Will the BRI reduce CO2 emissions

Plamen Tonchev: "Beijing has to prove that it can free a 'clean' New Silk Road from excessive financial burdens."

President Xi Jinping has announced that China will be climate neutral by 2060. What role will the New Silk Road (BRI) play in achieving this goal?

Xi Jinping's statement at the 75th session of the United Nations General Assembly has advantages and disadvantages. On the one hand, he promised that China would increase its targets under the Paris Agreement, the so-called Nationally Determined Contributions (NDB), reduce its CO2 emissions from year to year before 2030 and be climate neutral before 2060. The fact that China has set time-bound milestones is seen as a largely positive development. To what extent they will be achieved remains to be seen - they remain a goal and not a matter of course.

It is currently certain that China's greenhouse gas emissions will continue to rise for at least a decade. I don't find that particularly reassuring. In any case, Beijing does not seem to show any urgency in tackling climate change. While Chinese authorities are committed to tackling pollution at home, China's carbon-based industries are very active along the BRI aisles - a number of coal-fired power plants are being built in Asia, Africa and Southeast Europe. China tries to reduce emissions in its own country, but exports carbon-intensive processes abroad and thus shifts the burden of emissions on others.

In fact, China has channeled large parts of the BRI funds into coal-dependent projects. But Beijing also speaks of a "green and clean" BRI ...

Here, too, it is about pronouncements, about words that still have to be translated into action. In fact, at the second “Belt and Road” forum in April 2019, Xi spoke of an “open, green and clean” BRI. This type of Beijing rhetoric is widely believed to be a result of the controversy surrounding many of China-funded infrastructure projects, including quite a few with poor carbon footprints. China has to prove in practice that it can keep its word.

However, trends to finance less carbon-intensive projects would have more to do with the consequences of Covid-19 than with Beijing's announcements about a “green and clean” New Silk Road. Due to the increasing indebtedness of several BRI partner countries and the risk of insolvency, China's state development banks, the China Development Bank and the Export-Import Bank of China have become more cautious in lending for large infrastructure projects, which are normally associated with significant CO2 emissions.

To what extent is the "green BRI" also looking for new markets for renewable energies? And what does this mean for Europe and the USA?

In the past decade, China has seen a boom in the use of renewable energy sources, mainly photovoltaics (PV) and wind. This is a key element of the government's low-carbon strategy, which relies on generous state aid in the form of electricity price guarantees. For example, between 2010 and 2017, the installed PV capacity in China rose from 40 GW to 250 GW, i.e. twice as much as in the rest of the world. This had significant consequences for the industry worldwide and pushed a number of European and American solar module manufacturers out of the market. But this breakneck growth drove state aid levels in China to unsustainable levels and created a high risk of overcapacity. Two years ago, the government changed course abruptly and decided to cut subsidies for manufacturers of solar modules. This course was announced in mid-2018 on May 31st, hence the name "531".

Chinese solar module manufacturers are now desperately trying to win international orders - and BRI is proving to be very helpful for Beijing in this regard. In principle, China's enormous renewable energy resources could help developing countries reduce their carbon footprint. However, this will depend on available investment funds and prudent financial policies. Here again the effects of Covid-19 come into play - in the course of the crisis, many developing countries are trying to pay off accumulated national debts. In addition to a “green” New Silk Road, Beijing has an obligation to prove that it can free a “clean” BRI from excessive financial burdens. If China wants to prove that it is indeed a responsible political actor, now has the perfect opportunity: it must use the example of the BRI to prove that it can turn announcements into tangible results.

This interview was first published in the MERICS China Briefing on October 22, 2020.