China's commitment to halting overseas coal plant construction, made in 2021, is being undermined by a surge in privately financed captive coal projects, particularly in Indonesia. These off-grid plants are often owned, constructed, or operated by Chinese companies and are built to power resource-intensive processes like nickel smelting for the global electric vehicle supply chain. This development runs counter to Beijing's stated goal of scaling back support for fossil fuels and has led to a significant increase in Indonesia's coal-fired power plant capacity, nearly tripling to over 7 gigawatts in the year following President Xi's announcement, before tapering off. Captive coal projects are a gray area in China's pledge and are creating pollution hotspots.
These projects carry substantial health and environmental costs. In Indonesia alone, existing coal-fired power plants were responsible for approximately 10,500 deaths annually and $7.4 billion in health costs in 2022. Projections indicate these figures could rise to 16,600 deaths per year and $11.8 billion in annual health costs by 2030 under current policies. Captive coal plants are a significant contributor, with a 2024 report estimating that nickel smelting and processing activities powered by captive coal could cause up to 3,800 deaths annually by 2025, rising to 5,000 deaths by 2030, with an annual economic burden of $2.6 billion in 2025 and $3.4 billion by 2030. Cumulative losses could reach $38 billion and 55,600 deaths by 2060 without stronger emission controls.
As of July 2025, China's overseas coal pipeline continues to contract, with the total pipeline falling to 31.4 GW, down from 49.5 GW in 2024. Cancellations accelerated, with 16.4 GW of new capacity officially canceled in 2025, bringing total canceled capacity since the 2021 pledge to 59.3 GW, equivalent to 6.1 billion tonnes of avoided lifetime carbon dioxide emissions. However, 12.1 GW across 14 projects remain under construction, mostly captive coal plants in Indonesia, India, Laos, and Zimbabwe. New projects like Delong Nickel Phase IV in Indonesia (330 MW) and Phonesack Xekong Unit I in Laos (300 MW) have advanced to construction. Indonesia accounts for the largest share of projects under construction, totaling about 5.8 GW.
Chinese stakeholders control over 75% of Indonesia's nickel refining capacity, illustrating the deep ties between the two nations in this sector. For example, a $11.5 billion investment package was signed between Indonesia and Chinese glass maker Xinyi Glass Holdings Ltd in July 2023 for a quartz sand processing plant. This was followed by a plan in October 2023 for a $2.5 billion investment by Xinyi to build a 2.5 GW coal- and gas-fired power station to supply its factories. The exemption of captive plants from Indonesia's Just Energy Transition Partnership's target of retiring all coal-fired power plants by 2040 could lead to an additional 27,000 premature deaths due to air pollution and $20 billion in health costs, further highlighting the ongoing challenges in addressing coal reliance despite international commitments.
