11TH SSD ON 14 JULY 2022

[Featured Photo: The Sino-Singapore Dialogue speakers. From left: Dr Zhang Shuwei (Director and Chief Economist, Draworld Environment Research Center), Mr Ignatius Lim (Senior International Advisor, Shell Eastern Petroleum), Dr Zhang Junhua (Senior Associate, European Institute for Asian Studies), Mr Goh Kong Yong (Managing Director, Stratagem Group) and Mr Philip Lim (Director and Principal, RHT Green)]

The Green Belt & Road Initiative

The eleventh Stratagem Group – Nanyang Technological University (NTU) Sino-Singapore Dialogue was held in conjunction with the ‘Lien Fellows Reunion Dinner’ on 14 July 2022. The dialogue was themed “The Green Belt & Road Initiative” and involved international speakers from China, Germany and Singapore. The Belt and Road Initiative is a China-led effort to promote economic development and inter-regional connectivity in 147 countries (as of Mar 20221) and is arguably the largest single investment in infrastructure in generations. The Sino-Singapore dialogue was moderated by Mr Ignatius Lim, International Advisor of Shell Eastern Petroleum, on the relevance of The Green Belt and Road Initiative (BRI) and how this initiative can lay the foundation for regional cooperation in the areas of Green Technology, Green Infrastructure, Green Financing and Green Distribution and help Asia achieve climate neutrality, protect biodiversity and improve livelihoods. The Sino-Singapore Dialogue was well received with registered participants from across multiple industries and countries from the region.

Dr Zhang Junhua, Senior Associate of Centre of European Institute for Asian studies shared that the Indo-Pacific Economic Framework (IPEF) a U.S.-initiated trade and development partnership, was a move to counter China’s Belt and Road Initiative. However, this competition between US and China does not mean confrontation or conflict. This newly emerged competition to cooperate with Indo-Pacific nations for development projects presents a unique opportunity for the developing nations. It would help promote a positive and effective economic environment for the region.

Dr Zhang Junhua highlighted that the Belt & Road initiative (BRI) is a concept that is constantly evolving. Some drivers for China to shift towards Green BRI include (1) the need to improve its international image. President Xi Jinping has widely advocated ‘Green Economy’ and it has become a standard domestically. As part of China’s foreign policy, it is important to extend this green standard to BRI; (2) the need for funding support from international financial institutions. In order to leverage private green investment for BRI projects, China will have to ensure that the initiative complies with international standards; and (3) the need to cooperate with ASEAN nations. ASEAN nations are the driving force of the global economy and it is the world’s most dynamic regions in terms of economic growth and electricity demand. These nations are also prone to the effects of climate change and face an urgent need for green transformation thus it is key for China to be part of this transformation through Green BRI.

China faced challenges for the implementation of Green BRI. The ‘Foreign investment cooperation green development work guidelines’ introduced by the Chinese government are not enforceable by law. Unlike the state-owned enterprises, private companies are less inclined to abide by these guidelines. Secondly, green financing is still nascent. It requires very detailed scientific work to categorise all the BRI projects into green, yellow or red. However, these projects need to be evaluated before they can be evaluated for funding eligibility. Thirdly, there is a need for institutional embedment and integration across BRI. In April 2019, China launched the BRI International Green Development Coalition (BRIGC) being jointly initiated by Ministry of Ecology and Environment of China and international partners. BRIGC aims to promote international consensus, understanding, cooperation and concerted actions to achieve green development of BRI through joint efforts, and to facilitate BRI countries to implement integration of environment and development of the Sustainable Development Goals.

Dr Zhang Shuwei, Director and Chief Economist of Draworld Environment Research Centre, highlighted that the critical question is ‘How green is green?’. It is important for China to set the targets and standards for Green BRI, whether the goal is to replace gas in 10 years’ time or to limit global warming to 1.5 degrees Celsius. This would define the success factors and shape the actions required to achieve Green BRI. Due to the Russian-Ukraine crisis, energy transition is overshadowed by energy security concerns especially in Europe as they are highly reliant on energy imports from Russia. Dr Zhang observed that clean energy transformation is a multi-dimensional issue and requires constructive frameworks to evaluate the trade-offs. He foresees that the Green BRI would face more challenges in the future due to changes in geopolitical dynamics. China will have a new government after 20th Party Congress in October 2022 and the United States will hold its midterm elections in November 2022. It is also key to look at the role BRI will play for China in terms of pushing its political and economic agenda.

Mr Philip Lim, Director and Principal of RHT Green, discussed about the need for transparency for BRI projects. He proposed a global commons database of all investments and contracts including the terms of engagement and the stakeholders involved. Another concern for Green BRI is debt sustainability for BRI countries. Mr Lim highlighted the need to mitigate debt vulnerabilities post BRI; this could be achieved by prudently managing debt to GDP ratio.  China leads the world in solar, wind and hydropower technologies. There are plenty of ‘innovation catch-up’ opportunities for the countries involved in BRI. For developers, co-locating multiple renewable assets (onshore wind, solar PV and battery storage assets) into a hybrid project can lead to more efficient infrastructure usage, access to additional revenues, reduced development costs and reduced risks. This would benefit the governments, renewable developers and clean energy consumers. According to a 2022 study done by IHS Markti, there is scope for greater collaboration amongst recipient ASEAN nations as some still displayed low grid readiness, policy and regulation readiness and technology readiness. Mr Lim proposed that BRI can explore new collaboration models and new technology transfer practices. An example would be involving the BRI countries to create an industry fund to support start-ups with breakthrough clean technologies.

During the dialogue, there was unanimous consensus that infrastructure development plays a key role in transitioning to a green future. The Green Belt and Road Initiative (BRI) offers a new development paradigm by investing in green infrastructure in emerging and developing economies. As the world’s largest manufacturer of solar panels, wind turbines, batteries and EVs, China is well positioned to help deliver low-carbon technologies to developing nations as part of its BRI. However, a complex ecosystem of public and private stakeholders will be needed to facilitate these infrastructure projects, supported by international standards and forward-looking climate policies. Going forward, China together with policy-makers, infrastructure developers, financiers and investors can further cooperate to promote the implementation and scale-up of green infrastructure projects, supported by conducive policies and financing mechanisms.

1Based on www.yidaiyilu.gov.cn