China Swore Off Overseas Coal Plants. Is Xi Keeping His Climate Promise?

SINGAPORE—A pledge by China two years ago to stop building new coal plants overseas won applause from global climate activists, but Beijing’s decision to press ahead with some projects has spurred questions about whether the world’s largest carbon emitter is going back on its word.

This year, China and Pakistan resurrected long-dormant plans for a coal plant in Gwadar, a port city that is at the center of an economic corridor Beijing is seeking to develop. China is also forging ahead with plans for new coal-fired power plants in Indonesia, where the government wants them to supply energy for processing nickel, a metal used to make batteries for electric cars.

Chinese companies have canceled nearly 40 planned coal plants over the past two years, but the fate of about 40 other projects remains in limbo, as different parties tussle over how to interpret and carry out Beijing’s coal pledge.

The 40 remaining coal projects could produce about 245 million metric tons of carbon dioxide every year, or a little less than Spain’s total emissions last year, according to calculations by the Center for Research on Energy and Clean Air, an organization based in Finland that focuses on climate issues.

“China should double down on renewable energy in these countries,” said Isabella Suarez, a policy analyst at Transition Zero, a data and analytics company that advocates for a shift to renewable energy. She pointed to how Chinese leader Xi Jinping had also promised more support for developing countries to transition away from fossil fuels.

The problem is many developing countries say they are not fully ready to make the transition, which often requires big upfront investments to build the technology and adapt the power grids. Pakistan and Indonesia say they are choosing to go forward with coal plants in some places because they can ensure a stable and affordable power supply now, and the countries lack alternatives that are financially and technically feasible.

Beijing has said it is upholding Xi’s 2021 pledge. China’s economic planning agency issued guidance last year aimed at clarifying the pledge, which said projects already under construction should proceed “steadily and cautiously,” while new coal plants should be scrapped.

People familiar with the discussions of Chinese policy makers say Beijing is also weighing how strategically important projects are. Its projects in Pakistan, for example, have served as a showcase of its investments in developing nations.

China’s National Development and Reform Commission, Ministry of Ecology and Environment and Foreign Ministry didn’t respond to requests for comment.

China has been trying for nearly a decade to develop Gwadar—in a region beset by terrorism—into a hub for an economic corridor that would give it access to key Arabian Sea shipping routes at the mouth of the oil-rich Persian Gulf.

But projects there, including an airport and hospital, are stalled due to electricity supply issues. Poor infrastructure and electricity shortages are the biggest impediments to developing Gwadar, said Shah Jahan Mirza, managing director of the Private Power and Infrastructure Board, which oversees private investments in the power sector.

Since last year, blackouts across Pakistan have worsened due to a shortage of natural gas, which accounts for more than one-third of the country’s power output, after prices of liquefied natural gas surged in the wake of Russia’s invasion of Ukraine, with European buyers elbowing out poorer countries.

In February, Pakistan announced it would quadruple its coal-fired capacity and use domestic coal to reduce power generation costs and reliance on volatile external markets, marking a reversal from former Pakistani Prime Minister Imran Khan’s promise not to have any more power based on coal.

Pakistan first approved the Gwadar coal plant in 2017, but disagreements over financing and pricing delayed construction. In the summer of 2022, both sides considered building a solar farm instead, before settling back on the coal plant early this year.

In Pakistan, building and operating solar energy supplies, if you include the cost of storage, would be 270% more expensive than coal, according to estimates from the energy consulting firm Wood Mackenzie.

Indonesia is similarly pushing China to proceed with coal plants there. The country has 14.5 gigawatts of China-backed coal plants in the pipeline, most of which are so-called captive coal plants run and managed by industrial users for their own power needs.

Indonesia says it needs them to power projects such as smelters to process nickel ore used to make electric-car batteries, as the country tries to move up the value chain and develop its economy.

Climate activists have accused China of not keeping its promise because some of the Indonesia plants were announced in 2022. Beijing says they are part of an industrial complex and not stand-alone projects covered by the pledge.

Indonesia’s Ministry of Energy and Mineral Resources didn’t respond to a request for comment.

Replacing coal, which Indonesia has in abundance, with renewable energy and storage will be expensive. The International Renewable Energy Agency estimated in 2022 that Indonesia would require more than $400 billion for its renewable energy technology, grid expansion and storage needs through 2030.

As the world’s largest producer of solar panels and batteries, China is also well-positioned to take advantage of demand for more renewable projects. Last year, 26% of Chinese overseas energy investments went into renewable power, such as solar, wind and hydropower, up from 15% in 2021, according to data compiled by the Green Finance and Development Center.

China is facing complaints in at least one country where Beijing withdrew as a backer of coal power. Laos, a landlocked country in Southeast Asia, has bet on developing hydropower to pull itself out of poverty in part by exporting electricity to its neighbors.

The country says it needs some coal power to ensure stable supply during the dry season, when Laos finds itself plagued by blackouts and needing to import electricity from Thailand—at double the price.

But after China’s pledge to ditch overseas coal projects, debt-ridden Laos has struggled to find investors to replace Chinese financiers for two coal plants that were slated to be built in the southern Sekong province, to help with electricity exports to neighboring Cambodia.

“We want to develop. We need energy. But it’s very difficult to do without fossil fuel and financial support,” said Akhomdeth Vongsay, a senior official at the country’s Ministry of Energy and Mines.

Waqar Gillani in Islamabad and Clarence Leong in Singapore contributed to this article.

Write to Sha Hua at sha.hua@wsj.com