China as a new world leader of energy financing

What does it mean for the world and the climate protection?

In fact, China fills the energy funding gap. It directed the energy financing offer to the countries omitted by the global banks, often because of the higher level of risk they generate. These are for instance: Bosnia & Herzegovina, Sudan, Pakistan or Niger. On the other hand, more than 90% of the Chinese loans fund coal and large hydropower usage. There are no solar or wind energy financing loans. This is highly conflicting with the policy of sustainability, contrary to the decisions and agreements of UN Sustainable Development and the Paris Agreement on climate change and additionally, it is marked with high risk (mainly social and environmental; consider Bangladeshi protesting in Chittagong).

What are China’s profits?

China benefits from the promotion of their technologies and energy products. Apart from that, their financing policy involves gaining high returns, since they offer help in the form of the “tied aid”. In short, it means that those who receive financing are obliged to spend the money on Chinese products and services only.

Potential problems

There are worries concerning the Chinese energy financing policy. The situation may simply result in too strong industrial dependence on fossil fuels in the developing countries. This policy is just contrary to the global aim of reducing carbon emission and turning towards clean energy. China as a leader presents a great potential of implementing the green attitudes towards energy usage and thus, climate protection. China has already turned to the clean energy domestically. Since, the country has already reached the peak of carbon emission, the oil companies look for the outside trade areas to cope with the overproduction. The world market of clean technology investments is dominated also by China and this brings the opportunity to commercialize this area globally.

It is important to make a good use of China’s big potential. The poor countries should have a chance to implement the sustainability policy instead of becoming fossil fuels dependent. As China has proved to be successful in governing the cooperation between the national oil companies and private clean technology firms, it can successfully change its global policy as well. It would help solve the huge carbon emission problem in developing countries. If China changes its energy policy towards foreign markets as it has been changed inside the country, it will start supporting green energies and engage in the global sustainability approach.

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