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Greening China’s Belt and Road Production Capacity Cooperation and Development in Energy-Intensive Industries

By The Natural Resources Defense Council

Abstract

The countries along the Belt and Road, including certain EU member states, have a combined population of nearly 5 billion people, with a total economic output of approximately $39 trillion USD, reaching 70% and 52% of the global totals respectively. In general, the infrastructure in these areas is relatively outdated, and it is estimated that the annual infrastructure investment needs for these regions is over $1.5 trillion USD. As such, cooperation on infrastructure is a top priority and focus for the Belt and Road Initiative (BRI), and this will drive great demand for cement, steel, and glass, as well as significant energy consumption growth in BRI countries. Noticeably, in many of these countries, the industrial base for these high energy-consuming industries is weak, and production capacity is very low.

Chinese industry has outstanding advantages in terms of scale, technological sophistication, energy conservation and environmental protection, and international competitiveness. Given these advantages, there is significant room for cooperation with BRI countries. This capacity building cooperation will greatly support the development of relevant industries and infrastructure in BRI countries, driving local economic development and employment. At the same time, many BRI countries are densely populated, with significant economic and social variance, different religious belief and cultural traditions, a fragile ecology, and a weak foundation for environmental management, creating significant risk to the environment. Additionally, investment in high-energy consuming industries can have a “lock in effect,” due to significant environmental impacts and high carbon emissions. Environmental risks bring greater project and financial risks, affecting the image and reputation of Chinese industry, and the BRI’s cooperation and development efforts as a whole. Therefore, when promoting the development of production capacity in relevant industries, it is vital to consider the question of how to promote green, low-carbon cooperation in BRI countries.

This report assesses the progresses of BRI’s cooperation in related industries, analyzes the demand for production capacity along the Belt and Road, and discusses advanced pollutant emissions, energy consumption, water consumption, and carbon emissions standards and regulations at home and abroad. The report also introduces, for the first time, the voluntary “Green Capacity Cooperation Index System” for the BRI cooperation.

In order to promote green Belt and Road development and the realization of the United Nation’s Sustainable Development Goals, we suggest that the relevant industries 1) Realistically analyze the needs of key areas and countries, including advanced planning based on research and science; 2) Identify the comparative advantages of relevant industries in China, support and advocate for cooperation in these advantageous areas and in green production capacity, and oppose the use of outdated equipment specified in China’s relevant industrial policy and structural adjustment catalogue; 3) Recommend that the indicator system be used as the basis for industry self-governance, serving as the principles for green investment and financing for financial institutions, and references for the related policies and regulations’ development . Additionally, relevant industries should further study the variance of indicators in different countries and regions, with different resource conditions, working conditions, and different needs. Those related institutions, including research institutes, industry associations, financial institutions and policy-making departments should adhere to the principle of seeking truth from fact, formulating guidelines for green production capacity cooperation with the relevant industries in BRI countries.

 

Please click to read full report.

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