Kerry to Press China to Stop Financing Coal-Fired Energy Projects

Kerry to Press China to Stop Financing Coal-Fired Energy Projects

Biden’s climate envoy plans to push for a declaration during a trip next week, but Beijing doesn’t want to be seen as caving to Western pressure

U.S. special climate envoy John Kerry plans another trip to China next week, where he will press Chinese leaders to declare a moratorium on financing international coal-fired projects, according to people familiar with the matter.

Beijing hasn’t funded any new foreign coal plants or investments this year—the first time that has happened since China embarked on its infrastructure Belt and Road Initiative in 2013, according to a recent study by the Beijing-based International Institute of Green Finance.

U.S. officials now want Beijing to declare a formal halt to such projects, according to one of the people.

For its part, China has emphasized the importance of fulfilling its current pledges to reduce greenhouse gas emissions before making new ones, another one of the people said.

Beijing doesn’t want to be seen as caving in to pressure from the West, say people familiar with Chinese policy makers’ thinking. Instead, China has been trying to position itself as a major global player in fighting climate change on its own terms.

Spokespeople for China’s Foreign Ministry and the U.S. Embassy in Beijing said they had no information to share with regard to any planned trip by Mr. Kerry, while China’s Ministry of Ecology and Environment didn’t immediately respond to a faxed request for comment. Reuters reported earlier that Mr. Kerry would travel to China in September.

Mr. Kerry’s visit to the port city of Tianjin would mark the third trip to China by a senior Biden administration official, and Mr. Kerry’s second in five months.

Mr. Kerry and his Chinese counterpart, Xie Zhenhua, have spoken more than a dozen times this year, they have each said. Mr. Kerry’s efforts underscore how climate has emerged as a rare area of potential cooperation between the U.S. and China—the world’s two largest economies and its two largest emitters of carbon dioxide.

The Biden administration has characterized the bilateral relationship as one primarily of competition, though officials in Washington have made clear that on some issues—including climate and Afghanistan—there is room for cooperation.

Mr. Kerry’s trip comes as world leaders seek to head off the effects of greenhouse gas emissions. United Nations member states are seeking to fulfill the terms of the 2015 Paris Agreement, which pledged to limit global warming to well below 2 degrees Celsius from preindustrial levels, while also aiming ideally to cap the increase at 1.5 degrees.

In June, the Group of Seven wealthy democracies agreed to align their climate goals in a manner consistent with the more ambitious 1.5-degree threshold.

China’s role in reaching either target is seen as critical. Chinese leader Xi Jinping pledged last year that China would reach peak carbon emissions before 2030 and achieve net zero emissions before 2060.

Mr. Kerry is pushing for China to move even faster. If China were to stick to its current climate plan, the rest of the world would have to achieve net zero emissions by 2040 or earlier to solve the climate crisis, Mr. Kerry said in a speech last month. President Biden announced in April that the U.S. was aiming to reach net zero emissions no later than 2050.

When pressed by former U.S. climate envoy Todd Stern at a public forum this month, Mr. Xie said that rather than setting new ambitions, countries should first deliver on existing promises.

Beijing has long been the biggest public financier of overseas coal projects, investing more than $50 billion in such projects, primarily in the developing world through its public-policy banks, over the past two decades, according to data from Boston University’s Global Development Policy Center.

In recent months, however, China has quietly stopped approving or financing new overseas coal projects, a shift that has been praised by environmentalists. Even so, Mr. Kerry has been seeking to push Beijing to publicly declare a blanket moratorium ahead of the U.N. global climate summit, which is set to take place in Glasgow in November.

Beijing, however, has been reluctant to claim official credit for its actions. Instead, it has resisted pressure from Western nations to make new public commitments.

“In the past, China talked green and acted brown. Nowadays, China acts green but talks brown,” said a person who is advising the Chinese government on international coal financing.

People familiar with Beijing’s thinking said China wants to champion the right of developing countries—many of which are vital to China’s national-security interests—to continue using coal, as it has traditionally done. In past climate talks, a long-running fault line has splintered the developed and developing worlds.

Researchers at a think tank affiliated with China’s Environment Ministry argued during internal meetings last month that consolidating the support of developing countries should remain a key pillar in China’s climate diplomacy, according to a July presentation reviewed by The Wall Street Journal.

Beijing’s aversion to public commitments has left it isolated in multilateral settings where wealthy countries are increasingly converging around a consensus that more drastic actions are needed to combat climate change—and are happy to proclaim their ambitious targets.

The lack of an official commitment also worries some climate activists.

“By not officially committing to a moratorium, China is giving itself wiggle room to promote dirty fossil fuel in the future when the developing world starts recovering from the pandemic,” says Li Shuo, Beijing-based policy adviser at Greenpeace.

An official announcement is far from guaranteed but any new announcement by Beijing on international coal financing would likely come at an event where China would own the spotlight, said one of the people.

China’s powerful economic-planning body has led the drafting of a road map for how the country will achieve Mr. Xi’s climate pledges. Mr. Xie said China would publish this soon, without elaborating.

In its actions, China has taken many of the concrete steps that advocates like Mr. Li have long pushed for.

Investment guidelines jointly published by China’s Environment and Commerce ministries have advised lenders to go beyond host nations’ laxer environmental requirements and adhere to stricter international standards. These officials are worried about the reputational damage that Chinese-funded coal plants could bring, which in turn could hurt asset values, according to people familiar with the matter.

By Sha Hua, Timothy Puko and Keith Zhai