Will China's Increased Energy Investments Boost Global FDI and Its Power?

Fossil fuels has remained the dominant energy source for most countries across the world since the industrial revolution. Sadly, burning of fossil fuels – coal, oil, and gas accounts for – around three-quarters of global greenhouse gas emissions. They are also a major source of air pollution, responsible for at least five million premature deaths every year. These major concerns have shifted the world’s attention to innovations around other alternative forms of harnessing cleaner energy resources to drive sustainable activities that are socially, economically, and environmentally friendly. As part of the Paris Agreement in 2015, limiting global warming below 2 degrees is non-negotiable. It is thus necessary to prioritize cleaner energy resources that can replace fossil fuels for bigger good.

A country’s ability to unlock the potential opportunities in these areas will unequivocally increase its chances of taking part in global hegemony; Technology, Climate Change and Diversity and Inclusion. These constitutes critical areas that determines both economic, social and environmental prosperity. China is nowhere far from these indices which technically qualifies it a potential global leader. However, more work needs to be seen, especially in the area of diversity and inclusion.

Additionally, China has positioned itself in the Energy Sector and willing to be the leader in the green energy transition. Research has shown that China is one of the leading energy innovation hubs. As a member of the Intergovernmental Panel on Climate Change (IPCC) signatory, China is playing a major role in the clean energy transition. Based on analysis by some of the world’s leading energy institutes, China’s Intended National Determined Contribution (INDC) represents a significant undertaking beyond business-as-usual and will help slow the rise in global greenhouse gas emissions. Albeit to contributing about 26% of the global emission, China is still aiming to reach a peak in its CO2 emissions before 2030 and carbon neutrality before 2060. The energy sector is the source of almost 90% of China’s greenhouse gas emissions, putting energy policies at the heart of the country’s transition to carbon neutrality.​

According to the U.S. Energy Information Administration (EIA), International Energy Agency (IEA), Massachusetts Institute of Technology (MIT) and Tsinghua University, peaking carbon dioxide emissions around 2030 would reduce China’s emissions by at least 1.7 Gt or 14 percent from the most optimistic business-as-usual (BAU) scenario. In recent time, China confirmed its world energy consumer leadership with 3,274 Mtoe, equal to 23.6% of global consumption (+4.3% year-over-year). Most of this assessment has set China on its toes making them intensify efforts in other to help solve the energy challenges. Her leap in energy leadership has made her the largest financiers of energy projects globally. China’s two major policy banks, Chinese Development Bank (CDB) and Chinese Export-Import Bank (EXIM), financed a total of $196.7 billion in overseas energy sectors between 2007 and 2016. This huge sum of investment will mean an increase in the global energy supply, and it has also shown that China is not only willing to be self-energy sufficient, but also financing and supporting projects in the developing countries, which further set it up in the heart of many developing countries, especially Africa. China is already leading in renewable energy production figures. It is currently the world’s largest producer of wind and solar energy, and the largest domestic and outbound investor in renewable energy.

Conclusively, China sees itself as the biggest player, increasing its investment in renewables and helping the entire Paris Agreement, in the fulfillment of the green transition and achieving the net zero emission goal by 2050. This also speaks of what Position China will be at the helm of global affairs as further confirmed by the president’s speech. Although he did not openly advocate for a Chinese role in global leadership, Xi’s desire for China to be at the helm of the push toward globalization is implicit throughout his speech. Supporting developing countries with the needed support in fighting climate crises through the supply of renewables. As of early 2017, China owns five of the world’s six largest solar module manufacturing companies and the world’s largest wind turbine manufacturer. China’s investment, has grown over the years, increasing its global dominance, but we cannot attest to what happens in the future, whether it will dominate global affairs as against the current united states.

Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.