There is huge potential for Belt & Road Countries to Cooperate with each other to promote sustainable development
The Countries participating in the Belt & Road Initiative have intensified their efforts to promote a green transition in recent years, by improving energy efficiency, investing in renewable energies, reducing carbon dioxide emissions intensity, controlling pollution and protecting biodiversity.
China is leading by example. Renewable energies accounted for 29 percent of China’s power generation in 2019, up from 17 percent in 2000. China now aims to peak its carbon emissions before 2030 and achieve carbon neutrality before 2060.
Other Belt & Road Countries also have carbon neutrality targets, including Hungary (2050), Slovakia (2050) and Singapore (in the second half of this century).
But despite the progress, Belt & Road Countries still have a long way to go to realize a green transition. For instance, their energy consumption per unit of GDP is still 40 percent to 50 percent higher than OECD average and their CO2 emissions per unit of GDP is 80 percent higher.
According to the International Energy Agency’s “sustainable development scenario”, the share of fossil fuels in total primary energy consumption globally has to be reduced to 56 percent by 2040, and the share of power generation by fossil fuels reduced to 24 percent. But the share of fossil fuels in the total primary energy consumption of the Belt & Road Countries is as high as 89 percent, and fossil fuels still account for more than 70 percent of their power generation.
Among the 60 countries with the most serious PM2.5 air pollution globally, about half are Belt & Road Countries. Further, considering Belt & Road Countries need for future economic development, without changing the growth model, their CO2 emissions and other pollutions will continue to rise rapidly.
To further promote their green transition and development, Belt & Road Countries should strengthen policies in the following areas.
First, they should change their growth models to improve the quality of growth. The most important is to shift from resources-driven growth to innovation-driven growth.
Belt & Road countries should also promote the circular economy and raise the efficiency of resources utilization
According to the fifth assessment report of the Intergovernmental Panel on Climate Change, to achieve the Paris Agreement’s goal of keeping the global temperature rise “well below 2 C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 C above pre-industrial levels”, CO2 emissions have to be reduced by 40 percent to 70 percent from the 2010 levels by 2050, and all countries should achieve carbon neutrality before the end of this century.
Global sustainable development, therefore, requires all the Belt & Road Countries to set appropriate carbon neutrality targets.
The second is to strengthen environmental protection legislation and control pollutions and emissions, and not to repeat the old way of “polluting first and cleaning later”.
Most Belt & Road Countries have environmental protection legislation. The key is to ensure the laws are effectively enforced.
The third is to use market mechanisms to protect the environment. Market mechanisms can also make emissions reduction cost-effective. One important measure is to eliminate fossil fuel subsidies. According to data from the IEA, among the 25 countries with the highest fossil fuel subsidies in 2019, 18 were Belt & Road Countries. Saved fiscal resources from eliminating fossil fuel subsidies can be used to subsidize renewable energies.
Despite the significant reduction in the cost of renewable energies over the last 10 years (for example, the long-term unit cost of solar power declined by 80 percent and wind power by 30 percent to 40 percent), these new energy sources require a very high initial investment and hence need government support.
Another way of using market mechanisms is to introduce a carbon tax. More and more countries are developing carbon markets, including Belt & Road Countries such as China, India, Thailand and Kazakhstan. Several Southeast Asian countries are also planning to develop or are in the process of developing carbon markets, such as Indonesia, the Philippines and Vietnam. But overall, the development is still in its nascent stage in most Belt & Road Countries.
The fourth is to promote green investment. According to a simple extrapolation of an Asian Development Bank study, over the next 10 years Belt & Road Countries annual infrastructure investment needs will amount to $2.3 trillion. It is critical to ensure these investments promote green transition and development. This requires investing in renewable energies, green transport, green agriculture and green technologies.
The fifth is to develop green finance. In most Belt & Road Countries, public resources are insufficient to meet their needs. Developing green finance is an important way to attract private funding for green development. Green finance has developed rapidly in China in recent years. China became the world’s largest green bond issuer in 2018 and 2019. But in many Belt & Road Countries, green finance is still in an early stage.
The last is to strengthen international cooperation. Most Belt & Road Countries are developing countries that may have not contributed a lot to global CO2 emissions historically but will be affected disproportionately by climate change.
Developed countries have an obligation to support them in their green transition. The Paris Agreement envisages annual funding support for climate mitigation and adaptation in developing countries to reach $100 billion by 2020 and a higher level by 2025. Developed countries should fulfil their pledges despite the difficulties due to the pandemic.
There is huge potential for Belt & Road Countries to cooperate with each other in green development. China, as the initiating country of the Belt & Road Initiative and the world’s second-largest economy, has an important role to play in promoting the green transition and development of Belt & Road Countries, through policy dialogue, knowledge sharing, better infrastructure connectivity, capital flows and trade and technological cooperation.