Last month, President Xi Jinping addressed the United Nations General Assembly via video message and sent shockwaves around the world, announcing that his country will stop building coal-fired power plants overseas.

Notably, independent studies have found that stopping Chinese support for overseas coal generation could freeze up to 40 GW of generation in the near term. Specifically:   

• The Natural Resources Defense Council found that ahead of the September announcement, China planned to support more than 40 GW of new coal-fired power plants in 20 developing countries such as Bangladesh, Indonesia, Vietnam and other countries in Asia and Europe.
• The University of Maryland Center for Global Sustainability found that Chinese partners were involved in the development of 43 new coal plants outside of China, totaling 35 GW of generation. Canceling these Chinese-backed plants would cut carbon dioxide emissions by 145 megatons by 2030 and by 4.35 gigatons over 30 years.
• The Global Development Policy Center estimated China is financing 20 GW of under-construction overseas coal capacity with another 13.5 GW in the works.

While it’s clear this new pledge will be impactful, the scope and scale of these impacts will depend on how China moves forward and addresses a number of unanswered questions. For example, does this ban only cover policy banks and state-owned enterprises, or does it also apply to commercial deals won by private Chinese companies? Will the announcement cover different forms of economic activities, including financing, insurance, construction, equipment supply, and others? How will the new pledge affect existing projects or those under construction? Does it also cover off-grid power plants serving Chinese industrial parks?

Immediately after China’s new pledge, two powerful institutions in China took action. The country’s nickel and steel giant, Tsingshan Group, announced that it will not build new coal plants in Indonesia and other countries and the state-owned Bank of China, which has invested $35 billion in overseas coal since 2015, announced it will stop financing new coal mining and coal-fired power projects overseas starting in October. While these commitments are significant, other major Chinese banks have not yet made similar pledges, including the Export-Import Bank of China and the China Development Bank, which provided $15.6 billion in financing for coal-fired power outside China between 2013 and 2018 according to the Global Development Policy Center at Boston University.

There is additional uncertainty around how this announcement will impact coal-fired power investment from other nations. While Japan and South Korea committed to stopping overseas coal development earlier this year, ahead of Xi’s announcement, no other countries have followed suit. And according to the Global Development Policy Center, while China is the world’s biggest public investor in coal-fired power, the U.S. remains by far the biggest source of institutional investment in coal-fired power overall, followed by Japan and the United Kingdom.

Finally, it is worth asking if and when China will stop building coal-fired generation within its own borders – a move with more than double the greenhouse gas impact compared to stopping the money spigot for coal plant construction outside the country. China is currently building 88 GW of new coal plants domestically with another 159 GW in early development, according to the Center for Global Sustainability. What’s clear at this point with respect to China’s new commitment is that the devil will be in the details.