[CHINA WATCH] Green Development Index for Belt & Road

Recently, a green development index (GDI) for countries in the Belt and Road Initiative (BRI) was jointly released by Renmin University of China and Columbia University, comparing the green development status between BRI countries and the Organization for Economic Cooperation and Development (OECD) countries.

On the fifth anniversary of the Belt and Road Initiative, almost all organizations like to discuss the green development of the BRI, echoing President Xi Jinping’s call at the 2017 Belt and Road Forum for International Cooperation in Beijing.

At the forum held in May 2017, Xi first said countries should jointly pursue new idea of green development, and promote a lifestyle that is green, low-carbon, circular and sustainable.

The green development index is a direct response to Xi’s call, by putting green development and BRI together. BRI Green Development has great significance for the successful implementation of BRI and for world’s green & low carbon transition as well as the fulfillment of global sustainable development goals.

The major goals of the green development index are: 1) to assess the level of green development for BRI countries and seek gaps and reasons behind those gaps; 2) to identify key areas and technologies that contribute to the level of green development in BRI countries; and 3) to offer policy recommendations to promote green development for BRI.

Our green development index consists of three major components or categories: natural assets, green technologies and development outcomes. While most other similar indices focused on the two ends of development, ie natural assets as inputs and development outcomes as outputs, we have added the missing middle piece — green technologies. Green technologies are key for BRI countries to materialize green development and meet transition requirement.

Below each component are 15 sub-categories and 20 specific indicators. Those 20 indicators range from forest areas to biodiversity, from renewable energy to general technology competitiveness, and from human development index to PM 2.5 concentration.

A statistical method called factor analysis is employed to calculate weights for each indicator. Indicators such as renewable energy generation, energy efficiency, R&D expenditure, human development index, CO2 emissions are shown to have a relatively high weight.

Results shown that the overall level of green development in BRI countries has improved significantly over the past decade, but there is still a clear gap compared with OECD countries.

China's green development score rose from 57.2 in 2006 to 65.7 in 2015, being one of the fastest growing countries, according to figures released by the research conclusion. In 2015, China ranks third among all BRI countries, following Russia and Albania.

The significant improvement of China's GDI is closely related to the great efforts China has made in promoting energy efficiency and renewable energy utilization in recent years.

The performance of green development varies significantly from one country to another. For BRI countries in 2015, while the highest score is 66, the lowest score is only 28, a difference of almost 40. For OECD countries, the difference is only 22, with the highest score as 79 and the lowest as 57.

The low starting points in most BRI countries provides a great green development opportunity for them to improve. Several countries stand out including Saudi Arabia and Cyprus, both starting from low GDI scores. Interestingly, their improvements point to the same underlying reason — green technologies, though the specific technologies used tend to be slightly different.

This suggests multiple channels for a country to turn green, as well as learning from the successful experiences in other countries.

Another important policy implication from the research is that green development is not necessarily incompatible with economic development. In general, there is an inverted U-shaped relationship between GDI and GDP per capita, meaning they first increase together, and only when GDP per capita arrives at a certain level, GDI score stops increasing. This holds true for both OECD countries and BRI countries.

Within BRI, countries such as Singapore, Brunei and the United Arab Emirates, perform well in terms of economic development outcomes; however, all of them score poorly in the overall GDI. What differentiates green development from purely economic development is that the former requires a green-directed technological change and substantial clean technology investments.

In order to tackle the global climate change challenge, BRI countries should adopt a broader concept of development and start to embrace the idea of green development.

China can be a useful bridge between BRI countries and OECD countries, not only because of its economic development success, but also owing to its substantial improvements in GDI scores.

Within the past decade, China has become a global leader in renewable energy development and its successful story in improving energy efficiency even dates back earlier. Furthermore, the scale of China makes it unique in providing successful experiences to other BRI countries with varying sizes.

Due to the geographical closeness, historical ties, and similar starting points, China can provide world-class green technologies, technology know-how and successful policy experiences to BRI countries. Meanwhile, a scientific green development scoring system for BRI could help make this technology and policy diffusion process more transparent and impactful.

Dong Changgui, a research fellow from the National Academy of Development and Strategy at Renmin University of China. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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