Carbon Neutral by 2060? The Environmental Implications of China’s New Climate Target for Southeast Asia
On September 22, China announced its long term target to be carbon neutral by 2060 and reach peak CO2 emissions before 2030. This has been deemed a game-changer for international efforts to address climate change, especially seeing as China is currently the largest emitter, accounting for 24% of global carbon emissions.
China has also been considered a climate leader among developing nations (including among Southeast Asian states) for its ability to more accurately represent developing country concerns. As a result, its recent announcement may encourage Southeast Asian states to follow suit and up their climate commitments accordingly.
The potential effects of China’s declared target, however, must also be considered in the context of its Belt and Road Initiative (BRI), a key source of foreign investment in Southeast Asia. When this is taken into account, there is a risk that China’s commitment to carbon neutrality by 2060 could worsen environmental conditions in Southeast Asia, as the BRI could act as an avenue to export its emissions and lock in carbon intensive production systems for decades to come.
The BRI in Southeast Asia
Southeast Asia is a key site for the BRI: between 2014 and 2017, the region received a total of USD 46,869 million in BRI investments, accounting for the BRI’s largest share (30%) of investments. For many ASEAN countries, Chinese investment is incredibly appealing, as it offers a quick (and lucrative) solution – often with no strings attached – to meet increasing energy and infrastructure demands.
At present, energy accounts for the majority of BRI contracts and investments, and these have mainly involved coal projects followed by hydropower, while solar and wind energy projects remain limited. Coal is responsible for a significant proportion of global emissions, and hydropower – though not heavy on the emissions front – has been linked to environmental degradation, including biodiversity loss and water scarcity.
China’s BRI has far-reaching consequences for global climate emissions, as it has the potential to lock in carbon-intensive systems across the developing world for decades to come and lead to a 3℃ increase in global warming if not properly ‘greened’. A key question, then, is how China’s recent climate commitment will shape its BRI, and through this, how it will affect the sustainability of infrastructure development across ASEAN.
Improved environmental conditions through a greener BRI?
Though the details of China’s new targets have yet to be specified, one can expect there to be changes at the policy level, which are bound to shape the supply side of the BRI. According to a 2017 report by WWF and HSBC, 98% of BRI loans come from state-owned banks, of which 50% stems from the big 4 state-owned commercial banks (Bank of China, Industrial and Commercial Bank of China, Agricultural Bank or China, and China Construction Bank), 40% comes from the China Development Bank and 8% from China Exim Bank. The remaining 2% is miscellaneous.
Thus, there is a chance that we may see BRI loans from these state-owned banks issued with tighter environmental considerations, reflecting the government’s enhanced climate commitment. This would thereby translate into more low-carbon infrastructure development plans across Southeast Asia.
Unfortunately, however, this may be wishful thinking. Even before this recent announcement, China had been on track to meet its climate commitments domestically, and while stricter domestic environmental laws have resulted in some changes in corporate behavior overseas, this has not been consistent nor widespread. Further, there are concerns that the BRI will continue to act as a way for China to get access to new markets for resources (notably, coal).
In that sense, stronger domestic targets may actually indirectly incentivize China to export its emissions to regions like Southeast Asia, thereby worsening environmental degradation and increasing the region’s emissions.
The Mekong River is a telling example in this regard. China’s hydropower potential has been largely maxed out, yet there is still a consistent demand for energy domestically. As a result, China has begun tapping into Southeast Asia’s Mekong River’s hydropower potential (particularly in Laos and Cambodia, who have been referred to as virtual client states of China) despite criticism from domestic and international environmental groups. This upstream hydropower development has resulted in biodiversity and sediment loss, water scarcity, and disruptions in the river’s natural flood flows. The Mekong River faced one of its most severe droughts in 2019, affecting the livelihoods of the millions of people who depend on the river for food and income security. The severity of this drought has been attributed to Chinese dams that restricted the flow of water downstream.
Conclusion
As the world’s largest emitter, China’s declared long-term target of carbon neutrality by 2060 has provided environmentalists world-wide with a renewed sense of hope for international climate action. We must be wary, however, of the indirect repercussions of this objective. Though this could inspire developing nations across ASEAN to follow suit, there is also a risk that stricter domestic targets within China act as an incentive to export carbon-intensive strategies abroad to meet rising domestic energy demands and uphold economic growth. Should this be the case, environmental conditions in Southeast Asia – a major site for BRI investments – could deteriorate, as BRI projects may lock in coal-fired energy production, and carbon-intensive and/or environmentally degrading infrastructure across the region.
