But China’s pledge to end coal financing will only really make a difference if, as Xi said, Beijing “step[s] up support for other developing countries in developing green and low-carbon energy”—funneling money currently ear-marked for coal toward green energy production instead.

Beijing has pledged repeatedly to turn Xi’s signature Belt and Road Initiative—the multi-billion-dollar infrastructure investment project that is currently weighted 90% towards fossil fuel installations—green. Doing so could unlock a healthy portion of the $1 trillion a year in green energy finance that the IEA says is necessary for the world to meet its climate goals.

Beijing has solid economic incentives to lure developing economies to green tech, too, since China is the world’s largest producer of solar panels and wind turbines, dominating roughly 70% of the global market for the former. As the cost of renewables continues to trend below the cost of coal, there’s also a risk that China’s current investments in foreign coal projects will become unprofitable.

However, Xi’s pledge is vague on details, and doesn’t mention whether China’s private and semi-private industries will continue to invest in coal operations worldwide. Private finance contributes some 80% of international coal financing, anyway.

Also missing from Xi’s pledge was any indication that China will curtail coal projects at home. China consumes 53% of the world’s thermal coal, which provides 57% of the nation’s electricity, and regulators could allow for hundreds more coal plants to be built in the coming decade.

To the government’s credit, China has increased the proportion of energy provided by renewables to around 30% of national consumption, and Beijing is pushing power suppliers to pivot away from more polluting fossil fuels. The “decarbonization” drive has increased China’s use of natural gas, however, which is also part of the reason why gas prices in Europe are so high, feeding into another energy crisis there.

According to Nikos Tsafos, at the Center for Strategic and international Studies (CSIS), China has bought up 80% of the world’s gas supply this year, since the fossil fuel produces less carbon than coal when burned. But the power outages roiling the country’s industrial heartlands this week—forcing factories to suspend production—have revealed Beijing’s reluctance to block out coal completely.

On Monday, the China Electricity Council—a union of the country’s state-backed power generators—said China would expand coal purchases “at any price” to ensure supply throughout the winter. Even the U.K., which recently passed a record 67 days without burning a single lump of coal, has reintroduced the sooty fuel as 3% of its energy mix to offset the ongoing energy crisis. In times of crisis, the black stuff burns well.

Coal’s reliability and usually low cost is exactly why poorer countries have favored it as a fuel, too. Even though wind and solar power is cheaper than coal for much of the world, installing renewable power requires fresh financing, advanced tech, and skilled labor—all of which is typically hard to come by in developing economies.

If Xi says his government will stop financing coal, it probably will. But planning the transition from black to green energy will be easier said than done and—if China’s own decarbonization drive is any indicator—divesting from coal could lead to more investment in gas.

Eamon Barrett
eamon.barrett@fortune.com
@eamonbarrett49

CARBON COPY

Path to Zero

Fortune published the second instalment of our Path to Zero package this week, comprising a bounty of long form articles on the theme of new markets emerging, maturing and booming in the transition to a carbon neutral economy. We cover the cryptoverse's ready minting of sustainable alt coins, the ebbing tide of wave energy start-ups and the resurgence of VC funding for clean tech. You can browse the full package, here.

Carbon tax at the Capitol

Senate Democrats in the U.S. are preparing a bill that would tax polluters and pass on some of the money earned from carbon levies to households in the form of cash payments. The so-called carbon tax would also help pay for the Democrats’ $3.5 trillion social policy bill, which is currently being debated on Capitol Hill. A carbon tax would be among the most effective policies in forcing large-scale decarbonization but political—and financial—opposition to the measure stands in its way. NYT

No on climate action?

Glass Lewis, an adviser for proxy votes, is advising shareholders of Australian mining giant BHP to vote against the group’s Climate Transition Action Plan when the resolution is put forward in January. Glass Lewis says BHP’s plan, which targets a 30% reduction in Scope 1 carbon emissions over the next ten years, is insufficient and sets goals that aren’t clearly aligned with science. A rebuff could signal to the sector that simply offering any stance on climate is no longer enough to satisfy shareholders. The stance needs to have substance, too. FT

COP on 

The British government has said it will grant quarantine waivers to foreign diplomats attending the COP26 meeting on climate change in Glasgow in November. Some environmental charities are calling for COP 26 to be postponed as COVID-related travel restrictions threaten to prevent delegates from developing countries from attending. But the pivotal climate conference—where signatories to the Paris Agreement are due to submit new climate commitments—is already happening a year behind schedule. Meanwhile, Australian PM Scott Morrison has yet to confirm whether he will show up.  FT

Battery blues

Electrifying the world requires building better batteries, as well as building batteries better. Cobalt, one of the core components of rechargeable batteries, is abundant in the Earth’s crust, but detecting and mining it is a timely, expensive, and polluting process. Some scientists are researching developing new batteries out of sodium (from the sea) and sulfur (from industrial production), but those chemicals are much less stable. Nickel is another alternative, although it is mined alongside cobalt. For problems like this, there may not be an ideal solution. Bloomberg

IN CASE YOU MISSED IT

Getting burned: Battles over the cost of climate change are scorching California homeowners by Jeffrey Ball

Unlit streets, no AC, and higher bills: China’s energy crisis is finally hitting households where it hurts by Eamon Barrett

Net zero isn’t enough. We need to get to net negative by Noah Deich

Nuclear power will be critical in race to cut carbon emissions, Dominion Energy CEO says by Declan Harty

Shell to sell major U.S. shale operation to ConocoPhillips, accelerating its departure from fracking by Katherine Dunn

Germany’s new government hangs on a deal between climate activists and capitalism’s defenders by David Meyer

CLOSING NUMBER

$2 trillion

For developing economies, there might be some upside to not having “developed” yet. A developing economy, consultancy McKinsey argues, can invest in green manufacturing and infrastructure without having to bear the cost of divesting from industries built on fossil fuel. Of course, green investment isn’t cheap. McKinsey estimates it will take $2 trillion of investment to create 3.8 million green jobs across Africa by 2050. That’s a hefty figure. The world’s richer economies have already pledged to provide $100 billion a year in green finance to the global south, starting from 2020. But they’ve missed their target.