Staying In or Getting Out? The Determinants of Asian Lending for Coal

• In Event: The Politics of Green Industrial Policy: Lessons for a Green New Deal

Abstract

Coal-fired power plants are the major source of greenhouse gas emissions from the electricity sector and are among the leading sources of particulate air pollution. Climate advocates have been encouraging countries and private sector actors to suspend their support for and construction of coal-fired power plants through efforts like the Power Past Coal Alliance. While multilateral lending institutions have increasingly been pledging to stop lending for coal burning power plants, Asian lending institutions—both private sector and state-affiliated lending institutions—have largely continued to support lending for coal, particularly China and Japan. In Southeast Asia, Vietnam and Indonesia have been the major recipients of lending for coal. That is starting to change. In 2019, three Singapore banks dropped their lending for coal. Through elite interviews and qualitative case study methods, this paper seeks to understand the political economy of coal investment and disinvestment by Asian lending institutions, focusing on China, Japan, and Singapore as investors and Vietnam and Indonesia as recipients. Among the competing hypotheses are economic returns and country risk insurance policies, non-economic strategic considerations, domestic political drivers, recipient preferences, and the relative salience of international environmental pressures.

Authors

• Joshua Busby, University of Texas, Austin

• Joshua Eisenman, University of Notre Dame

• Michael Davidson, University of California, San Diego