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The blind spot in China’s net zero plans

04 December, 2020
Lou Del Bello

India, river, bridge, road, water

India, river, bridge, road, water
River in Assam, India | © Kushal Medhi/Unsplash.com

While China is embarking on a bold decarbonisation journey, its foreign investment portfolio remains carbon heavy and raises sustainability concerns.

China’s recent pledge to become carbon neutral by 2060 has ushered in a new wave of optimism within the global climate community, as well as created the momentum for Japan and South Korea to come forward with their own net zero emissions targets for 2050.

In what has been hailed as the most significant single action since the Paris Agreement, China, which is currently responsible for 28% of the world’s CO2 emissions, is set to reduce these emissions to net-zero. This step alone is expected to knock 0.3°C off the projected global temperature increase, according to the research team behind the Climate Action Tracker. China’s declaration has cast the country as a global leader that other nations will want to follow - and potentially do business with as it expands its portfolio of cheap clean technologies that could serve the entire planet.

But when it comes to international deals, environmental sustainability is not the only, or even the main concern. Over the past decade, China has struck business partnerships with many developing economies, providing finance and workforce to set up essential infrastructure, including transport and energy.

South Asia and South East Asia are among the regions where these partnerships are most one-sided. Pakistan, where China has funded extensive fossil fuel infrastructure, is now saddled with debt, and Myanmar’s solar industry is under a near Chinese monopoly. China also exerts a subtler but still meaningful form of control on seven of the region’s main rivers, including the Ganges, Brahmaputra and Mekong, and its relations and partnerships with downstream countries have been traditionally strained. From the Tibetan plateau, China regulates water flow into India through hydroelectric dams, which affects the local biodiversity, thwarting conservation efforts.

In China “there has never been any domestic regulation of the environmental impacts of overseas investments,” says Cecilia Han Springer, a senior researcher at the Global China Initiative within the Global Development Policy Centre at Boston University. “And I think that the new climate neutrality target just widens the gap between what they're doing at home and what they're doing overseas.” It is a very different set of objectives, which leads some Chinese businesses to look for partnerships abroad, she explains.

Through its flagship Belt and Road Initiative, China has supported massive coal development in countries such as Pakistan, where it has financed 9.6 GW of new capacity. At the same time, it has also boosted renewables, hydropower in particular, helping add 13.4 GW of capacity across the South East Asia region. “The interesting thing about the Belt and Road Initiative, especially with regards to the energy sector, is that there doesn't seem to be any sort of coherent strategy from the top,” Han Springer says, “other than having overarching objectives such as helping domestic companies go overseas.”

Sustainability concerns are also present when it comes to water resources. Last month, China offered nearly one billion US dollars in a loan to Bangladesh, India’s closest trading partner, for the restoration and management of the Teesta river, a main source of water whose levels are starting to dangerously dwindle due to climate change and dams installed upstream by India.

“The Teesta has been a bone of contention between Bangladesh and India for quite some time,” says Shahab Enam Khan, a security analyst and a professor with the Department of International Relations at Jahangirnagar University in Dhaka. “The water is controlled by India, the upper riparian,” he explains. “And upstream there are dams and flood control channels which can divert the water trajectory.” This flood control mechanism means that when India has excess water, they open the gates and Bangladesh gets flooded, and when they reinstate the water control system in summer, the downstream area suffers from drought. “This has been the practice for the last 60 years,” Khan says, “but it can’t go on like this forever.”

Bangladesh floated the idea of building a reservoir that would shield the region from sudden water fluctuations, and China offered the money and expertise to make it happen. “It’s not just a matter of money,” Khan explains. “They had the technology and know-how because they had already experimented with similar solutions in Tibet and other regions.”

Bangladesh is benefiting from Chinese help to restore its environment, but such ties may leave it caught in the middle of a trade war between China and the U.S., Khan says. The country’s main trading partners are China, when it comes to import, and the U.S., when it comes to export.

With its vast industrial portfolio and lending power, China is helping lift countries across South Asia out of poverty, and in some cases doing so sustainably. But while its presence is an economic advantage for the host countries, it may carry some long-term risks.

“There are many considerations when a country accepts foreign investments or loans,” says Ashley Johnson, assistant director for Energy and Environmental Affairs at The National Bureau of Asian Research in the U.S., “such as who will own and operate the project, does this create local jobs or give them away, what will be the size of the debt and how can it be repaid?” Ideally, she says, when planning an investment you would want these factors to align with long term goals for economic growth, energy access, and social welfare.

Catering to a country’s short-term needs without losing sight of long-term goals is “an increasingly hard challenge to overcome,” Johnson says. As an example, she mentions the need for electrification: while energy access is obviously a priority, “if the terms [of the deal] result in minor economic harm, like job loss, or major consequences, such as sovereign defaults, these are all factors that must be considered.”

Since the early days of the Belt and Road Initiative, however, poorer countries have become better equipped to balance their relationship with a powerful ally, making sure that China’s help does not come with long-term economic instability or environmental damages.

There are two main policy levers that host countries can pursue to ensure the environmental soundness of their infrastructure projects with China, Han Springer says. “One is increasing the ambition and the enforcement of their own environmental regulations. China tends to hide behind the guiding principle that it defers to host country environmental laws,” so the host countries can require Chinese companies to abide by strict environmental parameters. Countries can also insist on a project-to-project basis that Chinese businesses provide some kind of local benefits, whether that is employing local workers, or providing training and technology transfer.

The rise of the Belt and Road Initiative has also been accompanied by new regional initiatives put forth by other Indo-Pacific countries. “For example, both Japan and the United States have released strategies for a ‘Free and Open Indo-Pacific’ and part of these efforts are options for investment in clean energy development and transitions,” Johnson says. By putting more options on the table, such initiatives might increase smaller nations’ negotiating power, when they are concerned about the terms of a Chinese loan or investment plan.

Developing countries in South Asia and around the world are waking up to the caveats of China’s eagerness to do business. As setting social and environmental standards for some of the longer-standing investment partnerships with China might prove challenging, more informed plans for new investments are of key importance. And as China decarbonises its economy at home, being held accountable abroad may help shift the Belt and Road Initiative towards a greener path as well.

ArticleClimate Diplomacy
Topic
Climate Diplomacy

Region
Asia

Topics

Adaptation & Resilience

All countries will need to adapt to some of the environmental, social and economic impacts of climate change that are already unavoidable. Food security, livelihoods, water resource availability and public health are some affected areas. People living in poverty are more vulnerable, having a lower capacity to adapt. Thus, it is essential to promote resilience building. The adaptation and resilience aspects need to be mainstreamed into planning by policy makers and the private sector as well as integrated into development strategies.

Biodiversity & Livelihoods

Nature protection is most sustainable if it essentially contributes to the long-term stability of human needs. Today many regions around the world are confronted with increasing destruction of the natural foundations of life. The consequences of wide-ranging resource destruction are no longer regionally limited, but rather represent a global threat. Those affected are mainly rural populations, who find the sources of their income and the foundations of their way of life swept away. The depletion and destruction of natural resources goes hand in hand with decreasing agricultural yields and increasing poverty, which in turn forces the affected populations to deplete the remaining resources.

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Capacity Building

On the one hand, conflicts are caused by structural factors, such as economic and social inequality or environmental destruction. On the other hand, conflicts are fuelled by a lack of democratic structures, deficient mechanisms of non-violent conflict settlement, inadequate rule of law, the destruction of social and cultural identity and the disregard of human rights. Against this backdrop, development policies have been dedicated to a broad concept of security, which comprises political, economic, ecological and social stability. As a consequence, development cooperation agencies and actors have developed a broad spectrum of approaches for conflict prevention and transformation as well as for sustainable use of natural resources.

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Cities

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Civil Society

Civil society is the first victim of environmental pollution, under-development and conflicts. Economically disadvantaged and politically marginalized population groups are particularly affected by violent conflicts as well as increasing resource degradation. Simultaneously, civil society is a fundamental pillar for implementing sustainable development. It contributes in many ways to strengthening conflict prevention and plays a significant role in the peaceful and democratic development of states. It must be supported to strengthen civil rights, adherence to human rights in general and democratic participation.

Climate Change

Climate change resulting from the emission of greenhouse gases represents one of the vital challenges for international environmental policy. Flooding, droughts, shifting of climate zones and increasingly frequent and intense extreme weather events will have serious economic and social consequences for entire regions. The climate problem is also directly linked to the question of future energy generation.

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Climate Diplomacy

To address the challenges posed by climate change, a new profile of climate diplomacy is evolving. This utilises a full range of policies, including development cooperation, conflict prevention efforts, and humanitarian assistance, in addition to more traditional measures of climate change adaptation and mitigation. Moving from a risk analysis of climate-related threats to well-timed preventive action requires a greater commitment to integrating climate change concerns into development, foreign, and security policies. Examples include strengthening diplomatic networks, building new alliances with partners, and raising awareness – not only of potentially negative climate change impacts, but also of opportunities to embark on a sustainable transformation of our societies.

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Co-Benefits

Climate action entails an array of economic, social, political and environmental co-benefits. It provides an opportunity for economic growth and new jobs. Many investments can take into account climate considerations without becoming more costly. Further important co-benefits include: improved energy security, less local air and water pollution, health benefits as well as ecosystem and biodiversity protection.

Conflict Transformation

In order to overcome the structural causes of violent conflicts and thus bring about an improvement in the framework conditions for peaceful and fair development, it is essential to have long term and broadly planned peace development and peace advancement. Various governmental and non-governmental, national and international actors and groups are involved in these processes.

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Development

Climate change and development are inextricably linked. Climate change endangers the development agenda and has the potential to reverse development goals. Furthermore, successful mitigation of climate change heavily depends on development choices around the world. Therefore, development strategies need to be climate-compatible to provide long-term success, and there are viable policy options that support this compatibility. Many mitigation and adaptation activities can present development opportunities to developing countries and avoid the lock-in to environmentally damaging technologies.

Early Warning & Risk Analysis

The reasons for the development and escalation of conflicts and the incidence of risks are multifaceted and complex. Simultaneously, the assessment of the specific causes in the form of risk and conflict analyses can contribute to a better understanding of these processes and make it possible to provide warning of negative developments, or ideally help prevent them. In the context of natural resource use, risks and conflicts have gained increasing attention in the past years. The debate on possible future water wars is merely one example.

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Energy

The well-being of individuals, communities and nations depends on the availability of energy resources. The gap between energy supply and demand appears to be growing, making the world vulnerable to serious economic shocks. At the same time, the burning of fossil fuels causing climate change is one of the vital challenges of international environmental policy. So far, only rudimentary approaches exist for shaping climate and energy security in a sustainable way. The components of a strategy that can contribute to reducing vulnerabilities related to climate change and energy policy include a greater role for renewable energies, the improvement of energy efficiency and a stronger decentralisation of energy supply.

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Environment & Migration

The economic, social and environmental consequences of climate change aggravate the breakdown of eco-system-dependent livelihoods and are likely to become dominant drivers of long-term migration. Natural disasters already cause massive shorter-term displacement and the number of temporarily displaced people is likely to further increase with climate change. For vulnerable populations in vulnerable regions, such as the Sahel zone or the Ganges delta, migration often becomes the sole survival strategy. In order to address climate-related displacement and migration successfully, knowledge of effective adaptation and an improved understanding of how environmental change affects human mobility is essential. 

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Finance

Climate finance, from all sources, plays a key role in supporting and enabling adaptation and mitigation action as well as climate and energy innovation. The Paris Agreement ensured that the Green Climate Fund and the Global Environment Facility are at the core of climate finance architecture as entities entrusted with the operation of the Financial Mechanism of the UNFCCC. Increasing climate finance from all relevant public and private sources is crucial. Furthermore, much needs to be done to redirect finance flows to sustainable paths, e.g. reducing fossil fuel subsidies, introducing maritime and air transportation taxes. The conditions for green investment in developing countries should also be improved.

Forests

Forests are disappearing at an alarming rate. Competition for forest resources triggers, exacerbates, or finances numerous crises and conflicts in tropical developing countries. Illegal logging and timber trade foster instability and sometimes violent conflict by strengthening illegal and armed groups, increasing corruption and exacerbating use and claim conflicts among local communities, the state and the business sector. Forests are a vital resource to poor people but they can also become areas of conflict. Sustainable management of forest resources is therefore key to preventing violent conflict over and within forests.

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Gender

Gender plays an important role as a category of conflict for many reasons. The interlinkages between gender, environment and conflicts are complex and much research is still needed. Existing insights suggest that conflicts may worsen gender inequalities that existed before the outbreak of violence. The unequal distribution of land property rights in many parts of the world serves as an example. Moreover, women (and children) are among those most affected by both violent conflict and natural disasters. At the same time, women carry much of the burden of trying to implement rehabilitation measures after crisis events.

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Land & Food

Increasing water scarcity, desertification and crop failures due to extreme weather events are becoming more and more of a threat to global food production. While the world’s population continues to grow rapidly, food production is unable to keep pace. Due to the global food crisis in 2008, the number of hungry people reached the symbolic one billion threshold for the first time – corresponding to about 16 percent of world population. Food insecurity may be a consequence or cause of conflicts. Violent conflicts often lead to the destruction of agricultural infrastructure and means of production, as well as to the displacement of local communities.

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Minerals & Mining

In the past, the discovery and tapping of valuable or strategic resources like valuable minerals, oil and natural gas, particularly in developing and emerging countries, has often led to large scale environmental contamination and negative development. The "resource curse" of some countries shows that the wealth from resource yields is frequently unfairly distributed; instead of serving development it advanced the formation of corrupt elites and in some cases even led to conflicts and civil wars. Measures in various sectors and at all levels are important in order to use the potential of these natural resources in a manner that is sustainable and prevents conflicts.

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Private Sector

The spread of violent conflict not only affects people but also companies located in such regions. Destruction of investments and infrastructure, collapse of markets and trade partnerships, flight and expulsion of employees are phenomena of conflicts and environment-induced crises that directly affect companies in unstable regions. Almost all branches of the economy thus have a clear interest in a stable and peaceful environment for their activities. Conversely, the business sector plays an important role in the interaction of economic growth, social development and a healthy environment, all of which can advance peace and sustainable development. 

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Security

Environmental issues have a significant security dimension. Access to, and overuse of, natural resources often play a key role in civil wars or other forms of internal domestic conflict. This is compounded by climate change and environmental degradation. Climate change is now widely recognised as a non-traditional, risk-multiplying threat that will have increasing security impacts. Key risks with possible implications for human and national security include water scarcity, food crises, natural disasters, and displacement. More preventive diplomacy and advocacy is needed to address the strategic implications of climate and environmental change.

Sustainable Transformation

Sustainable Transformation allows societies to profit from a growing, environmentally sustainable and socially inclusive economy – especially in emerging and developing countries. This requires a higher up-front investment, but the benefits of a sustainable transformation in the medium and long term are significant. For instance, energy cost savings and reducing the impact of price volatility offer major incentives for deploying renewable energies and promoting energy efficiency. Such benefits exist in all key sectors of the economy.

Technology & Innovation

Innovations and technologies are already readily available and affordable but their global diffusion and uptake remains a challenge. Innovation and technology are crucial to achieving ambitious climate change mitigation and adaptation targets. However, research and development often do not receive appropriate public support. Developing countries can leapfrog high-carbon industrialisation phases by adopting, deploying and improving existing innovations and technologies. For this, it is essential to minimise financial, administrative and political barriers.

Water

The availability of freshwater resources in sufficient quantity and quality is essential for the preservation of human health and sound ecosystems. The use of water resources is also vital, however, for economic development: whether for agriculture, industrial production or for electricity generation. The world's freshwater resources are distributed very unevenly in terms of geography and seasons. In addition, water shortage is becoming more prevalent in several regions due to population growth, economic development, urbanisation and increasing environmental pollution. Thus, water resources can hold potential for conflicts between parties who have different interests and needs.

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Regions

Asia

The environment in Asia is already under tremendous pressure as a result of the unsustainable use of land, forests, water and even air in many regions. Climate change will only exacerbate these challenges. Rising sea levels will likely endanger densely populated areas, changes in the monsoon patterns can strongly impact agriculture, melting glaciers will increase long-term water scarcity, and extreme weather events such as heavy rainfall and cyclones can pose further hazards.

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Central America & Caribbean

Natural disasters and water scarcity are key challenges for most of Central America and the Caribbean. These challenges will become even more pronounced as the climate changes. Weak resource and disaster risk management and land disputes pose additional security challenges for large parts of the region. Several countries of Central America and the Caribbean have limited adaptive capacities as they face political instability caused by high social inequality, crime, corruption, and intra-state conflicts.

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Europe

As one of the most developed and most densely populated regions in the world, Europe makes heavy use of its resources, resulting in difficult trade-offs and negative consequences for the environment and ecosystems. Land is used for settlements, agriculture and dense infrastructure, creating problems of soil degradation. Water resources are stressed due to unsustainable agricultural practices. Despite nature protection policies, Europe continues to lose biodiversity at an alarming pace. Some of these trends are exacerbated by climate change, which is expected, for instance, to lead to shifts in water availability.

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Global Issues

Resource scarcities, environmental pollution and climate change are not limited by national borders, but often have a transboundary or even global impact. These issues interact with political stability, governance structures and economic performance, and can trigger or worsen disputes and violent conflicts. Exacerbating some of these trends, climate change is likely to lead to the degradation of freshwater resources, declines in food production, increases in storm and flood disasters and environmentally induced migration. All these developments pose potential for conflict.

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Middle East & North Africa

The geopolitical position of the Middle East and North Africa (MENA), its fossil fuel resources, high population growth and the political changes spurred by the Arab Spring all make the region one of the most dynamic in the world. Nevertheless, it is also one of the most arid and environmentally stressed. Dwindling water resources, limited arable and grazing land, high pollution from household and industrial waste, remnants of conflicts and increasing desertification are key environmental challenges.

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North America

Climate change has various impacts on the three North American countries of Canada, Mexico and the US. Canada and the US have well-developed adaptive capacities and foster the strengthening of capacities in other regions as well. With high per capita emissions, these two countries also bear a greater responsibility for a changing climate. Mexico has a sound national strategy for climate change adaptation, yet fewer capacities than Canada and the US. The poorer and rural populations of Mexico are especially vulnerable to climate change, due to an increased sensitivity and a lower adaptive capacity.

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Oceania & Pacific

In Oceania, population growth and economic development trends put a strain on oceanic and island ecosystems. Freshwater scarcity, overexploitation of fisheries, loss of land biodiversity, forests and trees, invasive species, soil degradation, increasing levels of settlement, poor management of solid and hazardous waste and disproportionate use of coastal areas are some of the problems. Climate change exacerbates most of these trends, while also raising questions about the future sovereignty of some island states.

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South America

South America has diverse and unique ecosystems and is very rich in biodiversity. Weak natural resource management, land disputes and extreme weather events bring about significant challenges for the region. While South America accounts for relatively few CO2 emissions, the changing climate will alter its ecosystems and greater climate variability will lead to more hurricanes, landslides, and droughts.

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Sub-Saharan Africa

In many African states, environmental security issues rank high on the political agenda. Throughout the continent, countries suffer from water scarcity, food insecurity and energy poverty. These chronic and worsening resource scarcities have severe livelihood implications and are exacerbated by political conflicts over access to and control over these resources. Climate change may seriously threaten political and economic stability in Africa. It may also put a severe strain on the capacities of states and societies to co-ordinate activities, to communicate and to organize.

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