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China’s overseas energy engagement in Belt and Road Initiative (BRI) countries in the first half of 2023 was the “greenest” in terms of project type since its start, according to new research published on Tuesday.
According the report from the Green Finance and Development Centre (GFDC) at Fudan University in Shanghai, 56 per cent of China’s US$8.61 billion (S$11.45 billion) in engagement, which they define as construction and investment, in the energy sector in BRI countries during the first half of the year went into renewable energy such as solar, wind, or hydropower projects.
“If we continue at this pace, 2023 would be the year with the largest green energy investment,” GFDC Director Christoph Nedopil told Reuters.
Chinese President Xi Jinping launched the BRI in 2013 to harness China’s strengths in financing and infrastructure construction and “build a broad community of shared interests” throughout Asia, Africa and Latin America.
However, the initiative has been accused internationally of supporting the development of environmentally damaging energy and infrastructure projects, as well as saddling developing countries with unsustainable levels of debt.
With renewable energy projects rising, fossil fuel engagement this year fell to its lowest since the BRI started, the GFDC report showed, with 44 per cent in oil and gas and no new coal engagement. In 2022, fossil fuels accounted for around 61 per cent of energy engagement in BRI countries, the report said.
The GFDC did note that in January Pakistan approved a 300 megawatt coal power plant to be built by China, but it was not included in the tally because it has not reached financial close.
“Green-related investments, including in metals relevant for the energy transition, have been seeing very significant Chinese engagement,” Professor Nedopil said.
China’s overseas engagement in the metals and mining sectors surged by 131 per cent from the same period last year, supported by Chinese players’ expansion into international lithium and copper mining and processing sectors, the report noted.
“Overall, China’s BRI engagement seems to become more strategic, in regard to both economic and industrial aspects: more bankable projects relevant for China’s and the host countries’ industrial development – and luckily many of these projects can be green,” Prof Nedopil said.
