Belt and Road
Fostering China to lead by example and serve as a sustainable finance champion.
China is emerging as a major provider of finance for infrastructure, at home and abroad. Through its Belt and Road Initiative, China could meet renewable investment needs throughout the developing world — but right now the Belt and Road is more brown than green. China can either become a major force for financing sustainability, or it can help lock in high-carbon technologies and projects at a massive scale.
The Finance Center helps Chinese financial institutions and governments of countries engaged in the Belt and Road Initiative (BRI) identify sustainable finance opportunities. Our goal is to increase the likelihood that Chinese finance will flow toward sustainable projects and away from unsustainable ones. We focus on analysis of Chinese finance flows and sustainable investment needs in BRI countries, as well as building coalitions of key BRI stakeholders.
Our Belt and Road work aims to green and decarbonize BRI by redirecting Chinese infrastructure investments away from coal-fired power plants and toward renewable energy infrastructure projects.
China’s Belt and Road Initiative (BRI) is the most ambitious infrastructure investment effort in history, involving an estimated $4 trillion to $8 trillion of infrastructure investment in countries and geographies with the largest growth potential. China is the largest investor in BRI, and has signed energy, industry and infrastructure development agreements with 138 countries under the BRI.
These countries currently account for approximately 23% of the world’s GDP and approximately 28% of global carbon emissions, while representing the largest growth potential over the coming decades. Demand for renewable energy, as outlined in these countries’ Nationally Determined Contributions (NDCs), is estimated at approximately $470 billion of investment by 2030.
To fulfill China’s reiterated commitment to a green BRI, China’s investment and capital flows should move away from traditional high-carbon projects in BRI countries. We envision China launching more stringent regulatory frameworks and finance mandates, which can prevent Chinese corporates and financial institutions from investing into coal and other unsustainable projects. Working with Chinese and international partners, we are going to launch a consolidated tracking platform of Chinese investment flows in BRI countries, to enhance the data transparency.
We are a member of the BRI International Green Development Coalition, a coalition of international and Chinese organizations working across ten themes at the nexus of sustainability and development. Through the Green Belt and Road Initiative, we proposed a traffic-light system for red-lighting coal and other unsustainable activities from Chinese investors. This system can help categorize investments and hopefully drive investment toward more sustainable projects and technologies.
Photo Credit: Alberto Sánchez Cerrato/iStock.