A government-backed coalition of international advisors to the Belt and Road Initiative (BRI) has recommended that China apply more stringent environmental controls over its outbound investments. If adopted, this would be a significant departure from China's usual approach of deferring to host countries often inadequate rules for regulating its overseas investments.
Chinese companies and financial institutions have primarily adhered to the "host country principle." The principle emphasizes compliance with host countries’ environmental and social regulations. However, the inadequacy of the safeguards in many Global South countries that make up the majority of BRI participant countries is often used as an excuse to lower the standards for China’s outbound investments.
Clean energy is growing at a breathtaking speed inside China. However, a majority of the energy infrastructure Chinese companies are building overseas is coal-based. Many such projects are of the low-efficiency type that China itself has gradually phased out. This creates a stark contrast between China's domestic green transition and its footprints across the world. The proposed classification methodology intends to address this contrast.
For instance, it is proposed to give coal-fired power plants a firm red light. Simultaneously, other types of Chinese overseas investments, such as hydropower and railways, would need to implement internationally recognized mitigation measures to earn "green" status. On the other hand, solar and wind power are considered green projects that advance the Paris Agreement's climate goals.
Click here to read the original article published by Eco-Business.
Please give your feedback on this article or share a similar story for publishing by clicking here.
