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Will the G7 green initiative have more climate credit than China’s BRI? | Business and Economy News

During the three-day leaders’ summit starting on Friday, the Group of Seven (G7) is set to unveil a Clean Green Initiative (CGI). The massive infrastructure investment plan aims to go hand in hand with China’s Belt and Road Initiative (BRI) and counter Beijing’s growing global influence with a little checkbook diplomacy.

“This initiative aims to level the playing field for foreign investment between Chinese and Western companies,” Lauren Johnston, research associate at SOAS China Institute, told Al Jazeera. “Chinese companies – especially state-owned companies – can access finance that Western companies find it harder to get. “

While the exact scope of the CGI is still unknown, it will likely expand to the Blue Dot Network, the Indo-Pacific infrastructure development initiative supported by the United States, Australia and Japan, which has prioritized the financial transparency and environmental sustainability of each project as well as its impact on the development economy.

Part soft power, part domestic stimulus, China’s ambitious and amorphous BRI has sunk billions of dollars into projects in 68 countries, mostly in Asia and Africa, since its launch in 2013.

Critics say it has funded and built green carbuncles around the world, locking countries into unsustainable infrastructure, technology and resource extraction at a time when they are expected to embrace cleaner energy sources.

“China is facilitating priorities for national governments around the world that are not in line with long-term climate and development goals,” Rebecca Ray, senior researcher at the University’s Global Development Policy Center, told Al Jazeera. of Boston, noting that many BIS projects would not. t pass the environmental and social safeguards demanded by the multilateral development institutions dominated by the West.

Greening or greenwashing?

In a speech at the United Nations last year, President Xi Jinping pledged that China would peak in CO2 emissions by 2030 and aim to be carbon neutral by 2060.

However, when the world’s biggest polluter presented its 14th five-year plan in March, it set only one carbon target: reducing emissions by 18% per unit of gross domestic product over five years, which is equal to its 2016 target.

And at the Belt and Road Forum, Xi stressed the importance of reducing the environmental impact of the BRI; the new BRI green coalition then assigning each funding proposal a red, orange or green light mark in order to discourage the funding of polluting projects.

In a speech at the United Nations last year, President Xi Jinping pledged that China would peak in CO2 emissions by 2030 and aim to be carbon neutral by 2060. [File: Carlos Garcia Rawlins/Reuters]

Earlier this year, the Financial Times reported that Bangladesh’s desire to reallocate a $ 3.6 billion BRI infrastructure loan to coal projects – a move prompted by a coal-rich country keen to secure a cheap energy sovereignty – exerted negative pressure on China. The ensuing fury led Beijing to keep its promises of a greener BRI, telling Bangladeshi authorities that they would no longer support its coal projects.

The BIS was already moving away from funding coal projects, which peaked at $ 6.9 billion in 2017 and halved in 2019, according to data compiled by Boston University. Last year they represented barely half a billion dollars in funding.

But despite this pivot and China’s growing strength in renewable energy, there has been no leap forward in its financial support for green energy projects.

Beijing’s oft-stated targets could be hot air more than wind ($ 1.1 billion invested since 2011; none since 2017) and solar ($ 2.2 billion since 2010, nearly half of which in 2012), with a meager $ 493 million invested in geothermal energy. and $ 60 million in biomass production. These are eclipsed by the $ 48 billion invested by China in oil, $ 44.3 billion in coal and $ 41.2 billion in hydropower projects since the launch of the BRI, according to researchers at Boston University.

Beyond the brand?

China has consolidated its dominance over critical rare earth elements (REEs) which are used in energy storage and transmission as well as key high-tech and defense components. The country is home to more than a third of the known reserves of rare earths, and its mines extracted more than 60% of the world’s total rare earths in 2019, according to the US Geological Survey.

It is also the world’s largest importer of rare earths, leveraging its position in resource-rich regions of the developing world, particularly those with access to cobalt, a rare mineral that is an essential part of every lithium battery. .

“[China is] quite well placed in these supply chains and that obviously concerns American decision-makers, ”Kevin Acker, research director at the Johns Hopkins School of Advanced International Studies China Africa Research Initiative, told Al Jazeera.

At the Belt and Road Forum, Chinese President Xi Jinping stressed the importance of reducing the environmental impact of the BRI. [File: Jason Lee/Pool/Reuters]

Acker cited as an example a resource-versus-infrastructure deal that China struck in the Democratic Republic of Congo (DRC) before the BRI. In this 2008-2009 project, Chinese companies developed “copper and cobalt mines with a line of credit from the Export and Import Bank to finance mining and infrastructure projects,” he said. he declared.

The DRC produces 70 percent of the world’s cobalt, about a quarter of which comes from artisanal mines that often extract the ore by hand under conditions that Human Rights Watch described as “dire.”

But it is not clear whether the G7 CGI will have enough money to put more pressure on Beijing to strengthen the BRI’s environmental and social impact standards.

“My eyes will wonder if this turns into something beyond the mark. We are still waiting for the $ 100 billion that was committed in Copenhagen five years ago, ”said Ray.

And how the West will win the battle for hearts and minds in the developing world, as well as to achieve much-needed sustainable goals, may lie in a little empathy. China has a better understanding of what it’s like to be a poor country in need of finance or a reliable supply of electricity, Johnston said.

“They understand that you have to turn on the light first,” she said. “We have to be able to figure out how they can turn the light on in a green way. “

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