China’s export insurance giant is taking a risk on coal

(Resource China, New York, 25 April 2019) Worldwide, a growing list of insurers now refuse to cover coal projects, citing risks from climate change and overcapacity. But Sinosure, the sole underwriter of coal-fired power plants along China’s Belt and Road Initiative (BRI), has yet to show any indicator of leaving coal behind. China’s foreign direct investment has more than doubled over the past three years, with much of it funneled into energy development. Coal has dominated these investments, combining coal-rich resources in many Belt and Road countries and China’s coal tech. Observers tend to focus on the role of financiers and power companies in overseas coal projects, but the importance of insurers should not be overlooked. Because insurance is a prerequisite for obtaining a loan on an overseas investment project, support from an insurer is needed for a project to move forward. State-owned China Export & Credit Insurance Corporation, known as Sinosure, acts as gatekeeper of energy investments along the BRI. Sinosure is China’s only policy insurer to cover overseas coal-fired power projects, meaning that overseas coal power projects require a green light from Sinosure to go ahead. By the end of 2018, Sinosure had underwritten 28 gigawatts of coal power capacity worldwide, exceeding the entire coal capacity of Australia.