The convergence of environmental pressures and economic recession due to the COVID-19 pandemic makes the future of international finance for coal-fired power plants increasingly uncertain. Environmental advocates have long been concerned about international coal investments locking host nations into decades of harmful air pollution and carbon dioxide emissions that cause global climate change. Now, the future of these planned coal plants is at a crossroads.

To understand what may happen in the future, we take a look at China, Japan, and South Korea, the largest enablers of new coal projects around the world. We compare the past ventures of Chinese, Japanese, and Korean companies to understand how their changing stances on coal may affect the future of CO2 emissions. Japan and Korea are making policy moves to shift away from coal. However, even while setting more stringent targets domestically, China is continuing to enable unsustainable coal overseas.

Coal in Asia

Coal remains a dominant source of power generation in Asia due to its price and availability. Japan, the top public financier of coal power projects since 1994, has long been criticized by domestic and international environmental groups for backing fossil fuels abroad. Korea has been similarly criticized for backing coal plants that do not adhere to its domestic environmental standards. Now, China faces similar scrutiny.

Japanese developers have rationalized their investments by insisting that they are purveyors of the “cleanest” coal technology and, as such, can provide poor countries with cleaner coal. Japan’s 5th Strategic Energy Plan even stated that Japan should only supply coal technology “at or above ultrasupercritical pressure (USC), the global state-of-the-art.”

Prior research has demonstrated that coal plants in Asia owned, designed, and built by Chinese companies tend to be cleaner in terms of CO2 emissions intensity and energy efficiency than plants of non-Chinese companies. But what about the overseas coal plants of Japanese and Korean companies? Who, really, is developing the “cleanest” coal?

Finding the “cleanest” coal

To characterize the involvement of Chinese, Japanese, and Korean actors in a given overseas coal project, we look at the types of companies involved in that coal plant. We examine three types of companies: parent companies, architecture and engineering companies, and construction companies. While parent companies represent foreign direct investment (FDI), engineering and construction companies typically represent engineering, procurement, and construction (EPC) arrangements, which play an important role in the technology choices for a plant and may also operate it.

Using this definition, we map out the coal plants with involvement from Chinese, Japanese, and Korean companies in the rest of Asia. 

We find 483 coal plants with Chinese company involvement, 110 plants with Japanese company involvement, and 58 plants with South Korean company involvement. We also find that Chinese and Korean involvement tends to be overwhelmingly through engineering and construction companies (i.e. EPC contracts), while Japanese plants have a higher proportion of involvement via parent companies, representing FDI.

So whose plants are the “cleanest”? We used CO2 emissions intensity as our comparison metric. This refers to the amount of CO2 emitted per unit of energy produced, and is a measure of efficiency rather than absolute emissions, which allows comparison of plants of all different sizes.

Looking at the average emissions intensity of each country’s overseas fleet in this region, we find that Japanese and Chinese plants are roughly equal, at 1.14 tCO2/MWh. However, Korean plants have much lower emissions intensity, at 0.97 tCO2/MWh. The average emissions intensity of all coal plants in Asia is 1.21 tCO2/MWh.