China's Belt and Road Plan Is Destroying the World

All Chinese-financed, coal-fired power plants built overseas use low-efficiency, subcritical coal technology, which produces the highest emissions of any form of power generation. Thus, China is destroying the environment.

By Sagatom Saha


China has continually assured the world that its Belt and Road Initiative (BRI) is a green project. 

At the first BRI forum in May 2017, Chinese dictator Xi Jinping touted BRI as a “vision of green development and a way of life and work that is green, low-carbon, circular and sustainable.” 

Similar promises were made at this year’s forum in April. 

However, China has long been the world’s largest exporter of coal power equipment, exporting twice as much as its nearest competitor. 

At the same time as the first forum, Chinese companies were building an estimated 140 coal plants abroad, including in countries like Egypt and Pakistan that previously burned little to no coal. 

At the current rate, Chinese coal plant developers will drive energy investments that make it impossible to limit global warming to safe levels. 

If Chinese development banks continue their current practices, then pollution will inevitably worsen around the world.

The Belt and Road’s Dirty Truths
Much of what Beijing touts as development assistance for power projects worsens pollution. 

Nearly 40 percent of Chinese Development Bank (CDB) and Chinese Ex-Im spending on electricity generation has gone toward coal. 

As a result, the amount of coal-fired generation Chinese policy banks are directly responsible for between 2013, the year that BRI was announced, and 2018 could generate enough electricity to power Norway or Poland.
This surge in coal-fired generation will come with a drastic emissions increase. 

Chinese development finance flows between 2013 and 2018, by conservative estimates, will contribute to annual emissions equivalent to that of the Netherlands. 

Overall, projects backed by Chinese development banks will produce more coal-fired power globally than clean energy generation, setting the path ahead in the wrong direction. 

If it were not for government support, then Chinese coal power suppliers almost certainly would not be as successful and global emissions would be fewer.
The CDB and Chinese Ex-Im financed power plants in thirty-eight countries since 2013, nearly half of which are fossil fuel-based. 

Most Chinese-financed, coal-fired power plants built overseas use low-efficiency, subcritical coal technology, which produces some of the highest emissions of any form of power generation. 

In more than one-third of countries, projects funded by the Chinese development banks increase national emissions intensity. 

That is, Chinese foreign aid makes those countries’ power sectors higher emitting than before.
The picture is even worse in countries where China has concentrated efforts. 

In Pakistan, where Beijing has focused massive amounts of BRI spending through the China-Pakistan Economic Corridor, China has financed so much coal that its power investments are more than twice as emissions heavy as Pakistan’s electric grid was in 2012. 

Overall, as Chinese development finance in a country’s power sector increases, it becomes harder for that country to lower emissions.
Beijing did not finance fossil fuel projects in more than half of the thirty-eight countries, but China’s non-fossil fuel projects constitute one-off investments over the six-year period. 

Moreover, nearly all those non-fossil fuel projects are not wind and solar but hydroelectric dams, which carry their own environmental damage. 

China’s hydroelectric projects portend ruin for millions of farmers and fishermen.

Better Alliances and Best Practices
The United States should not allow China to freely and falsely claim the mantle of global environmental and clean energy leadership. 

BRI marks a new era of U.S.-China global competition, in which Chinese funding for development and infrastructure projects could bring Beijing economic and strategic benefits at America’s expense. Take Southeast Asia, for example—Cambodia, Indonesia, Laos, and Vietnam all receive Chinese development finance for power generation projects. 

The region is home to the Straits of Malacca, the second largest oil trade chokepoint after Hormuz, several U.S. military installations, and the world’s fastest-growing economic market.
As it stands, Beijing is leveraging environmentally and socially harmful infrastructure projects for diplomatic capital that blunts America’s Indo-Pacific military presence and gives it a competitive advantage over the United States in an important emerging market. 

On the other side of Asia, Beijing-backed coal projects are, in part, helping the Chinese Communist Party deepen defense cooperation with Islamabad while worsening air pollution that already causes tens of thousands of premature deaths annually.
The State Department should highlight these environmental and social costs and the comparative advantage of U.S. power projects under Indo-Pacific Strategy initiatives, which seek to grow the region’s energy markets while minimizing environmental impact. 

If the United States firmly communicates the environmental and social costs of Chinese development finance, then Beijing’s reputation should suffer accordingly amid a growing global backlash to BRI.
Further, the United States should cement ongoing partnerships with Australia, India, and Japan—some of America’s strongest allies in the Indo-Pacific region—to internationalize new standards on “quality infrastructure.” 

Even with the creation of the new International Development Finance Corporation (DFC), the United States cannot compete dollar for dollar with BRI. 

This burden-sharing strategy will help pool and coordinate funds competing with Beijing.
The United States will find it difficult to sway countries away from Chinese development finance and China away from financing low-quality coal projects. 

That China has been supporting coal abroad while canceling coal projects at home is simple self-interest: Beijing sees coal equipment exports as a solution for excess industrial capacity. 

Beijing must keep legacy coal manufacturers afloat because the Chinese coal industry and steel industry, which depends on coal, supply roughly twelve million Chinese jobs. 

The United States should consider the important role that domestic concerns play in Beijing’s development assistance plans and pursue strategies that help assuage them. 

The Energy Department could facilitate projects to transition coal and steelworkers in both the United States and China into roles in the clean energy economy, such as the production and installation of solar panels and wind turbines.
Despite repeated claims of “green development,” Xi Jinping tacitly admitted BRI’s first phase has been an environment failure. 

After the second Belt and Road Forum, the Chinese Ministry of Foreign Affairs released a list of deliverables that include many efforts to make BRI greener. 

The United States can independently verify and communicate widely whether China is making progress toward these goals. 

Unless the United States challenges Chinese claims and competes with Chinese development projects, Beijing will continue to diplomatically benefit from asserting leadership with little cost.
Chinese development finance has an even more harmful impact than visible, given the low quality of Chinese coal technology. 

More transparency would allow the United States to engage China on BRI’s true environmental and social impact. 

If the United States can successfully push China to become a more responsible provider of development assistance, then global prosperity would grow, emissions increases would slow, and Beijing’s ability to deploy foreign aid at America’s expense would diminish.

China’s Belt and Road is conduit for polluting investments

China’s Belt and Road is spreading polluting investments around the world 
By Kelly Sims Gallagher

China’s Belt and Road Initiative (BRI) is the biggest vehicle for foreign direct investment in the world, but it is presently locking in outdated, dirty, and inefficient technologies in recipient countries rather than preparing them for sustainable prosperity in a carbon-constrained world.
 China must overhaul its social and environmental policies governing overseas investments to make them consistent with its domestic policies.
As China seeks to reduce its overseas investment risks, it should be conscious that social instability caused by air pollution and climate damage rank among the biggest risks of all.
 According to official Chinese government sources, the BRI is motivated by a desire to “promote an orderly and free flow of economic factors, highly efficient allocation of resources, and deep integration of markets by enhancing the connectivity of the Asian, European, and African continents and their adjacent seas”.
 China’s overseas investment flows hit a record $183bn in 2016, second only to the US and representing a 44 per cent increase over the previous year, according to Unctad.
In terms of overall stocks of foreign direct investment, China is also second only to the US with $4.7tn compared with the US investment of $6.4tn.
In terms of FDI stock, China is the largest investor in least-developed countries, the top investor in developing Asia, the third-largest investor in Russia, eastern Europe, and Central Asia, and the fourth-largest investor in Africa.
 For energy-specific projects, Chinese-led policy banks lent $160bn in overseas finance for the energy sector since 2000, nearly equalling total energy finance from the World Bank and regional development banks during the same period.
Some 80 per cent of China’s overseas energy investments are in fossil fuels compared with only 3 per cent in solar and wind and 17 per cent in hydro.
Although there are undoubtedly economic and development benefits created for Chinese investors and host countries deriving from China’s substantial FDI, there is growing controversy over the significant social and environmental impacts of China’s overseas investments.
 While local communities have protested the localised environmental effects of certain investment projects, broader concerns about the greenhouse gas emissions resulting from new long-lived infrastructure projects that could last 50-75 years for a new power plant, for example, are also emerging.
In addition, concerns have emerged about debt sustainability as well as geopolitical and national security issues.
 China’s policy banks, specifically the China Development Bank and China ExIm Bank, and state-owned commercial banks like the Industrial and Commercial Bank of China still actively lend for coal-fired power plants. 
 While China’s policy or state-owned commercial banks have never formally limited their investments in coal-fired power plants, the Chinese government did state that “China will strengthen green and low-carbon policies and regulations with a view to strictly controlling public investment flowing into projects with high pollution and carbon emissions both domestically and internationally” in the context of a 2015 US-China Joint Statement on Climate Change at the Presidential level.
 Of course, recipient countries could limit new coal power plant construction through their own domestic energy, air quality, water, and climate policies.
In 2016, colleagues and I determined that between 2001 and 2016, Chinese financial institutions supported the construction of more than 50 coal-fired power plants abroad that were either under construction or operational. 
 A majority of these power plants, or 58 per cent, used sub-critical coal technology, which is the most energy inefficient form of coal-fired power plant and, therefore, the type that is most carbon intensive. 
We then estimated that on an annual basis, this fleet of more than 50 coal-fired power plants would release nearly 600m metric tons of carbon dioxide per year, which is equivalent to 11 per cent of total US emissions in 2015. 
 While the governance system for overseas investments has matured, the policies governing the environmental dimensions of China’s FDI are relatively weak and mostly voluntary in nature.
 The policies governing China’s overseas investments remain inconsistent with the policies that govern domestic investments.
Chinese companies and investors are solely required to adhere to the environmental policies and preferences of the recipient country governments, and even then, there do not appear to be serious enforcement consequences for companies or banks that fail to do so.
 Policies specifically aimed at limiting emissions of climate-altering greenhouse gases from China’s FDI do not exist.
 Many observers have suspected that one purpose of the BRI is to provide a pressure relief valve for China’s legacy industries. 
On the other hand, the Chinese government’s go-out strategy and industrial policies in support of strategic industries could result in a considerable amount of new “green” investment overseas given many of China’s strategic industries are, in fact, green industries.
 The relatively recent solar investments in Pakistan are a good example of the alignment between strategic industry promotion and the provision of green finance.
It is important to remember, however, that the predominance of China’s global energy investments between 2000 and 2016 were in fossil fuels — $54.6bn in oil, $43.5bn in coal, $18.8bn in natural gas — compared with $2.4bn in solar, $1.7bn in wind, and $24.9bn in hydropower.
 Domestically, the Chinese government is making a tremendous effort to promote and unlock green finance, and there are undoubtedly spillovers from the domestic provision of green finance to BRI countries.
The remarkable growth of China’s green bond market, for example, provides evidence that there is a strong appetite for green growth inside China.
International investors also appear eager to invest in green financial instruments within China.
The question now is how to apply these same instruments to outbound investments, especially within the BRI.
The first place for the Chinese government to start is to overhaul the policies governing those overseas investments.