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Could China's quest for resources undermine low carbon policies in Latin America?

Substantial Chinese investments in natural resources and commodities—when combined with those of other nations and firms—run the risk of taking Latin America in an unsustainable direction. This is one of the points made in the report A High-Carbon Partnership? Chinese-Latin American Relations in a Carbon-Constrained World" authored by Guy Edwards and Timmons Roberts. Here we share an commentary published in Climate Wire.

Climate Wire published a commentary by Lisa Friedman on 20.03.14 for which Nivela's Director, Monica Araya was interviewed. We thank Climate Wire for kindly let us share Lisa Friedman's article with non-subscribers.

We will soon publish an interview with lead author Guy Edwards.

"China's quest for resources may undermine low-carbon policies in South America -- study"

By Lisa Freeman

China's soaring demand for Latin America's copper, soybeans, petroleum and other natural resources has sparked concerns among climate change experts that the high-carbon relationship could sour global warming negotiations.

In a Brookings Institution report released yesterday, researchers argued that Chinese energy investments in places like Brazil, Venezuela and Costa Rica threaten to hike Latin America's carbon footprint. That, in turn, could influence progressive countries' negotiating positions in the U.N. climate talks -- if not overtly, then by bolstering what the authors referred to as "dirty" ministries.

"Maintaining or moving to low-carbon pathways is critical for those Latin American countries which are seen as progressive voices at the U.N. climate negotiations," Brown University co-authors Guy Edwards and Timmons Roberts wrote. While trade with China may be key to boosting economic growth in the region, they warned, "building a high-carbon partnership could be disastrous for Latin America and the world in the long-term."

The report comes as Latin America takes on a high-profile role in the U.N. climate negotiations. Lima, Peru, will be the site of this year's main negotiating session in December, where countries will be expected to deliver a draft of the new global pact that countries will sign in Paris in 2015. That meeting, along with a pre-conference in Venezuela, is expected to shine a spotlight on a part of the world where countries have taken increasingly stronger positions in the negotiations.

With disparate economies and ideologies throughout the region, though, those positions vary substantially. Colombia, Chile, Peru, Costa Rica, Guatemala, Panama and the Dominican Republic are part of a negotiating group that is moving aggressively on renewable energy domestically and pushing all countries -- including the major developing countries, like China -- to take on heftier emissions cuts. In doing so they, along with vulnerable Caribbean islands, have distanced themselves a bit from the G-77 and China, an umbrella group of all developing nations that often takes a hard-line stance that wealthy countries should take the bulk of responsibility for cutting carbon.

Oil-rich Venezuela and Ecuador, along with leftist Bolivarian Alliance for the Peoples of Our America partners Bolivia and Nicaragua, meanwhile, have joined forces with China in a bloc they call the "Like-Minded Group" that goes even further than the G-77, insisting that developed countries have caused the climate crisis and that they alone should fix it. Industrialized countries, they insist, should shoulder legal responsibility for cutting greenhouse gas emissions, while compensating developing nations for voluntary actions. Brazil, as the biggest country in the region, also negotiates alongside China, India and South Africa in a powerful bloc representing major emerging economies that also happen to be skyrocketing emitters of greenhouse gases.

China dominates region's exports

China, meanwhile, has come to dominate Latin America's exports in a rise the authors called "impressive." In 1990, they noted, the United States accounted for 60 percent of Latin America's foreign trade and Asia just 10 percent. By 2010, trade with Asia had doubled to 20 percent, and by 2011, China had become the top destination for exports from Brazil, Chile and Peru. According to the U.N. Economic Commission for Latin America and the Caribbean, China will surpass the European Union as Latin America's second-largest trade partner by 2016.

The vast majority of the relationship traffics in natural resources. In 2006, for example, exports of copper, ores, soybeans, iron and crude petroleum made up 60 percent of all exports from Latin America to China. And while China is making similar inroads into Africa, the authors note that the potential growth of Latin America's emissions profile sets the region apart.

"Latin America and China together represent roughly 19 percent of GDP and about 40 percent of total global greenhouse gas emissions. This is quite a chunk," Edwards said. He noted that while many nations in the region are heavily reliant on hydropower and eager to see growth in renewable energy, energy demand in Latin America is expected to double to about 600 gigawatts by 2030. That means the trade relationship with China poses a new threat. "If these countries are put on a high-carbon pathway, then that is obviously a step backward," he said. The report takes a deep dive into three very different investment alliances to explore unfolding the China-Latin America dynamics.

In Costa Rica, for example, the authors argue that the country's relationship with China has already threatened its ambitious climate goals, like becoming carbon-neutral by 2021. While the country has aligned itself with other climate-progressive countries in the talks, a plan to upgrade the country's national oil refinery with a $1.5 billion loan from China -- a move that would triple production of the refined fuel -- has raised eyebrows. Wrote the authors, "China might be inadvertently pulling the Pacific Alliance members away from their climate goals as in the case of Costa Rica while indirectly bolstering their climate policies due to increased investment, economic growth and confidence on the international stage as a result of the [trade] progress."

Venezuela, meanwhile, provides an even starker contradiction. Despite having the world's largest oil reserves, Venezuela has fashioned itself into a darling of the climate change movement with ceaseless calls for industrialized countries to protect the Earth for future generations, even as the country develops vast tar sands and does next to nothing domestically to limit domestic emissions. China plays a major role in Venezuela's energy landscape, having invested billions of dollars in oil fields and lent Venezuela about $46.5 billion between 2005 and 2012 -- more than any other country. The authors said the relationship carries over to the climate talks.

"Given Venezuela's current ideological preference of exporting oil to China, Venezuela's partnership with China is beneficial to it for two reasons. First, it can export oil to a preferred ally, thus securing much-needed loans. Meanwhile the country at the U.N. climate negotiations can position itself alongside China to avoid an aggressive climate treaty, which would undermine its own economy and arguably China's as well," they wrote.

Trade may 'trump' climate change in Brazil

And in Brazil, where China replaced the United States as the most important trading partner in 2010, soybeans are the top export commodity -- a demand that, the authors note, is tied to deforestation in the Amazon. The Brazilian government has taken strong steps to reduce the destruction of its tropical forests, but, according to the report, "Brazil's leadership on climate change is uncertain," given setbacks in deforestation due to a rush for new infrastructure projects.

The authors describe Brazil as the "most ambitious" among the emerging economies on climate change but note that in recent years, the government has shifted "to a greater focus on economic growth." Whereas for the past few years, it had been seen as a country that helped bridge developed and developing countries, at the last U.N. climate conference in Warsaw, Poland, it reverted back to an old hard-line position that industrialized countries must cut carbon based on historic responsibility.

The authors describe Brazil as the "most ambitious" among the emerging economies on climate change but note that in recent years, the government has shifted "to a greater focus on economic growth."

According to the report, "It is unclear how actively Brazil and China are coordinating their climate positions," since only lower-level diplomats attend meetings of the negotiating bloc to which they belong. "Trade and commercial issues may simply trump the climate change issue in driving the nation's position, and trade with China represents a major and fast-growing sector." And across all its Latin American trade partners, the report notes, there are few bilateral efforts with China on climate change, an absence Edwards said is worrisome.

"China is so focused on its own domestic growth that climate change considerations haven't really been factored into its relationships with Latin American countries," he said. But, he added, "If China's presence is going to keep surging ahead and keep knocking the U.S. and the E.U. off the top places for trade, it's going to have to be doing stuff on climate change."

Monica Araya, director of the nonprofit group Costa Rica Limpia and a former special adviser to the Costa Rican government on climate change until she was fired last year for opposing the government's oil refinery deal with China, said there is a growing awareness in Latin America about the threats that climate change poses to the region's development. But, she said, her part of the world still has some soul-searching to do on how to approach the climate threat.

"It hasn't translated yet into a political commitment," Araya said. "The region in its diversity hasn't really signaled whether the commitment of decarbonization is at the highest levels of government. What you see are isolated action ... but as a matter of state policy, we're trying to have it both ways."

She agreed with the authors that China's involvement in the region could have enormous climate implications.

©2014 E&E Publishing, LLC
Reprinted with permission

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