TY - JOUR
T1 - Financing carbon lock-in in developing countries
T2 - Bilateral financing for power generation technologies from China, Japan, and the United States
AU - Chen, Xu
AU - Li, Zhongshu
AU - Gallagher, Kevin P.
AU - Mauzerall, Denise L.
N1 - Funding Information:
X.C. is grateful for doctoral and postdoctoral funding support from the Princeton School of Public and International Affairs and the Center for Policy Research on Energy and the Environment at Princeton University and thankful for research assistance from Kassidy VanGundy at the Boston University Global Development Policy Center, where X.C. was a graduate fellow in fall 2018.
Funding Information:
K.P.G is grateful for the ClimateWorks Foundation, the Rockefeller Brothers Fund, and the Charles Stewart Mott Foundation for financial support, and to Xinyue Ma and Rebecca Ray of the Global Development Policy Center for research support.
Publisher Copyright:
© 2021 Elsevier Ltd
PY - 2021/10/15
Y1 - 2021/10/15
N2 - Power sector decarbonization requires a fundamental redirection of global finance from fossil fuel infrastructure towards low carbon technologies. Bilateral finance plays an important role in the global energy transition to non-fossil energy, but an understanding of its impact is limited. Here, for the first time, we compare the influence of overseas finance from the three largest economies – United States, China, and Japan – on power generation development beyond their borders and evaluate the associated long-term CO2 emissions. We construct a new dataset of Japanese and U.S. overseas power generation finance between 2000 and 2018 by analyzing their national development finance institutions’ press releases and annual reports and tracking their foreign direct investment at the power plant level. Synthesizing this new data with previously developed datasets for China, we find that the three countries’ overseas financing concentrated in fossil fuel power technologies over the studied period. Financing commitments from China, Japan, and the United States facilitated 101 GW, 95 GW, and 47 GW overseas power capacity additions, respectively. The majority of facilitated capacity additions are fossil fuel plants (64% for China, 87% for Japan, and 66% for the United States). Each of the countries’ contributions to non-hydro renewable generation was less than 15% of their facilitated capacity additions. Together, we estimate that overseas fossil fuel power financing through 2018 from these three countries will lock in 24 Gt CO2 emissions by 2060. If climate targets are to be met, replacing bilateral fossil fuel financing with financing of renewable technologies is crucial.
AB - Power sector decarbonization requires a fundamental redirection of global finance from fossil fuel infrastructure towards low carbon technologies. Bilateral finance plays an important role in the global energy transition to non-fossil energy, but an understanding of its impact is limited. Here, for the first time, we compare the influence of overseas finance from the three largest economies – United States, China, and Japan – on power generation development beyond their borders and evaluate the associated long-term CO2 emissions. We construct a new dataset of Japanese and U.S. overseas power generation finance between 2000 and 2018 by analyzing their national development finance institutions’ press releases and annual reports and tracking their foreign direct investment at the power plant level. Synthesizing this new data with previously developed datasets for China, we find that the three countries’ overseas financing concentrated in fossil fuel power technologies over the studied period. Financing commitments from China, Japan, and the United States facilitated 101 GW, 95 GW, and 47 GW overseas power capacity additions, respectively. The majority of facilitated capacity additions are fossil fuel plants (64% for China, 87% for Japan, and 66% for the United States). Each of the countries’ contributions to non-hydro renewable generation was less than 15% of their facilitated capacity additions. Together, we estimate that overseas fossil fuel power financing through 2018 from these three countries will lock in 24 Gt CO2 emissions by 2060. If climate targets are to be met, replacing bilateral fossil fuel financing with financing of renewable technologies is crucial.
KW - Bilateral financing
KW - Committed carbon emissions
KW - Decarbonization
KW - Development finance institutions
KW - Foreign direct investment
KW - Power generation
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U2 - 10.1016/j.apenergy.2021.117318
DO - 10.1016/j.apenergy.2021.117318
M3 - Article
AN - SCOPUS:85110023747
SN - 0306-2619
VL - 300
JO - Applied Energy
JF - Applied Energy
M1 - 117318
ER -