Even as China has slashed its domestic carbon emissions faster than other countries, the absence of a strategy to divest from coal projects abroad and the lack of a clear definition on what constitutes green finance threaten to undercut its contribution in fighting the global climate crisis.
“China has yet to publish a climate strategy to shift its investment in coal overseas,” Bai Yunwen, executive director of Greenovation Hub, a Chinese think-tank on environmental governance said at the World Bank’s Innovate4Climate (14C) forum in Singapore on June 5. “If we do not cut overseas flow in coal, we will lose the war.”
The world’s biggest emitter of greenhouse gases, China is working hard to reduce its carbon emissions. The world must cut emissions by about 45 percent between 2010-2030 and reach net zero in 2050 order to limit global warming to 1.5°C. The Intergovernmental Panel on Climate Change said in its 2018 special report that capping global warming to 1.5°C could reduce risks to food security, economy and health.
A paper published in May 2019 by the Breakthrough National Center for Climate Restoration in Australia said that failure to drastically cut emissions gives rise to a scenario where about a billion people could be displaced by 2050.
“Green finance” v. “climate finance”
China, however, plays the conflicting roles of being the world’s largest investor both in fossil fuels and renewable energy.
While its renewable energy investments have reached US$44 billion in 2017, China has also invested US$35.9 billion in coal operations in 27 countries including Indonesia, Philippines and Vietnam, according to the Institute for Energy Economics and Financial Analysis.
“US$21.3 billion has been committed to over 30GW of coal-fired capacity across 12 countries, and an additional US$14.6 billion has been proposed in funding for over 71GW across 24 countries, adding up to US$35.9 billion in funding for 102GW of coal plant projects over 27 countries in total,” the IFEA said in its report “China at a Crossroads: Continued Support for Coal Power Erodes Country’s Clean Energy Leadership”.
Published in January, the report also said that the “country with the most coal-fired capacity supported by Chinese finance is Bangladesh, followed by Vietnam, South Africa, Pakistan, and Indonesia”.
Most of these countries are part of China’s Belt and Road initiative (BRI), a highly-ambitious infrastructure project in the world which targets the development of roads, railways, bridges and ports which will connect China to Asia, Europe and Latin America.
The BRI summit in April 2019 indicated possible green investments, however as it encouraged green finance including the issuance of green bonds, according to this Reuters report.
But even this can be a cause of worry sans a clear definition of “green finance.”
“We need a clear definition of green finance and climate finance,” Bai said. “In 2015 we already are the largest green bond market. There are a lot of activities labelled “green,” but are these projects compatible with the climate [target]?”
She added there were projects that support greenwashing, such as “clean coal and clean gasoline.”
“With no official definition, it will be hard to tell if the private sector will be part of the problem or will be part of the solution”.
China has only recently started to tackle removing coal from its new standards for green bond issuance, according to a report by Reuters in March 2019.
Bai furthered in an interview at the sidelines of the I4C forum that China should instead tap the clean energy market in the BRI countries.
“China has done a lot within China because we are facing air pollution, but we see a big demand from some Asian countries along the BRI for energy access and clean energy. It’s a big opportunity for the Chinese financial sector”.
Purple Romero (email@example.com) is a longtime contributor to Asia Sentinel. She is attending the World Bank forum in Singapore as an Asia Sentinel representative