Will China’s carbon-neutrality pledge green BRI investments?

(The Third Pole.net, 29 Oct 2020) The news that China will move to low-carbon energy investments domestically is a wake-up call for policymakers in countries that receive Belt and Road finance for infrastructure development.

President Xi Jinping recently announced that China would achieve domestic carbon neutrality before 2060. This target signals a clear direction of travel for China’s economy and future energy investments, and it keeps the 1.5 C temperature goal of the Paris Agreement within reach.

Does China’s pursuit of carbon neutrality mean its Belt and Road Initiative (BRI) could help jumpstart a cleaner growth pathway by exporting the technologies and policies necessary for decarbonisation? Or will Chinese companies continue to shift more high-carbon projects abroad as the domestic market shrinks?

The risk of more high-carbon infrastructure overseas

A recent study by Tsinghua University’s Institute of Energy, Environment and Economy (Tsinghua 3E) provided a roadmap for reaching carbon neutrality in China by 2060. This showed steep declines in fossil fuels, with a 96% drop in coal use by 2050, 75% drop in natural gas and 65% drop in oil. This requires domestic investments in fossil fuels to decline rapidly. If the power sector and heavy industries do not proactively prepare for this transition, they may pursue more high-carbon projects along BRI.

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The Third Pole.net, 29 Oct 2020: Will China’s carbon-neutrality pledge green BRI investments?