2018 - 2019 Edition of Citi Perspectives for the Public Sector

Citi Perspectives for the Public Sector |  2018-2019 19 Beijing has also invited Latin American countries to participate in the BRI and, under the same banner, outlined a plan to increase China’s trade traffic through the Arctic. These developments illustrate BRI’s flexibility, inclusiveness and embrace of diverse international partnerships and parallel investment programs. Indeed, enterprising investors and project sponsors have already generated new BRI branches, including a Green and a Digital Belt and Road. Citi is actively engaged with companies and projects bringing the BRI into new geographic and thematic areas. A Green Belt and Road BRI projects are increasingly incorporating sustainability goals, referencing international environmental standards and promoting low-carbon construction. The Global Commission on the Economy and Climate estimates demand for climate-resilient infrastructure could surpass $90 trillion between 2016 and 2030. 3 At the same time, many of the developing countries involved in the BRI are vulnerable to growing environmental risks related to climate change. Awareness of both the need for infrastructure and its potential environmental costs is motivating BRI project sponsors and host governments, including China, to set project sustainability expectations and to make greater use of green financing structures. China has made a broad variety of commitments to “greening” the BRI. In December 2016, the UN Environment Program signed an agreement with the Chinese Ministry of Environmental Protection (MEP) to promote BRI environmental sustainability. In May 2017, the MEP, Ministry of Commerce, Ministry of Foreign Affairs and National Development and Reform Commission jointly issued a circulate entitled “Guidance on Promoting the Green Belt and Road.” 4 Practically, such commitments have translated into financing for low-carbon transportation and renewable energy projects. According to the U.S.-based think tank the Institute for Energy Economic and Financial Analysis, Chinese outbound investments in large-scale renewables projects reached $44.3 billion in 2017, up from $20.0 billion in 2015. 5 The Industrial and Commercial Bank of China (ICBC) has made loans to the 50 MW Dawood windfarm and a new mass rapid transit line in Lahore, both in Pakistan. In 2017, Shanghai Electric Generation Group co-invested with Saudi Arabia’s ACWA Power in a 700MW concentrated solar power China has made a broad variety of commitments to “greening” the BRI. 3 The Global Commission on the Economy and Climate. (2016) The Sustainable Infrastructure Imperative: Financing for Better Growth and Development. http://newclimateeconomy.report/2016/ 4 Chinese Ministry of Environmental Protection. (2017) “ Guidance on Promoting Green Belt and Road. ” https://eng.yidaiyilu.gov.cn/qwyw/rdxw/12484.htm 5 Buckley Tim. (2018) China 2017 Review: World’s Second-Biggest Economy Continues to Drive Global Trends in Energy Investment. Institute for Energy Economics and Financial Analysis . http://ieefa.org/wp-content/uploads/2018/01/China-Review-2017.pdf