China turns its back on BRI’s coal projects in Bangladesh

China has told Bangladesh it will not fund polluting coal mines and power plants, as Beijing has taken the first interim steps to deliver on its promises of sustainable Belt and Road investments.

In a letter viewed by the Financial Times, the Chinese Embassy in Bangladesh informed the local Ministry of Finance that “the Chinese side will no longer consider projects with high pollution and high energy consumption, such as mining. coal. [and] coal-fired power stations ”.

The letter, sent last month during negotiations for more than $ 3.6 billion in infrastructure loans agreed in 2016 that Dhaka now wants to reuse, was a rare signal of Beijing’s reluctance to fund polluting coal projects in under the Belt and Road initiative. The BIS is that of President Xi Jinping signature foreign policy to strengthen China’s trade and infrastructural ties in dozens of countries.

He marked “the first indication I saw of [China’s promises of a green BRI] translate into action on the ground, ”said Simon Nicholas, Australia-based analyst for the Institute for Energy Economics and Financial Analysis.

However, it remained unclear whether the letter from the embassy was simply a reflection of conditions in Bangladesh or a wider abandonment of charcoal, he added.

The Bangladeshi government’s support for the energy sector has become a financial burden due to the overcapacity of power plants and the rising cost of imported coal.

Nicholas noted that Beijing has yet to publicly declare its intention to curb the development of coal-fired power overseas, and that its failure to do so could hamper the transition to renewables in BRI countries. who are looking to China for funding.

Vietnam was the biggest recipient of foreign energy investment by Chinese companies in 2020. ICBC, the Chinese commercial bank and the Southern Grid utility are in talks to resume funding for the 2GW Vinh Tan 3 power plant after Mitsubishi pulls out Corp due to concerns about climate change, Vietnam state media reported last month.

At home, China has also sent mixed signals about its willingness to reach peaks in carbon dioxide emissions. Xi did not confirm his surprise promise that China would be “Carbon neutral” by 2060 with the strong political measures that climate activists had hoped for in the country’s latest five-year economic plan, released last week.

Environmentalists have identified the BRI as a central element in determining whether developing countries can develop their economies properly and without compromising the Paris Agreement goals of keeping global warming below 2 ° C below pre-industrial levels.

Without investment in renewables and other green technologies, BRI countries could account for more than half of global carbon dioxide emissions by 2050, up from around 26% today, in 2019. to study found.

China has repeatedly promised that the BRI will be based on “pro green development”. A study supported by the Chinese Ministry of Ecology and Environment published in December called for a negative list polluting projects to discourage investments harmful to the environment.

Chinese companies for the first time made most of their energy investments last year renewable projects.

But trade deals risk falling out of line with this broader sustainability agenda as long as companies retain an appetite for investment in coal, said Christoph Nedopil Wang, director of the Green BRI Center in Beijing.

“If this were to become a broader trend for Chinese overseas investment, ideally we would have a clear and strict political announcement from a high level of government – as high as possible,” he said. declared.

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