China coal exit: Opportunities for China-led financing of early phase down of coal-fired power plants in Pakistan and Vietnam Christoph Nedopil, Lawrence Ang, Matt Carpio and Mengdi Yue March 2024 China coal exit: Opportunities for China-led financing of early phase down of coal-fired power plants in Pakistan and Vietnam Christoph Nedopil, Lawrence Ang, Matt Carpio and Mengdi Yue About this Publication This brief is produced by the Griffith Asia Institute (GAI) at Griffith University, Brisbane, Australia in collaboration with the Green Finance & Development Center (GFDC) of the Fanhai International School of Finance at Fudan University, Shanghai, PR China and Climate Smart Venture Pte Led, Singapore. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to Griffith University, FISF, Fudan University or Climate Smart Ventures, to its affiliated organisations, or members of its Board of Executive Directors. The publication is based on a project supported by the Coal Asset Transition Accelerator (CATA). Please cite as: Nedopil, C, Ang, L, Carpio, M and Yue, M, (2024): China coal exit: Opportunities for China-led financing of early phase down of coal-fired power plants in Pakistan and Vietnam, Griffith Asia Institute, Griffith University (Brisbane), Green Finance & Development Center, FISF Fudan University (Shanghai), and Climate Smart Ventures (Singapore), DOI: 10.25904/1912/5201. © 2024 Griffith Asia Institute, Griffith University, Green Finance & Development Center, FISF and Climate Smart Ventures Cover picture: Engineer and construction site manager dealing with a coal power plant in the background. (Image: Shutterstock) i Acronyms and abbreviations ACT Accelerating Coal Transition ADB Asia Development Bank ALLIES Choosing your allies BAU Business as usual CFB Circulating Fluidised Bed CFPP Coal-fired power plant CIF Climate Investment Funds CPPA Central Power Purchasing DE Debt-to-equity DISCO Distribution companies ETM Energy Transition Mechanism EV Enterprise Value EVN Electricity of Vietnam FCFE Free cash flow to equity FiT Feed-in tariffs FUTURE G7 GEM Ministry of the Future Group of Seven: Canada, France, Italy, Germany, Japan, the United Kingdom and the United States of America and the European Union Global Energy Monitor GFANZ Glasgow Alliance for Net Zero IEA International Energy Agency IGCEP Indicative Generation Capacity Expansion Plan IPG International partners group JETP Just Energy Transition Partnership MAS Monetary Authority of Singapore MDB Multilateral development bank MEE Ministry of Ecology and Environment MOFA Ministry of Foreign Affairs MOFCOM Ministry of Commerce MOIT Ministry of Industry and Trade MPO Managed coal phase-out MW Megawatt NDRC National Development and Reform Commission NEPRA National Electric Power Regulatory Authority, Pakistan NPV Net Present Value OECD Organisation for Economic Cooperation and Development PC Pulverised Coal PDP8 8th Power Development Plan RE Renewable energy SOEs State-owned enterprises SOFIs State-owned financial institutions US United States of America USD US dollar WEF World Energy Forum ii Contents About this Publication i Acronyms and abbreviations ii Contents iii Executive summary 1 1. Introduction 2 2. The context of coal power phase-down 4 2.1 Global energy transition and coal retirement trends 4 2.2 China’s international coal policy 6 2.3 Vietnam: Power sector context and policy 6 2.4 Pakistan: Power sector context and policy 8 3. Key objectives and methodology 10 3.1 Due diligence and scenarios development 10 3.2 Criteria development and plant selection 12 3.3 Financial analysis 14 4. Results 17 4.1 Vietnam 17 4.2 Pakistan 18 5. Discussion and recommendations 20 Appendix 1: Sample cash flows for Vietnam’s Hai Phong and Quang Ninh CFPPs 21 Appendix 2: Sample cash flows for Pakistan’s Sahiwal and Engro CFPPs 22 About the authors 23 About Griffith Asia Institute 24 About the Green Finance & Development Center 24 About Climate Smart Ventures 24 Notes and references 25 iii Executive summary • Prevalent literature assumes that coal-fired power plants (CFPP) in Asia are difficult to retire due to their relatively young age. This study evaluates how the financial values of six Chinese-sponsored coal-fired power plants (CF