Review of Chinese Enterprises' Green Investment on Belt and Road
Title: Wang Yongzhong, Chen Zhen
At present，over 130 Belt and Road countries，including Singapore，Hungary，Ukraine，Chile，Costa Rica and South Africa，have pledged to achieve carbon neutrality by the mid-21st century. In the future，with the acceleration of global energy transition and the interiorization of the low-carbon development concept，more countries will make such commitments and implement corresponding green and low-carbon policies.
It is of great significance for the countries and regions along the Belt and Road to promote green investment. On one hand，the overall economic development in these countries and regions remains at a low level，which means their energy intensity，carbon intensity and greenhouse gas emissions per unit of GDP are all relatively high，and their ecological environment is relatively fragile and sensitive to climate changes，thus，green investment will be necessary for their sustainable development; on the other hand，for Chinese enterprises that participate in the Belt and Road co-constructions，promoting green investment can not only lower the climate risks，financial risks and legal risks in their overseas investments，but also build a good image of green investors，which facilitates the sustainable development of the Belt and Road investment projects.
Global Green Investment Policy Trend
In order to achieve green investment and sustainable development goals，as major financial providers，international financial institutions represented by the World Bank and developed countries such as the European Union have introduced a series of restrictive policies on investment and financing，including stopping coal credit，increasing green financing and enhancing supervision on financing sustainability.
The World Bank is a pioneer in global green financing. In 2013，the World Bank took the lead to announce that it would no longer provide loans for coal-fired power generation projects unless the host country lacks alternative power generation sources or other financing channels. In 2019，it further stopped financing oil and natural gas projects. The World Bank launched the Climate Change Action Plan in June，2021，aiming to provide record level green financing for developing countries to reduce carbon emissions，and align its financing flows with the Paris Agreement. According to the plan，the World Bank will extend its efforts from green project investments to helping countries to fully integrate climate and development targets during 2021 to 2025. It will do so by (i) drastically increasing green financing，and raising the share of green financing in the total financing of World Bank Group to 35 percent; (ii) ensuring at least 50 percent of the green funds of International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD) that are affiliated to World Bank is used for climate adaptation; (iii) aligning all new financing projects with the Paris Agreement targets starting from July 1，2023; and (iv) ensuring that 85 percent of newly approved projects of International Finance Corporation (IFC) and Multinational Investment Guarantee Agency (MIGA) that are private development institutions of World Bank will be aligned with the Paris Agreement targets starting from July 1，2023，and 100 percent two years later，starting July 1，2025.
As one of the earliest developed economies to embrace green development，EU launched the new strategy of Green Infrastructure: Enhancing European Natural Capital in 2013 to encourage investment and utilization of green infrastructure，and provide financing facilitation. In March 2021，EU enacted the Sustainable Financial Disclosure Regulations，requiring institutional investors of financial markets to disclose ESG (Environmental，Social Responsibility and Corporate Governance) related risks and impacts，which include carbon emissions，greenhouse gas emissions and hazardous waste discharges.
An agreement was made in November 2015 by the Organization for Economic Cooperation and Development (OECD) to reduce government spending on coal-fired power plants and tighten financing for coal projects. In addition，various international financial institutions，including the European Investment Bank，the Export-Import Bank of the United States，and the Asian Development Bank，have successively issued policies of stopping financing or funding coal power projects.
Status Quo of Chinese Enterprises’ Green Investments for the Belt and Road Initiative
Low-carbon transition pressure and green investment preferences have spawned huge demand for green investments in the Belt and Road countries. According to the Quantitative Report on the Green Investment and Carbon Emission Paths of the Belt and Road Countries jointly released by Tsinghua University PBC School of Finance，Vivid Economics and Climateworks Foundation in 2019，in order to align with the targets of the Paris Agreement，the Belt and Road countries need to increase green investments by at least 12 trillion U.S. dollars during the period from 2016 to 2030. Currently，Chinese enterprises’ green investments in the countries and regions along the Belt and Road mainly have the following features:
First，green energy investment begins to take shape. Data from Refinitiv shows that between 2013 to 2019，around 1350 Belt and Road projects were launched with a total value of 1.7 trillion U.S. dollars，among which there were around 100 clean energy projects worth 104.95 billion U.S. dollars，covering areas like natural gas pipelines，wind energy and water energy. According to the Belt and Road Investment Report for the First Half of 2021 released by the International Institute of Green Finance，Central University of Finance and Economics on September 26，2021，China’s investment of renewable energy projects in countries and regions along the Belt and Road in 2020 exceeded that of coal projects for the first time; in the first half of 2021，China realized zero investment in coal (coal power and coal mining) projects in the Belt and Road countries and regions. Chinese enterprises actively practice the green concept and have undertaken a number of green investment projects. The Mombasa-Nairobi Railway，for example，has become a model project in protecting local ecological environment. Many photovoltaic companies go overseas actively and have built a number of photovoltaic projects along the Belt and Road.
Second，green finance has strong development momentum. China’s p