The Impact of China’s Financing for Coal on Climate Change and Agriculture in Africa

 In op-ed

Back in September 2020, President Xi Jinping announced China would aim for carbon neutrality by 2060, followed by setting more ambitious Nationally Determined Contributions (NDCs) for 2030. Such bold commitments appeared to reflect Beijing progressing towards adopting climate-friendly policies, premised on low-carbon and renewable technologies.

Despite these new commitments, China continues to fund coal projects worldwide, Africa being no exception. This is somewhat a double-edged sword. On the one hand, Chinese-funded coal plants help provides power across Africa, as currently, around 53% of the population lacks access to electricity. On the other hand, there is mounting pressure on governments to close existing coal plants and end coal financing, as at current trends emissions from coal power is predicted to be over three times larger than what is compatible with the Paris Agreement by 2050 (see figure 1). Although it must be noted that Africa accounts for only 2% of total carbon emissions.

Source: Climate Analytics

So just how much of Chinese financing goes into coal-power plants across Africa? Let’s dig into the data. As the China-Africa Loan Database reveals, out of 178 power sector projects from 2000 to 2019, only 7 are coal plants. Although this appears relatively low, coal plant funding is planned to escalate. In 2020, 13 new coal plants across the continent were planned to go ahead, totaling 32,174 mega-watts – almost 3 times the current output of coal plants of 11,874 MW. This will significantly contribute to Africa’s carbon output. Take South Africa as an example – it is one of the top recipients of Chinese coal financing, with coal contributing to around 90% of its energy mix.

Whilst financing of coal plants may increase power supply, it has simultaneously produced negative externalities for agriculture – the backbone of many livelihoods and economies across the continent. As the most carbon-intensive fossil fuel, coal pollutes the air, water, and soil. This pollution has detrimental impacts on crop production and can even render arable lands unusable. For instance, the poisonous dust from power plant chimneys dries up trees and leads to lower agriculture output. By 2050 it is estimated that there will be a 10.6 % decline in crop mean yield across African regions. Moreover, this arable land acts as crucial carbon storage, but it is estimated that the continent could lose two-thirds of its arable land to desertification.

Considering that over 60% of the African population depends on agriculture as a source of livelihood, with around half of the population (approximately 670 million people) facing increasing levels of food insecurity, the impact of climate change on agriculture is one we cannot afford to ignore. This is becoming increasingly pressing as the continent’s population is set to double by 2050.

Incidence of heat stress during the hottest month in Africa. Source: International Labour Organization

But can climate action, increasing electricity access and protecting agriculture go hand-in-hand? If so, what role can China play in all this?

Beijing often opts for a bilateral approach in its engagement with Africa. Although at times this can be beneficial and is also partially attributed to African choices, it has also resulted in minimal contributions to the African Union’s (AU) continental frameworks. These frameworks have been developed to formulate strategic plans for industrial transformation. China has provided minimal contributions to the Comprehensive Africa Agricultural Development Program (CAADP), focused on agriculture-led development, with cooperation being limited as investments tend to be small-scale and country-specific.

And of course, agricultural-led development requires energy. This is where the AU energy framework – the Program for Infrastructure Development in Africa (PIDA) – comes in. PIDA’s remit concerns developing regional and continental infrastructure, including renewable energy projects. As with CAAPD, China’s contributions to PIDA have been lacking, with one report estimating that only 9 out of 76 PIDA projects have involved Chinese partners, the reason being that Chinese stakeholders do not have a coordinated approach to PIDA.

African countries themselves also have high renewable energy goals directly related to agriculture. For example, Cote d’Ivoire aims to intensify and mechanize agricultural production sustainably through integrating renewable energy plans with the agricultural sector. Similarly, Mali aims to keep the country as a carbon sink by minimizing carbon emissions in energy, agriculture, and land-use sectors, whilst Zambia’s carbon emission targets are organized around sustainable agriculture and renewable energy.

A total of 52 African countries’ NDCs have commitments to either develop energy efficiency policies or launch renewable energy projects, with three countries, Ethiopia, South Africa, and Sierra Leone, announcing carbon neutrality goals.

Clearly African governments are looking to incorporate renewable energy into their agricultural management and production processes.

Considering All This, What Are Some Practical Next Steps Policymakers From Both Beijing and Africa Can Take?

First, both African and Chinese policymakers should pursue a green recovery in the post-COVID-19 context. This refers to enforcing policies that support climate change mitigation. As noted by Hannah Ryder, CEO of Development Reimagined, “the costs of acting NOW to address climate change will be lower than the costs of doing nothing”. Governments have spent huge sums of money on COVID-19 recovery, with an average of 2.6% of GDP spent by African countries. Governments should look to prioritise policies which are climate-friendly to contribute towards a green recovery.

But How Can a Green Recovery Be Translated Into Concrete Policy Actions?

For Chinese partners, Chinese financiers of African coal-fired plants, namely the Industrial Bank of China, the China Export-Import Bank, and China Development Bank, should reduce their investment portfolio that funds coal.Evidence demonstrates that there is significant Chinese financing into renewable energy resources – however, post-COVID, this should become a norm, not the exception.

Importantly, Chinese partners should engage with the AU frameworks and country-level goals through financing at the intersection of energy and agricultural projects. For example, some African governments have established agro-industrial zones, which focuses on value-addition in agricultural goods for export. Ethiopia and Egypt have established agro-industrial parks with other countries having plans in the pipeline. Yet, most projects have not documented any plans to include renewable energy. The Egyptian agro-zone mentions the possibility of incorporating biogas, whereas, in Madagascar, there is a mention of the proposed zone being linked to pre-existing solar energy networks. There is clearly a gap here which Chinese partners should look to support. Overall, this will contribute to AU frameworks including CAAPD and PIDA.

Another point is for green projects planned before COVID to not be downgraded in importance. There have been cases of renewable projects being cancelled, as in Zambia where a US$548 million deal for three solar projects by Power China fell through due to debt concerns and fiscal squeezes from COVID pressures.

African governments should push for demand-led green recovery. Agricultural cooperation, with a focus on localisation and skills development, should be a priority. For example, African governments should encourage Chinese partners to establish public-private partnerships in the agricultural sector, which would support the sectors development through knowledge and skills transfer. Specifically, there should be a focus on increasing value-added agricultural goods. China produces its own staple cereals and grains, but does look to import value-added and specialist agricultural products. Cultivating the value-chain to meet these demands will provide more diversification in African economies whilst stimulating job creation.

I am hopeful that the targets set by Beijing for 2060 and 2030 can be achieved. However, Beijing cannot simply offshore its coal plants to Africa, otherwise, agriculture will consistently remain under threat. A green recovery must be prioritised and demanded by African governments, and Chinese partners must act now to avoid future costs.

By King Carl Tornam Duho for Development Reimagined. King is an independent finance and economic consultant based in Ghana. The report was originally published on The China Africa Project on June 25th 2021.

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EDMOND BOSILONG

Research Analyst

Edmond is a research analyst who is passionate about sustainable development, innovation, and the environment. Passionate about climate financing, he firmly believe there is a more reliable system to promote equality, growth, and welfare in societies without affecting the ecosystem. Through his skills, knowledge and experienced gained over 7 years, he wants to make an impact in the world of development. Edmond holds a Master’s Degree in Public Policy from Korea Development Institute and a BA Degree (Honors) in Business from University of Derby.

   HANNAH RYDER

    Founder and CEO

Hannah Ryder is the Founder & CEO of Development Reimagined. A former diplomat and economist with 20 years of experience, named one of 100 most influential Africans in 2021, she is also Senior Associate for the Africa Program of the Center for Strategic International Studies (CSIS), sits on the Board of the Environmental Defence Fund, and is a member of UAE's International Advisory Council on the New Economy. Prior to her role at DR, Ms Ryder led the United Nations Development Programme (UNDP)’s work with China to help it scale up and improve its cooperation with other developing countries, including in Africa. She has also played various advisory roles for the UN and OECD and co-authored the seminal Stern Review of the Economics of Climate Change in 2006.

LEAH LYNCH

Deputy Director

Leah Lynch is Deputy Director of Development Reimagined (DR), and head of the China office. Leah has over 10 years of experience in development and has lived in China for over 8 years. Leah has also travelled extensively around Asia and Africa for research. Leah supports the strategic direction of the team across China, with a mission to deliver high quality research on sustainable development and poverty reduction. Leah is also Chair of the Sustainability Forum at the British Chamber of Commerce in China, providing direction on sustainability initiatives for British and Chinese business. Leah has also consulted on various evaluations on UK aid (ICAI) and is a specialist on development cooperation from the UK and China. Leah has also consulted on various UN projects, including providing support to the UN China team during the COVID-19 Pandemic. Prior to DR, Leah was at the United Nations Development Programme (UNDP) China, supporting the UN’s portfolio on communication strategies, China’s South- South Cooperation and the Belt and Road Initiative (BRI). Before UNDP, Leah lived and worked in Kenya developing sustainable water policies for the Kenyan government.

YIKE FU

China-Africa Policy Analyst

Yike Fu is a Policy Analyst and has been responsible for leading numerous areas of work, including on debt analysis in Africa and beyond, and China-Africa trade and investment logistics and analysis. She is the co-author of “African Debt Guide”, in which she challenged the narrative that Africa is in the midst of a new debt crisis by analysing data back to the 1970s and adopting new metrics to present the real story behind the data. She also developed a benchmark to compare the financial distribution of development partners such as the UK, US, Japan, France and China in Africa. Prior to her role at DR she worked at the International Finance Corporation and African Union Representational Mission to the US. She holds a Masters in International Affairs from George Washington University.

JUDITH MWAI

Research Analyst

Judith is a Research and Policy Analyst, where she specialises in Africa-China relations, international development, and diplomacy. During her time at Development Reimagined, Judith has co-authored several articles published in The Diplomat on debt and China-Barbados relations and was quoted by China Daily in a piece on Women Rights in China. Previously, Judith worked as a research analyst for an Advocate and Commissioner and Oats office in Kenya.

OVIGWE EGUEGU

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Ovigwe specialises in geopolitics with particular reference to Africa in a changing Global Order. He is adept at critically analysing the politics of contemporary development processes and providing insight into the geopolitical interests that influence them. His work includes research, publications, tailored briefings and advising on global and regional trends, and issues at the nexus of geopolitics and development. Ovigwe appears frequently in media around the world such as Al Jazeera, TRT World, SABC, CGTN, BBC Radio, and other platforms.

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Jing leads China-African health and agriculture cooperation research at Development Reimagined, having managed our FOCAC Policy Analysis and Advocacy project. She is also the co-author of “China-Africa Health Cooperation under FOCAC Umbrella”, in which she analysed China’s commitments around health cooperation since the first FOCAC summit and deepdived into four African countries’ health overview, challenges and cooperation with China as cases studies. Before DR, Jing worked at GIZ Cambodia on M&E of a disability advocacy project. She also worked as a translator with Chinese medical team in Benin.

PATRICK ANAM

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Patrick is an International Trade Policy and Trade Law Expert with over 5 years of experience. His expertise includes trade law, trade policy analysis and regional integration. He is currently engaged with Development Reimagined as a Senior Trade Analyst and was the lead author of Development Reimagined's recent Report on Africa-China Relations titled "From China-Africa to Africa- China: A Blue Print for a Green and Inclusive Continent-Wide Strategy Towards China." and “Reimaging FOCAC Going Forward.” Patrick has previously consulted for the East African Community, UNECA and for the Kenya Ministry of Trade.

ROSIE FLOWERS

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Rosemary is our Senior Policy Analyst. She is a skilled policy analyst and has previously worked as a UK civil servant. She is studying Human Rights at Birkbeck, University of London with a research focus on international law in the context of health crises such as the COVID-19 pandemic.

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Project Manager and Africa-China Communication Assistant

Jade is a Project Manager for Development Reimagined’s flagship project Africa Unconstrained, which focuses on financing needs and debt vulnerabilities of African countries. Her research focuses on China-Africa development finance alongside debt vulnerabilities, infrastructure needs and South-South cooperation. She has worked with a breadth of stakeholders from China, Africa and the wider international community, including governments, private sector, NGOs and civil society. Her writing has appeared in a number of publications, including The Africa Report, The China-Africa Project, The Diplomat and more. Jade holds a Master’s in China and Globalisation studies from King’s College London.

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Rosie is the Project Manager of Africa Reimagined (AR) at Development Reimagined (DR) where she supports high-end African brands with entering the Chinese market by operating services such as trademark protection, Chinese market research, Chinese partnership building, and Africa to China logistical support and import/export services. Rosie has worked with DR for over two years now with proven success in helping high-end African brands navigate the Chinese market. She is extremely passionate about her work because more African brands selling in the Chinese marketplace means African countries can export MORE value-added goods, create MORE jobs and foster MORE innovation in African countries.

Rosie is also alumni of the School of International Studies at Peking University in Beijing where she is also an editor at the Peking Africa Think Tank. PATT is led by a diverse group of scholars who specialise in African Studies within the context of Sino-Africa relations.

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Lauren has lived in six countries from the Americas to Europe and Asia and speaks both French and Spanish proficiently. At Development Reimagined, Lauren’s research focuses on climate action both in the Asia-Pacific and in Africa, and how countries are using tools such as SDGs and Covid-19 action to build a more climate-resilient future. She holds a Masters in International Relations from Leiden University.

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Founder and CEO

Hannah Ryder is the Founder & CEO of Development Reimagined. A former diplomat and economist with 20 years of experience, named one of 100 most influential Africans in 2021, she is also Senior Associate for the Africa Program of the Center for Strategic International Studies (CSIS), sits on the Board of the Environmental Defence Fund, and is a member of UAE's International Advisory Council on the New Economy. Prior to her role at DR, Ms Ryder led the United Nations Development Programme (UNDP)’s work with China to help it scale up and improve its cooperation with other developing countries, including in Africa. She has also played various advisory roles for the UN and OECD and co-authored the seminal Stern Review of the Economics of Climate Change in 2006.