19 September 2019

China Exports Pollution With BRI Funds Despite Pledge for Sustainability

China is the world's largest manufacturer of solar power equipment, and also one of the largest financial backers of coal-fired power plant development. The Belt and Road Initiative (BRI) has been touted by China as a means of creating a sustainable development culture globally, but the reality is something very different.

There is a tremendous amount of Chinese development money flowing into nations in South East Asia, as well as Africa. The BRI seeks to build-up a logistical chain that will allow Chinese products to flow West, with Chinese-owned factories and ancillary development all along the way.

Chinese President Xi Jinping has expressed his desire to see the BRI bring sustainable development to some of the poorest nations on the planet. China certainly has the ability to do this, but it does not appear to be happening.

According to Martin David, who is Asia-Pacific head of projects practice group at global law firm Baker McKenzie:

"While Chinese officials have signaled a move towards more sustainable projects in BRI nations, I don't see this materially changing Beijing's [real-world] funding of infrastructure projects [in partner nations]."


The BRI Appears to Run on Coal and Hydro

Xi stated directly that the BRI investments must be green and sustainable at the second Belt and Road Forum in Beijing, which was held last April. He also said that the BRI would be focused on high-quality growth with zero tolerance for corruption and an emphasis on transparency.

At the moment Chinese investment abroad is backing nearly 100 gigawatts of new coal-fueled power plants, many of them in China's poorer neighbors to the South. Nations like Cambodia, Myanmar, Indonesia, and Laos have been big recipients of Chinese development money, but they aren't getting much in the way of Chinese solar technology.

Instead, these nations are getting massive hydroelectric projects (which sound good in principle due to the near-zero carbon emissions, but in practice, they aren't) and multi-billion dollar coal power plants. The reasons why China is keeping its solar tech at home probably has to do with the costs associated with developing power projects and the desire for reliable base-load generation.

There isn't much difference in the planning costs for a $50 million USD solar generation facility when compared to a $800 million USD thermal coal project, so Chinese developers seem to be opting for larger-scale projects that offer better potential for profits.

This dynamic seems to be especially prevalent in the hydroelectric electric space. Chinese developers have built hydro plants in Cambodia that currently account for around half of the nations generation capacity, but this level of hydro development can be catastrophic for the river ecosystems.

Within the nations of Thailand, Cambodia, Myanmar, Laos, and Vietnam, Chinese money is behind 8 gigawatts of coal power projects, and 137 hydropower projects spread across Myanmar, Cambodia, and Laos that will produce an impressive 65 gigawatts of electricity when completed. There is no way to know how this level of human intervention will affect the river systems in South East Asia, but there has been an outcry from environmental groups over the build-out.

Local Resistance to Chinese Development is Growing

China has seen a number of problems develop in connection to its foreign investments over the last year. The 1MDB scandal in Malaysia was mostly financial in nature, but Chinese power projects in Indonesia and Kenya are being fought on environmental grounds.

A Chinese developer had been planning to use Chinese loans to build a coal power plant close to the seaside town of Lamu, in Kenya, which is a Unesco World Heritage Site. According to the BBC, the National Environmental Tribunal has halted development on environmental grounds.

The local people of Lamu have protested the development of the power plant, and are concerned over the pollution it may cause. The development of the coal-fueled power plant was halted in part because Kenya's National Environment Management Authority (NEMA) allegedly granted the plant's license without any sort of environmental impact study, or public consultation, which is flatly illegal in Kenya.

Chinese developers are also facing public opposition in Indonesia, where a deal backed by China Huadian Engineering is currently on hold after the Indonesian corruption watch-dog learned that the Chinese company's local partner had bribed officials to win the $900 million USD infrastructure project.

There is little doubt that Chinese investments are creating infrastructure in some of the poorest nations on earth, but the types of projects are not always in-line with the stated goals of the BRI.

China has the ability to create sustainable infrastructure in impoverished nations who are accepting Chinese development money, but it appears that outdated, dirty, and environmentally destructive power sources are being built at a rapid clip instead.