As part of a four-article series, HSBC examines how the Belt and Road Initiative (BRI) is evolving in response to the lessons and challenges experienced so far and what this could mean for the global economy, from climate change to regional economic development and from project governance to trade connectivity. Our third article explores the critical issue of climate change and the green agenda. How aligned is the BRI with global sustainability?
The first phase of the BRI has prompted concern about environmental risks, both from specific projects to their surroundings and, more broadly, from increasing industrial activity and therefore emissions. Attention is warranted: if the BRI does not support the sustainability agenda, the world will not achieve its climate targets. But evidence also shows that China is, in fact, a global environmental leader, suggesting that the BRI could support rather than undermine the sustainability agenda.
China has, for instance, curbed emissions growth in recent years while becoming a global leader in green investment and innovation. It is also the world’s biggest investor in renewable energy, committing more than US$100bn in 2018.1 While many countries are not on track to achieve the environment and climate goals committed to at the Paris climate conference in 2015, China is raising the bar for itself. It has already passed its 2020 target of 105 GW of cumulative installed photovoltaic power.2
China has every reason to care about the environmental crisis. Air pollution costs the country an estimated US$38bn annually.3 It also knows that every aspect of its commercial future, from mobility to digital industry, depends on efficient and sustainable energy. The BRI must not only be low-impact from an environmental perspective; it should also foster investment in the green economy.
“No country has put itself in a better position to become the world’s renewable energy superpower than China,” stated a report released by the Global Commission on the Geopolitics of Energy Transformation in January 20194. Three months later, the Export-Import Bank of China agreed to provide nearly 85% of the $400-million needed for the development of South America’s largest solar farm.5 The deal, which was agreed on the condition that a majority of the materials needed were purchased from Chinese suppliers, is the latest demonstration of China’s intent to use green energy as a means of economic diversification. This trend will accelerate as the country pushes to meet its revised target of 35% reliance on green energy by 2030.6