While every energy-saving bulb makes a difference, there are only a small number of existential frontiers in our efforts to deal with climate change.
Of these, China’s Belt and Road Initiative (BRI), involving over 70 countries from Central Asia to Latin America, has been dangerously ignored.
New infrastructure will be a major contributor to global carbon emissions over the coming decades, accounting for over half of new sources according to the World Economic Forum.
Such investments in countries involved in the BRI could make up as much as 60 percent of global infrastructure investments over the coming two decades.
That is, BRI-involved countries could be the single largest source of growing carbon emissions over this critical period.
A forthcoming report by Tsinghua University and partners has, for the first time, aggregated growth and carbon scenarios for BRI countries.
Notwithstanding data weaknesses and uncertainties, the results indicate that these countries are currently on track to generate emissions well above 2-Degree Scenario (2DS) levels based on current infrastructure investment patterns and growth projections.
BRI-involved countries could exceed their 2DS carbon budget by as much as 11 gigatons by 2030 and 85 gigatons by 2050.
In this scenario, these countries would account for 50 percent of global emissions by 2050, up from 15 percent in 2015, if all other countries succeeded in following a 2DS pathway.
More optimistically, emissions would be 39 percent lower if BRI-involved countries achieved “historical best practices.”
However, they would still fall short by 77 percent of the reduction required to align with a 2DS, resulting in their carbon emissions still exceeding the 2DS budget by a huge margin (38 percent) by 2050.
Making things harder, carbon emissions are usually locked in at the contractual stage of an investment.
Indeed, infrastructure development planning involves long lead times that predetermine technology choices, which in turn shape institutions, behavioural norms, and outcomes, including carbon emissions for decades to come.
This means that carbon emissions in BRI-involved countries could become largely locked in over the coming one or two decades.
Considerable efforts over recent years in raising awareness of investors about climate risks are to be applauded.
Yet these efforts are unlikely to be effective in preventing carbon-intensive investments in BRI-involved countries. Carbon- and climate-related regulations in these countries are scarce and when they exist they are often inadequately enforced.
Many carbon-intensive assets in countries involved in the BRI are less sensitive to economic stranding as they will sit on public balance sheets.
Many cross-border, carbon-intensive infrastructure investments are de-risked by public institutions, notably export credit agencies and development banks.
Reducing Belt & Road Emissions
There is an urgent need to act at scale to ensure that low carbon infrastructure investment becomes a norm in countries involved in the BRI. The BRI itself makes a difference in two ways. First, it increases the scale and pace of infrastructure investment, although to varying degrees in different countries.
Second, it raises the possibility of a more focused, leveraged set of climate-related interventions given the high concentration of financial flows and associated policy interest and influence.
Proposed here is a subset of four interconnected interventions. Countries involved in the BRI are the ultimate decisionmakers in matters concerning their own development, including infrastructure choices with their associated carbon and environmental outcomes.
A recent study by the OECD, the U.N. Environment Programme, and the World Bank, “Financing Climate Futures,” highlighted the many possible, positive choices that could deliver climate and development win-wins.
At the same time, it pointed to the many reasons that such choices were not being taken, including gaps in human and institutional capabilities, perverse incentives, and behavioural factors.