Polluting investments? Why we need a new era of development cooperation
China’s Belt and Road Initiative (BRI) is one of the most ambitious projects of contemporary times, whereby China seeks to increase its sphere of influence in West, South, East and Central Asia, as well as in Africa and Europe. The BRI, as some put it, is considered a “conduit for polluting investments” among which are coal-fired projects, that have lately gained international attention, especially due to expected negative repercussions on the post-2020 climate treaty.
Although India is officially not a part of the BRI, it has been one of the major investment destinations for China, particularly in the energy sector. India has been the largest recipient of Chinese off-the-shelf equipment exports. However, in recent years, Chinese investments in Indian coal-powered projects have shrunk considerably, due to changes in India’s domestic policies and its international commitments. At the same time, Chinese investments in renewable energy plants, especially solar, are witnessing a steady rise. India, with its ambitious renewable energy targets and leadership in launching the International Solar Alliance, could herald a new era of energy and development cooperation that is climate-friendly.
How big is India’s Coal Problem?
India is looking to enhance its investments in renewables for a rapid transition from coal. The task ahead is therefore massive. Studies indicate that by 2030, India’s greenhouse gas (GHG) emissions could double in comparison to the 2012 levels due to “demographic” and “urban” transitions, but its per capita emissions would be below today’s global average and less than half of China’s emissions (2015). Nevertheless, India’s emissions trajectory is projected to be consistent with meeting its “Paris emissions intensity pledge”.
Statistics show that many coal plants are on the brink of bankruptcy due to paucity of coal supply (owing to cancellation of coal blocks), bottlenecks in land acquisition, decelerating demand, and competition from renewable energy sources whose tariffs are at times lower than those of coal. While several coal projects have either been cancelled or shelved, figures show that India’s growing energy demand is touted to be met by renewable energy sources in the long term.
At the same time, according to India’s new energy policy draft, its coal-fired capacity is estimated to double by 2040, in line with the growing demand for electricity. It clearly implies that India’s dependence on coal is not expected to reduce in the medium term and the percentage of contribution of coal and other fossil fuels to the country’s energy mix is going to drop only marginally.
Calling for Climate-friendly Development Cooperation
The failure of the Bretton Woods Institutions (World Bank and International Monetary Fund) to sufficiently integrate environmental and/or sustainability norms with their lending policies is a bone of contention in international climate policy. Also China’s entry into the arena of development cooperation is being seen with immense scepticism from an environmental point of view. Through the BRI, Chinese coal firms are shifting outward as the growth of this sector is slowing down domestically, partially also due to its policies concerning restriction of coal consumption at home.
Chinese investments in coal-fired projects across Asia and Africa are, in a way, contradictory to its international climate change commitments. Between 2001 and 2016, China was involved in 240 coal power projects in BRI countries. Though China is providing fillip to investments in climate change mitigation and adaptation projects in several African nations through its South-South Climate Cooperation Fund, this has been at a much slower pace, as compared to financing of fossil fuel projects. China insists that when the goal is to ensure access to affordable energy, coal remains the best option in the majority of developing and least developed countries of Africa and Asia.
What can India do?
By launching the International Solar Alliance, Prime Minister Narendra Modi secured a major diplomatic victory at the international level, so much so that he recently won the 2018 ‘Champion of the Earth’ award for it (apart from his pledge to eliminate single-use plastics in India by 2022). The country’s leadership could use this opportunity to advance climate action on a global scale by aligning climate diplomacy with its development cooperation strategy at bilateral and multilateral levels.
India could promote the International Solar Alliance, which is founded on rules-based international order and values of mutual cooperation, as the new “belt” of development justice that combines reliable access to affordable energy, climate, and environment action and socio-economic stability. This could then serve as a tool for establishing other such alliances that build momentum towards ‘climate-responsible’ international development cooperation.
Dr. Dhanasree Jayaram is Postdoctoral Researcher at the Institute of Political, Historical and International Studies hosted by the University of Lausanne, Switzerland; Co-Coordinator at the Centre for Climate Studies and Assistant Professor at the Department of Geopolitics and International Relations, Manipal Academy of Higher Education, Karnataka, India.
[The views expressed in this article are personal.]