China’s rapidly increasing investment, trade and loans in Latin America may be entrenching high-carbon development pathways in the region, a trend scarcely mentioned in policy circles. High-carbon activities include the extraction of fossil fuels and other natural resources, expansion of large-scale agriculture and the energy-intensive stages of processing natural resources into intermediate goods.
This paper addresses three examples, including Chinese investments in Venezuela’s oil sector and a Costa Rican oil refinery, and Chinese investment in and purchases of Brazilian soybeans.
China and Latin America have a critical role to play to ensure progress is made before the 2015 deadline, since they together account for approximately 40 percent of total global greenhouse gas emissions. Several Latin American nations are world leaders in having reached high levels of human development while emitting very low levels of greenhouse gases. Several have publically committed to ambitious greenhouse gas emission reduction goals. Staying on or moving to low-carbon pathways is critical for these countries, but substantial Chinese investments in natural resources and commodities—when combined with those of other nations and firms—run the risk of taking the region in an unsustainable direction.
Chinese investments and imports of Latin American commodities may be strengthening the relative power of political and commercial domestic constituencies and of “dirty” ministries (e.g. ministries of mining, agriculture or energy) vis-à-vis environmental and climate change ministries and departments. These “cleaner” ministries are traditionally weak and marginalized actors in the region. China may thus be inadvertently undermining Latin American countries’ attempts to promote climate change policies by reinforcing and strengthening actors within those countries and governments that do not prioritize climate change and who have often seen environmental efforts as an impediment to economic growth.
China has stated that it is interested in cooperating with Latin America on combating climate change, but official bilateral or multilateral exchanges on the issue outside of the UNFCCC negotiations have been limited. Both China and Latin America could benefit substantially by refocusing on opportunities for low-carbon growth such as renewable energy. China’s growing influence in global renewable energy markets presents excellent opportunities to invest in clean energy in Latin America.
China and Latin American countries could launch a climate change initiative through the newly created China-CELAC (Community of Latin American and Caribbean States) Forum, focused on financing the reduction of greenhouse gas emissions from agriculture, forestry, energy and transport, as well as sharing technology and strategies for adapting to climate impacts. Chinese-Latin American relations should also mainstream environmental protection and low-carbon sustainable growth into their partnership, to avoid pushing countries in the region towards high-carbon pathways.
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