EU, China race to secure green projects in Southeast Asia

Last weekend, the European Union launched a new green partnership with the Association of Southeast Asian Nations (ASEAN) that will see €30 million ($34 million) donated to the region’s green investment fund — the ASEAN Catalytic Green Finance Facility.

Days later at the annual China-ASEAN summit, Beijing vowed to step up its investment in green projects in the region and announced a new Action Plan on China-ASEAN Green Agriculture, according to a summary issued by China’s Foreign Ministry.

A report published last December by the European Council on Foreign Relations argued that increased funding of green initiatives could escalate tensions between the EU and China.

Climate action will increasingly intersect with “questions of geopolitical and geo-economic interest, particularly on trade and technology,” the report stated. “This means that it will no longer be possible to ringfence climate policy from the broader complexity of the Europe-China relationship.”

EU-China row

In December 2020, the EU became a “strategic partner” of the ASEAN bloc. The EU, now using its green investment as a form of “green diplomacy,” has significantly increased its leverage in the region as Southeast Asian states try to hedge against the US and China.

Josh Kurlantzick, senior fellow for Southeast Asia at the Council on Foreign Relations, said cooperation could be difficult because of “the drift away from China by some EU members, China’s increasingly aggressive diplomacy, and the fact that so much of China’s investment in Southeast Asia is environmentally unfriendly means.”

In March, Beijing placed sanctions on several European parliamentarians and think-tanks in retaliation to Brussels who, just hours earlier, sanctioned two Chinese Communist Party officials in Xinjiang over alleged human rights abuses of the Uyghur population. An EU-China investment pact was subsequently put on hold.

Recently, the EU has also taken a more robust stance on the South China Sea and Taiwan. Taiwanese Foreign Minister Joseph Wu also made a secret visit to Brussels in late October, much to Beijing’s disappointment.

Working towards a greener economy

EU ambassador to ASEAN Igor Driesmans, however, feels optimistic about upcoming green projects with China.

Under the framework of the International Platform on Sustainable Finance, “The EU and China are working together on greater convergence of taxonomies of green finance and investments, including identifying and assessing the commonalities and differences in our respective approaches and outcomes,” Driesmans told DW.

The platform was launched in 2019 by the EU and China, together with six other countries, to coordinate rules and standards on green finance.

Last year, both sides launched a High-Level Environment and Climate Dialogue and their Joint Communique on Climate and Environment published in October extended their commitments to climate cooperation, including on transitions away from coal and fossil fuel subsidies.

The EU and several European development banks have now pledged more than €780 million to the ASEAN Catalytic Green Finance Facility, Driesmans noted.

Together, with support from other development partners, potentially China, this facility is expected to mobilize €7 billion for green infrastructure projects in Southeast Asia, he added.

Sameer Kumar, an associate professor at the University of Malaya’s Asia-Europe Institute, says there are practical areas where the EU and China can cooperate, such as effective management of solid wastes, a particular concern as 60% of the ASEAN region’s population is forecast to live in urban areas by 2025.

“ASEAN would gain immensely from the long experience and technical expertise of the EU and China” in this area, Kumar added.

EU-China collaboration ‘imperative’

Chinese President Xi Jinping’s vow in September to stop his country’s funding of new coal-fired power plants abroad, meanwhile, was welcomed by Brussels.

“This is a good position from which the EU and China can cooperate to fund green initiatives in ASEAN,” said Nithi Nesadurai, director and regional coordinator of Climate Action Network Southeast Asia.

Their work would also be in parallel, Nesadurai added, with the EU and China funding different projects and different organizations.

Last week saw the formal launch of the Smart Green ASEAN Cities program, an EU-funded initiative. Beijing has engaged in similar projects through the ASEAN-China Partnership for Eco-Friendly Urban Development scheme.

Brussels has typically been reticent about criticizing the environmental policy of China, which was responsible for emitting 27% of the world’s greenhouse gases in 2019, according to a recent Rhodium Group report.

“Europe and China may be economic competitors, but they are not geopolitical rivals in the way that the US and China are,” said Sophia Kalantzakos, global distinguished professor in Environmental Studies and Public Policy at New York University. “Climate and biodiversity cannot and should not be sacrificed at the altar of superpower rivalries.”

EU-China collaboration is “imperative,” Kalantzakos added. With just eight years to go until 2030, a global deadline for climate action, “Southeast Asia will increasingly turn into a climate hotspot,” she said.

Edited by: Sou-Jie van Brunnersum