How China can become the world leader for solving climate change
The global climate change community is gathered for the United Nations Conference of Parties in Madrid, with the growing recognition that the world is not on track to meet its goals for addressing climate change. As governments search for ways to meet this shortfall, they are grappling with a shifting geopolitical landscape fraught with popular unrest and the damaging impacts of a changing climate. The need for leadership toward achieving tangible climate change solutions has never been greater.
This provides an enormous chance for China, the largest economy and carbon emitter, to live up to its rhetoric and announce concrete steps towards meaningful emissions reduction. Four years ago, China took such a leadership position at the global climate talks by eschewing decades old political divisions over developed and developing country responsibilities and putting concrete emissions targets on the table. This year, China has an opportunity to take bold action once again. The following are four steps China can take to become a world leader on climate change.
First, China should double down on its domestic commitments. China appears to be on track to meet or exceed most of its commitments under the Paris Agreement. The next move is to raise the level of ambition of those commitments and set a bold new vision for the long term. This will be difficult for China amid a trade war with the United States and less political will to tackle the issue of climate change in the face of more pressing concerns like air pollution and slower economic growth. But China still continues to be the largest market for renewable and nuclear energy technology. Its strategic interests to grow and be competitive in those sectors still drive a fair amount of policymaking and investments. The opportunity to create a strong vision over the next year for low or carbon neutral development would be potentially transformative.
Second, China should raise the standards for its international spending. Through its Belt and Road Initiative, China has been a dominant presence in infrastructure project development abroad for much of the 21st century, particularly in the emissions substantive energy sector. Even as it receives praise for cutting back coal power generation and investing in renewable energy capacity domestically, Chinese development banks have financed a quarter of a trillion dollars worth of new fossil fuel investments abroad, a quarter of which use coal, the worst polluting fuel, locking developing countries into this major carbon emitting source for decades to come.
China should align these investments with its carbon commitments. No government actors thus far have issued a law regulating environmental protection in overseas Chinese investments. The only requirement is for Chinese companies to comply with host country regulations. The Chinese State Council should follow the lead of multilateral development banks and introduce a “best nation standard principle” where the more stringent standard between China and the host country is adopted and enforced.
Third, China should engage in meaningful multilateralism with regard to its development investments abroad. On top of adding teeth to its own foreign investment system, China can have a positive impact through the multilateral forums it has established under the Belt and Road Initiative. China should use its position of leadership in multilateral forums such as the International Green Development Coalition to provide key technical assistance and incentives to improve standards wherever possible.
Finally, China should grow its green finance portfolio. China is the second largest issuer of green bonds. The green investment principles under the Belt and Road Initiative follow more than a decade of efforts by Chinese authorities to green its financial system and to share the financial and reputational risks of Belt and Road Initiative investment. The problem, as with most sustainable initiatives under the Chinese foreign investment system, is that these principles remain voluntary, with no mechanisms for rewarding good performance or for disincentivizing poor behavior.
China must look beyond new initiatives or working groups. It can greatly improve its reputation as a global climate leader and fulfill its desire to create a “Green Belt and Road” by doubling down on domestic climate goals, applying higher standards to its overseas investments, adding accountability to its multilateral forums, and growing its green finance portfolio. It is time for China to raise the ambition of its goals and hold its companies and the countries along the Belt and Road Initiative to strong environmental standards, rather than locking them into emissions heavy energy inconsistent with a habitable planet and sustainable future.
Sarah Ladislaw is the senior vice president and director of the Energy and National Security Program with the Center for Strategic and International Studies. Lachlan Carey is an associate fellow with the Energy and National Security Program with the Center for Strategic and International Studies.