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Cease funding coal overseas, NGO group tells high investor Financial institution of China

© Reuters. FILE PHOTO: A Bank of China logo in Beijing, China, October 19, 2020. REUTERS / Tingshu Wang

By David Stanway

SHANGHAI (Reuters) – The Bank of China (BoC), a leading global investor in coal-fired power plants, must end funding such projects outside the mainland and instead support clean and renewable energies, an alliance of 35 non-governmental organizations said Tuesday.

The comments, made in an open letter to the chairman of the state-controlled BoC, Liu Liange, and signed by groups from 13 countries in Asia, Africa and Europe, add to the growing criticism of China for funding coal-fired power plants abroad, in particular as part of his Belt and Road Initiative.

While China said it would respect local communities' right to choose what kind of energy they need, the letter, signed by organizations from several belt-and-road countries, suggests growing opposition to coal itself in developing countries.

Total foreign funding of coal-fired power plants by the Bank of China since the Paris Agreement in 2015 has exceeded $ 35 billion, the highest of any global investor, and is "inconsistent with China's climate change ambitions" the letter says.

More than 130 financial institutions have already decided to limit investments in fossil fuels and urged the Bank of China to follow suit.

The Bank of China did not want to comment on the letter. Its President Liu Jin said at the end of August that the bank would "gradually reduce" the proportion of total lending to coal projects in the period 2021-2025, but would also grant more loans for technical upgrades in the industry.

GRADUAL SHIFT

Julien Vincent, executive director of Market Forces, an Australian organization campaigning against fossil fuel funding, said dozens of coal-fired power plants around the world would go dead without the bank's support.

"The narrative about coal from Chinese business and financial leaders is clearly changing, but what really matters is action," he told Reuters.

Chinese financial institutions have gradually turned away from coal. The Industrial and Commercial Bank of China, the world's largest bank by assets, has already committed to creating a "road map" for phasing out coal.

In recommendations released last week, a government advisory body also urged China to "limit and phased out" the use of public funds for foreign investments in coal power and encourage state banks to make similar commitments.

According to a study published on Tuesday by the European think tank E3G, 44 countries have already committed to "no new coal", with 1,175 gigawatts of coal-fired power plant capacity being cut since 2015.

A similar commitment from China was said to cut 55% of all proposed new coal-fired power plants worldwide.

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