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WASHINGTON – China has provided developing countries with $34 billion for climate projects since the launch of its Belt and Road Initiative in 2013 to 2021, significantly more than previously understood, according to a new study published today by the Center for Global Development.
The study from the Washington, DC- and London-based think tank analyzed financing data from several independent databases to form the most up-to-date view yet of China’s climate finance.
The study finds that China’s direct, country-to-country climate financing was nearly double the US, about $3 billion vs. $1.5 billion per year over the five-year period from 2017 to 2021. When US and Chinese climate-related funding to international institutions like the World Bank is included, the US still holds a lead contributing $7.3 billion, compared to China’s $4.1 billion per year over the same period. But by any measure, China is a major player that's ready to contribute towards global climate finance needs, the study’s authors say.
“Western countries have said they will only increase their climate finance contributions when China and others start to pull their weight. But our study shows that China is already a significant contributor of climate finance,” said Ian Mitchell, a senior fellow at the Center for Global Development and an author of the study.
“If China formally committed to a new UN climate finance goal, started reporting its climate lending and moved towards using grants in the poorest countries, it would neutralize all those excuses,” he added.
China does not report its climate finance figures and is not obligated to, due to its designation as a developing country under the UN Framework Convention on Climate Change.
The Paris Agreement reaffirmed a target for wealthy countries to provide $100 billion in climate finance to developing countries per year through 2025. There is no universally agreed-upon definition of climate finance, but it typically encompasses both projects to reduce emissions and to make infrastructure more resilient to climate change.
While China’s lending is large in volume, it tends to be less generous than the US, the study finds. A significant portion of US climate support is in the form of grants, which do not need to be repaid, and though they are smaller, the US’s loans tend to have more favorable terms than China’s.
The study also highlights that China's green lending has been counterbalanced with continued finance for fossil fuel projects to the tune of $57 billion between 2013 and 2021, significantly outstripping its climate finance over the same period.
Chinese officials have promised to end financing for coal projects and increase the percentage of the Belt and Road devoted to green lending. But 2020 and 2021, the most recent years with available data, saw the country's climate finance fall to notable lows as China began to pull back lending.
“China has been scaling back the Belt and Road Initiative since the beginning of the pandemic, and we're seeing signs that its climate finance could be a casualty of that decrease. It would be a shame for the world to wake up to China's rise as a major climate finance provider right as it begins to step back from that role. It's not too late for China to take a leadership role on climate finance,” said Mitchell.
The full study is available at https://www.cgdev.org/publication/china-provider-international-climate-finance.
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