The House Foreign Affairs Subcommittee on International Development said Thursday that new aid to foreign countries will come with more strings attached: all of it related to reducing C02 levels. The problem for many on the committee is that China can swoop in and provide those countries with loans themselves. That gives Beijing soft power leverage in developing countries, a soft power that already rivals that of the U.S. from the Southern Cone of South America to Africa.
Moreover, with China the world’s biggest C02 emitter at the moment, some Republicans on the Committee noted that regardless of the cuts in fossil fuel use made in the U.S., China will just make up for it over there despite Beijing’s long term pledges.
Ranking member Brian Fitzpatrick (R-PA-1): “Despite being the leading global emitter, China has been allowed not to meet the same (Paris Accord) commitments. Anything we do can be offset by their larger emissions output,” he said in his opening remarks.
The Foreign Affairs Committee hearing was titled “Preparing for COP26: United States Strategy to Combat Climate Change through International Development”
The COP26 summit on climate change policies will take place in Scotland next month. President Biden is expected to discuss a unified approach to rebuilding an economy based on alternatives to fossil fuels. Worth noting, China has successfully captured a chunk of that economy. China dominates nearly all of the solar supply chain, a big chunk of some of the metals required to make EV car batteries are processed in China, and they are gaining on Europe in wind turbine production. Xinjiang Goldwind Science and Technology, best known as just Goldwind, now rivals GE Renewable Energy, a Paris-based multinational manufacturing wind turbines and rotor blades.
China is better positioned than Europe to lead on the cleantech supply chain, and with the possible exception of EVs, leads the U.S. on solar and wind, let alone nuclear, another zero-emissions power source that China is building out more than any other nation.
Witnesses at the hearing, all of them government aid and lending agencies to the developing world, said that climate policies will be a metric used in U.S. loan and aid approval.
The U.S. International Development Finance Corporation (DFC), a new development agency working to scale private, commercially viable investments, expects clean energy projects to be nearly 30% of its loan portfolio by 2023 and 100% by 2040.
“Our competitors around the world want in on this not because they recognize the dangers of climate change, but because they want to win the clean energy industries of the future and they’re not waiting for the U.S. to take the lead,” said Jake Levine, Chief Climate Officer at DFC. “(China has) already mobilized aggressively to dominate energy markets like solar cells. And while it is undeniable that China is an egregious polluter, China also ranks first in the production of solar, wind, electric vehicles, EV batteries, and hydropower. That’s because clean energy is the economic driving force of the future.”
See: Reclaiming the U.S. Solar Supply Chain from China by CPA chief economist Jeff Ferry
To Levine’s point, China is not waiting to build up these industries. But they are not doing it necessarily for themselves. They are building it up to manufacture for and to sell to the United States and Europe. Despite being the world’s leading producer of solar and wind, China’s power grid is around 60% coal, and the bulk of the remainder is oil and natural gas.
Also, imagining U.S. development loans to Brazil will come with stipulations on preserving the Amazon rainforest, or loans to Congo will come with stipulations on mining operations, China can present itself as a well-financed alternative.
Even though the China-led Asian International Infrastructure Bank (AIIB) is also talking about climate change being a factor in lending decisions, China also has the world’s largest banks – like the International Commercial Bank of China – that has no such requirement.
The AIIB’s annual meeting next week in Dubai will see bank President Jin Liqun get out ahead of the COP26 by announcing their priorities for climate finance in support of Paris Agreement implementation.
Last month in a video-recorded address to the United Nations, Xi Jinping said, “China will step up support for other developing countries in developing green and low-carbon energy, and will not build new coal-fired power projects abroad.”
President Biden’s climate policy advocate, John Kerry, quickly welcomed Xi’s announcement, calling it “a great contribution.”
The U.S. is far ahead of China on reducing carbon emissions, but behind in solar and wind in particular.
Ranking member Nicole Malliotakis (R-NY-11) highlighted the fact that the U.S. was increasing its renewable energy in the power grid — going from 5% to 12% over the last few years. And U.S. emissions have fallen by around 30% since 2005, she said.
We owe some of that to businesses outsourcing a lot of their polluting industry to China. Only China’s environmental controls on those industries are much weaker than they are here, meaning the pollution – be it plastics in the river, or chemical spills in the land – are as degrading to the planet as the threat of a warmer North Pole.
“Our C02 reduction will not offset the damages caused by China,” Malliotakis said. She called China’s environmental commitments “worthless” since the U.S. rejoined the Paris Climate Agreement. “They’re also building more coal in developing nations around the world with little to know environmental oversight,” an argument Beijing can counter now that Xi said they will no longer fund such projects.
One of the more eye-opening, if not saddest, exchanges of the day came between Rep. Claudia Tenney (R-NY-22) and Jonathan Richart, the Deputy Vice President for Infrastructure, Environment, and Private Sector funding at yet another government development agency – the Millennium Challenge Corporation. It has invested $14 billion throughout Africa, Asia and Latin America since 2004.
Tenney: “As we look to tackle climate change, I want to make sure we have a level playing field that benefits American interests.
Richart: We have mechanisms in our procurement for how we screen those bids.
Tenney wasn’t impressed with the response. “Will these companies be cut off from receiving money?” she asked him.
Richart: If the mechanisms work, then yes we would not be procuring those panels but just digging through it would be challenging and need a broader solution.
Richart could offer no real answer, nor did he give any case examples to showcase how the agency could spot such things. At least one polysilicon supplier, Hoshine Silicon Industry of Xinjiang, is banned by Customs and Border Protection from being part of the U.S. solar supply chain.
Rep. Dean Phillips (D-MN-3) asked Richart “how can our climate policies for development loans happen if China is an alternative?”
Richart had no answer. “We just do it different than how China might,” he said.