Greening the Belt and Road Initiative to Support Low-Carbon Energy Transitions: Q&A with Rebecca Ray

Tunisia. Photo by Anastasia Palagutina via Unsplash.

With the support of the Chinese government, the China Council for International Cooperation on Environment and Development (CCICED) was established in 1992. As a high-level international advisory body, CCICED focuses on core issues of environment and development and has contributed to championing sustainable development in China. CCICED has also worked to build a bridge between China and the international community on the environment and development and has served as an effective platform for exchanging China’s green practices and international experience.

In a new special policy study (SPS) published by CCICED on greening the Belt and Road Initiative (BRI) to support global low-carbon energy transitions, a team of Chinese and international policy experts and researchers present a realistic approach for BRI participating countries to cope with the global climate crisis by focusing on three avenues for green BRI development: technical cooperation, financial cooperation and diplomatic cooperation. Kevin P. Gallagher served as an International Co-Leader of the project, while Cecilia Springer and Rebecca Ray contributed as SPS Members.

Below, Ray discusses the new SPS and details the key policy recommendations for greening the BRI to support global low-carbon energy transitions.

Q: What was your experience like working with CCICED as an SPS Member?

Q: What are the key policy recommendations for greening the BRI to support global low-carbon energy transitions?

RR: Through the BRI, China is building billions of dollars of infrastructure projects across the world. If the BRI is harnessed for global energy transitions, it can play a crucial role in closing the financing and technical gaps faced by developing countries in meeting their energy transition goals. However, that possibility is by no means guaranteed. In this SPS, we examine three pathways to use the BRI to support global energy transitions: technical cooperation, financial cooperation and diplomatic cooperation.

Technical cooperation entails building technological and environmental expertise of lenders, investors and host country governments along the BRI to successfully implement and oversee renewable energy projects. One innovative way is triangular cooperation, in which China contributes its technological resources and multilateral development banks or high-income countries contribute financial resources to train practitioners in BRI host countries. The SPS details this type of joint endeavor in Ghana and Zambia and finds that while this approach can be very useful, it could benefit from developing into longer-term platforms for continued capacity building.

Financial cooperation involves crowding in and guiding new sources of finance, by continuing to build green bond markets, blended finance opportunities and public-private partnerships. China’s history of coordination between state lenders and investors makes this avenue especially attractive for the BRI.

However, new and existing investors alike need guidance to make sure that their renewable energy projects are truly green – locally as well as globally. As previous research by the Boston University Global Development Policy Center has shown, even low-carbon energy sources can damage fragile ecosystems and the communities that depend on them if they are not well planned and designed, and in those cases, the projects face cancellation or suspension. To ensure projects are effective and long-lived, the SPS recommends Chinese lenders and regulators implement the “whole green lifecycle” to environmental management that was highlighted in the 2021 “Green Development Guidelines for Foreign Investment and Cooperation” issued by the Ministry of Finance (MOFCOM) in conjunction with MEE. This approach includes due diligence steps throughout project planning, design, implementation and completion to ensure all possible environmental risks are foreseen and mitigated.

Finally, diplomatic cooperation envisions developing the BRI into a collaborative platform for pursuing the growing global environmental consensus that has produced multilateral agreements, such as the Glasgow Climate Pact and the Kunming Declaration. To accomplish this, the BRI will need to develop new and stronger multilateral environmental bodies within the BRI platform to ensure environmental concerns are core to all major BRI decisions and strategies. With this intentional incorporation of environmental priorities, the BRI can step into its potential as a force for global climate change mitigation.

Q: What are the challenges of implementing the policy recommendations?

RR: The scale of the BRI is unparalleled. With the multitude of lenders, investors and state agencies involved, directing these efforts toward renewable energy and guiding the resources to make projects as sustainable as possible is an enormous task. That is one reason why the SPS recommends state lenders and government regulatory agencies take the lead in guiding investors through the “whole lifecycle” approach to environmental management.

Another significant challenge is technical: many developing countries have significant populations without electricity access currently, so building a new grid that is designed to absorb large amounts of renewable energy presents different challenges and opportunities than “greening” an existing grid. For this reason, the SPS recommends the triangular cooperation model to build the institutional capacity necessary to support energy transitions.

Q: What is the one policy change you would make overnight?

RR: If I could, I would make a change not in policy, but in the platform. Collaboration between China, the world’s largest bilateral creditor, and major multilateral development banks (MDBs) like the World Bank and the Asian, African and Inter-American Development Banks must be rapidly strengthened to close the financial, technical and environmental gaps that currently stand in the way of effectively and sustainably transitioning the world’s energy systems away from fossil fuels. MDBs have developed decades of expertise on the particular environmental and social challenges of operating in various national and local contexts around the world, while China has developed unparalleled technology and cost efficiency in the renewable sector. Global energy transitions need both types of resources, working in tandem.

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