The “Green Belt and Road”: China’s journey to carbon neutrality
The “Green Belt and Road”: China’s journey to carbon neutrality
In late September 2020, President Xi Jinping announced that China will achieve domestic carbon neutrality by 2060, showing a clear direction for China’s future energy investments. By exporting technologies and policies necessary for decarbonization, the new target is expected be used to pave a greener way for growth for the countries participating in China’s Belt and Road Initiative (BRI).
The current status and challenges in de-carbonising the BRI A recent study by Tsinghua University’s Institute of Energy, Environment and Economy provides a roadmap for reaching carbon neutrality.1 It shows steep declines in domestic fossil fuel investments and use, with a 96% drop in coal use by 2050, a 75% drop in fossil gas and a 65% drop in oil. If the power sector and heavy industries can’t adapt well to this transition, they may tend to participate in more high-carbon BRI projects.2 , published by the Global Development Policy Center at Boston University, Chinese companies and policy banks invested in or financed for at least 777 overseas power projects between 2000 and 2018. Coal projects are mainly in Southeast Asia, South Asia and Africa, accounting for 40% of these projects’ generating capacity. Three policy banks – China Development Bank, Exim Bank of China, and Agricultural Development Bank of China – were involved in the financing of 73% of those projects, significantly more than foreign direct investment from China, which was more focused on natural gas power generation.
China’s commitment to carbon neutrality is a market signal to its overseas investments In Egypt and Oman, proposals for coal plants involving Chinese companies have stalled, while renewable projects have succeeded. The Chinese company GCL signed a contract to build its first solar panel factory in Egypt in 2018. The Chinese solar company Yaowei stated in 2019 that it will set up a solar panel production plant in Zimbabwe, increasing access to the African market. Chinese firms are constructing the massive 950 MW concentrated solar power (CSP) and photovoltaic (PV) hybrid projects in the United Arab Emirates. Chinese SOEs have been involved in large renewables projects in Myanmar, Vietnam, Chile, Laos and the Philippines among others, and Chinese solar equipment is exported to dozens of other countries. Recent high-profile plans include Uganda’s 500 MW solar plant with China Gezhouba and Zambia’s 600 MW solar project with PowerChina.
Investment in Vietnam As Vietnam’s government has designed policies to incentivise the development of its renewables industry, Chinese companies have exported hundreds of millions of dollars’ worth of solar PV equipment to the country. The 600 MW Dau Tieng PV complex in Vietnam, the largest of its kind in Southeast Asia, will be developed by PowerChina, which also developed the 99 MW Bac Lieu offshore wind project, the 73 MW Soc Trang wind farm, the planned 550 MW Luning PV project and the 24 MW Fuhlen wind farm, which was Vietnam’s first wind development in 2016. Several other large renewables deals have been signed in the last year.
Conclusion: towards a greener future Willis Towers Watson works closely with Powerchina, Gezhouba, China Three Gorges, China General Nuclear and other Chinese SOEs, assisting them in implementing and investing in renewal energy projects including the above-mentioned Bac Lieu & Soc Trang Windfarm in Vietnam, various other onshore and offshore windfarms in Vietnam, Pakistan and Brazil, and PV projects in Myanmar, Pakistan, the Maldives and Africa.
