What new research did you present at the Mistra Geopolitics breakfast seminar? Can the EU and China save the Paris Agreement in 2020?
At adelphi, we have been looking into implications of the Chinese investment abroad on the decarbonisation pathways of the “target” countries. Our starting point was the Belt and Road Initiative (BRI), a major investment and cooperation effort with over 120 countries China announced in 2013.
The BRI is a great case study of geopolitics of decarbonisation – the work stream we concentrate on in the Mistra Geopolitics Programme. Getting a full picture of the interests that drive the initiative is certainly challenging, as the BRI projects unfold in different contexts and involve a multitude of actors. But many observers agree that geopolitical motives play an important role. At the same time, BRI investments will have an influence on future emission pathways.
To understand this more thoroughly we looked closely at Kazakhstan. In Kazakhstan, China invests quite heavily, and the economic cooperation between the two countries has been growing over the past decade. But can this potentially help Kazakhstan lower greenhouse gas emissions or will it lock in high-carbon pathways for the economy? And how does this connect to the geopolitics of Chinese investment abroad? I presented our preliminary answers to these questions during the breakfast seminar.
Fascinating questions! Have you drawn any new insights from the perspectives of other researchers and practitioners at the seminar?
The relationship of China and the European Union was not the primary focus of our BRI research. Preparing for the seminar and during the panel discussion, I got to thinking about the dilemma the EU is facing: It is looking for a strong partner to raise global climate ambition, especially as it currently cannot count on the US federal government. But there are also conflicts of interest with China, and the question of incentives that the EU can offer is a difficult one. China’s recent pledge to achieve net zero emissions before 2060 sends a hopeful signal for international cooperation on climate.
The remarks of the panel regarding the changing geopolitical context were very instructive. It seems, finding a common ground on such issues as climate becomes more challenging for the EU and China, as the latter is increasingly seen as “systemic rival” by the former. Contentious issues perceived as high politics can simply overshadow climate topics. For me, the seminar painted a picture of an EU that is searching for a strong, coherent strategy that could incentivise cooperation with China on raising climate ambition without compromising European interests in other areas.
Why is China so important when it comes to climate change and the Paris Agreement?
China is the world’s biggest emitter of greenhouse gases. The country’s commitment to carbon neutrality before 2060 caused both international praise and questions on how its current policies would need to change to implement this, not least with regard to its coal capacities. For example, the Climate Action Tracker (CAT) still rates China’s climate action as “highly insufficient”. Furthermore, according to CAT, the government’s recovery policies recognise that the economy is transitioning and contain green elements, but generally “remain carbon-intensive”. So, China still has to ensure it does its fair share for the Paris Agreement domestically, but its recently announced goals are an important step towards this, especially in light of the pandemic and in a challenging geopolitical context.
Additionally, China invests in infrastructure abroad, influencing the way other countries decarbonise. There is reason to believe that these investments are not just guided by economic rationale, but are connected to China’s ambitions as a global power. We do not have enough data yet to understand how this would shape global emission trajectories, but we need to keep these investment flows in mind to have a better picture of decarbonisation (dis)incentives.
What implications does China’s Belt and Road Initiative have for decarbonisation?
China’s energy investments in other countries over the last two decades mostly went to fossil fuel projects, even though the renewables portfolio has been growing. Moreover, China builds transport corridors and industrial capacities, which will also increase emissions if this infrastructure continues to be high-carbon. Generally speaking, China’s investment spurs growth, and in the current economic model, it is emission-intensive growth. To be fair, this is probably true for much of the global infrastructure investment. To make the new infrastructure low-carbon, we need proactive policies both by China and by the BRI target countries.
Can you give us an idea of the scale of China’s investment through the Belt and Road Initiative?
It differs quite a lot from country to country, and it is rather difficult to get coherent numbers on the BRI. There is no single source of data and reporting, no project pipeline. The Emerging Economies Forum (EMF) cites the total “loan commitments and disbursements of all Chinese banks to BRI countries” by the end of 2018 amounting to USD 580-600 billion. This is comparable to the total commitments and disbursements of the World Bank Group in the period of 2013 to 2018 (almost 630 billion). Most sources agree that the most investments go to the energy sector, followed by transportation. There is no doubt that the BRI represents an amount of financing significant enough in order to study its economic, political and environmental impacts very carefully.
What does the Chinese investment look like in Kazakhstan?
In Kazakhstan, China has been investing long before Xi Jinping announced the BRI – choosing the Kazakhstani capital Astana to do so (now named Nur-Sultan). We see diverse projects: in energy, industry, transport, and agriculture. Most funds go to heavy industries, including petrochemicals, fossil fuels and transport infrastructure. Some projects invest in renewable energies, improve public transportation or build up manufacturing capacity. Overall, the majority of investments support the emission-intensive economic model of Kazakhstan although some low-carbon efforts add to the mix. There would likely be more opportunities for more low-carbon cooperation, if actively promoted by the government of Kazakhstan. For instance, low-emission transportation could provide a wide array of co-benefits, while also helping achieve the key goal of both Kazakhstan and China – transcontinental connectivity. But this is barely considered at the moment. Again, to “green” infrastructure and connectivity investments we would need ambitious, proactive policies. This is clearly an entry point for the EU to promote decarbonisation.
To read the full interview, click here.
[This interview originally appeared on mistra-geopolitics.se.]