Chinese lenders arranged three-fourths of all the $120 billion in global financing for coal projects last year, new research from BloombergNEF showed on Wednesday.
Chinese banks accounted for a massive 76%, or $93 billion, of the arranged financing for coal projects last year, followed by U.S. banks, which were at a distant second with $10 billion worth of coal project financing, BNEF’s report found.
According to BNEF’s researchers, the share of coal financing is still too high and not aligned in any way with a path to limit global warming to 1.5 degrees Celsius. Coal financing accounted for around 13% of all fossil fuel funding, while the share has to plunge to just 1% by the 2040s for a chance at reaching the Paris Agreement target to limit global warming, BNEF said in the report.
All the top 10 banks that arranged funding for coal last year were in China, led by the Industrial and Commercial Bank of China Limited, according to the findings.
China continues to rely on coal and expand its coal generation capacity despite the fact that it’s also the world leader in renewable capacity expansion and investment in green technologies.
Its banks continue to finance coal, while many banks, especially in Europe, have already dumped coal financing and are either limiting or halting funding for oil and gas projects, too.
But global coal demand is set to rise by 1.4% this year and surpass a record-high level of 8.5 billion tons for the first time, the International Energy Agency (IEA) said last week.
While coal demand in the United States and the EU is set for a 20% record decline, coal use in emerging economies “remains very strong, increasing by 8% in India and by 5% in China in 2023 due to rising demand for electricity and weak hydropower output,” the IEA said in its Coal 2023 annual report.
China’s coal demand is expected to drop next year and plateau through 2026, and global demand is set to decline to 2026, “but China will have the last word,” the IEA noted.