action Network, Sierra Club, and Oil Change International.

The report found that in total, Chinese banks account for US$244.7 billion in total coal-related financing since 2016, more than the largest American, European, Japanese, Korean and Canadian banks combined.

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