There is a significant risk from linking the
China emissions trading system with other jurisdictions. Should this result in failure—for example problems with monitoring, reporting and
verification (MRV), price instability or a prolonged price collapse—it could represent an
insurmountable setback to the internationalisation
of carbon trading. Cooperation with other
carbon-pricing jurisdictions to establish clubs of
free-trading economies with border adjustment
measures on non-member countries may therefore
be a less risky way to encourage propagation.
7.2 International Cooperation
on National Energy Sector
Investment
Over the past decade, China has rapidly
increased its foreign direct investment (FDI) in
overseas energy sectors as part of its Go Out
strategy. Over the coming decades, the Belt and
Road Initiative (BRI) looks set to channel
unprecedented outflows of Chinese capital into
energy resources and infrastructure, and higher
up the value chain in new technologies and
infrastructure. By some estimates, the scale of
these investments could be up to $900 billion.
China has an interest in ensuring good energy
sector governance in partner countries where it
invests. This will help mitigate the risks of
instability and underinvestment in these countries, enhancing China’s energy security as a
result (see Box 17). China can also cooperate
with partner countries to support them through
the transition, especially by providing access to
low-carbon technologies produced by Chinese
companies (see Box 18).
The way that China approaches investments
along the BRI will be a measure of China’s
commitment to green and sustainable growth,
both at home and abroad for many of its international partners.
2 Learning from past experience
and minimising the risk of investment disputes
with host countries and underperforming assets
—by adhering to high standards of social and
environmental governance and developing
Fig. 41 Timeline of action plans under the strategic pathway: global phase-out of fossil fuel subsidies and establishing
carbon pricing mechanisms fit for a low-carbon, energy-secure system
2
See Navigating the New Normal for an in-depth
exploration of China’s evolving approach to FDI and
the BRI: https://www.chathamhouse.org/publication/
navigating-new-normal-china-and-global-resourcegovernance.
646
W. Jigang and P. Webb
China emissions trading system with other jurisdictions. Should this result in failure—for example problems with monitoring, reporting and
verification (MRV), price instability or a prolonged price collapse—it could represent an
insurmountable setback to the internationalisation
of carbon trading. Cooperation with other
carbon-pricing jurisdictions to establish clubs of
free-trading economies with border adjustment
measures on non-member countries may therefore
be a less risky way to encourage propagation.
7.2 International Cooperation
on National Energy Sector
Investment
Over the past decade, China has rapidly
increased its foreign direct investment (FDI) in
overseas energy sectors as part of its Go Out
strategy. Over the coming decades, the Belt and
Road Initiative (BRI) looks set to channel
unprecedented outflows of Chinese capital into
energy resources and infrastructure, and higher
up the value chain in new technologies and
infrastructure. By some estimates, the scale of
these investments could be up to $900 billion.
China has an interest in ensuring good energy
sector governance in partner countries where it
invests. This will help mitigate the risks of
instability and underinvestment in these countries, enhancing China’s energy security as a
result (see Box 17). China can also cooperate
with partner countries to support them through
the transition, especially by providing access to
low-carbon technologies produced by Chinese
companies (see Box 18).
The way that China approaches investments
along the BRI will be a measure of China’s
commitment to green and sustainable growth,
both at home and abroad for many of its international partners.
2 Learning from past experience
and minimising the risk of investment disputes
with host countries and underperforming assets
—by adhering to high standards of social and
environmental governance and developing
Fig. 41 Timeline of action plans under the strategic pathway: global phase-out of fossil fuel subsidies and establishing
carbon pricing mechanisms fit for a low-carbon, energy-secure system
2
See Navigating the New Normal for an in-depth
exploration of China’s evolving approach to FDI and
the BRI: https://www.chathamhouse.org/publication/
navigating-new-normal-china-and-global-resourcegovernance.
646
W. Jigang and P. Webb