Research Report

Greening the Belt and Road: A UK-China collaboration

Posted: 9 May 2019

Resource Type: Research Report

Download

$8tn BRI investments are expected by 2049

Financing Belt and Road Initiative (BRI) infrastructure brings not just opportunity, but also a responsibility to ensure that new infrastructure
projects in BRI countries meet high environmental standards.

Globally, 70% of greenhouse gas emissions come from the construction and operation of infrastructure. As BRI countries will host significant new infrastructure in coming decades, greening the BRI is critical to building the low carbon development paths of many emerging countries for decades to come.

China and the UK are working in close partnership to further the international collaboration needed to achieve the ambitious endeavour of greening the BRI. In 2018, the UK and China jointly published the Green Investment Principles for the Belt and Road. These voluntary principles aim to harmonise green infrastructure standards along the BRI, to increase the use of green financial products, and ultimately to vastly reduce the emissions footprint of the BRI.

China, a key trade partner and investor in many BRI countries, is in a natural position to shape the green growth of BRI trade corridors. Between 2013 and 2018, trade between China and other BRI countries amounted to $6.47tn,
which is phenomenal considering that total global merchandise exports in 2018 reached $19.5tn.

The UK, with its concentration of 250 foreign banks, provides a global platform for multilateral development banks and private sector players to co-finance major BRI projects. The UK’s professional services, insurance and maritime firms also provide critical support to BRI deals’ robust financing structures and ensure that risks are well mitigated and diversified.

Alongside supporting climate commitments, investments which fulfil internationally recognised green standards are commercially savvy, so offer investors a pathway to longterm stable returns.

Greening the BRI is a long-term vision. Partnership between China and the UK provides a once in a generation opportunity to set industry standards and mobilise private sector capital to accelerate a global low carbon transition.

Sources: City of London, World Economic Forum,
The Belt and Road Portal, UNCTAD
 

Opportunities

Global gas emissions construction image

70% of global greenhouse gas emissions

come from construction and operation of infrastructure. As BRI countries will host most of the world's new infrastructure in coming decades, greening BRI is an imperative to meet the below 2 degree aspiration of the Paris Agreement.

BRI countries greenhouse emissions

 

Global greenhouse gas emissions

BRI countries currently account for 20% of global greenhouse gas emissions but this ratio could rise to 2/3 by 2050.

Greening BRI is an opportunity to avoid such greenhouse gas emissions escalations.

$8tn

BRI investments are expected by 2049

30%

of investable assets globally include sustainability in their investment analysis

200

countries are connected with China, facilitating growing maritime trade flows

Suggested reading