China has cancelled 61.5 gigawatts of planned overseas coal projects since 2021 to meet its climate commitments. While this is a major policy shift, the use of private captive power plants and ongoing energy security needs in Southeast Asia mean coal remains an active part of the regional industrial supply chain.
Five years after China announced plans to stop financing new coal power plants abroad, new research shows a significant change in the landscape. Since 2021, 61.5 gigawatts of planned international coal capacity have been cancelled, representing 67% of the pipeline that existed at the time of the policy shift. This move marks a major change in how the world's second-largest economy influences global energy financing and infrastructure development.
However, the transition away from fossil fuels is not straightforward. While state-backed infrastructure projects have seen a clear decline, private firms are using a common method to keep projects alive: captive power plants. These are coal-fired plants built to power specific industrial facilities, such as nickel and aluminum smelters, rather than being connected to national power grids. Because they are categorized as industrial assets rather than public energy projects, they often continue to operate outside the scope of international climate commitments.
In Southeast Asia, the reality of energy security is also driving continued reliance on coal. Countries like Indonesia, Vietnam, and the Philippines are balancing their move toward green energy with an urgent need for reliable and affordable electricity to fuel their growing economies. Indonesia, in particular, remains a central point for this trend, with 17.1 gigawatts of coal power capacity still in the development pipeline. This approach to energy management—where countries prioritize immediate power stability over long-term decarbonization goals—creates a complex picture for the global energy transition.
For investors, this situation highlights two important areas. First, global coal demand will likely continue to be influenced by industrial requirements in emerging markets, even as public financing for large-scale power plants dries up. Second, the energy-intensive industries linked to these captive plants, particularly those involved in refining battery metals like nickel and aluminum, will continue to rely on coal-based power in the near term. The final outcome of these projects will depend on how energy security policies in these nations evolve and whether increasing global pressure for cleaner supply chains eventually forces changes to these industrial power models.