OPINION: Duterte and China's takeout menu

By Renato Redentor Constantino

This article was originally published in ABS-CBN News

Upon arrival in Beijing, Philippine President Rodrigo Roa Duterte will right away notice the incredible blend of modernity and the present that China is determined to leave behind. The brimming sense of enterprise and economic might is manifested in 12-lane roads, layers of mass transport above and below ground, and massive buildings.

It is also the start of smog season. With luck, Duterte will have a front seat view of what many call the “Airpocalypse”. There might even be enough toxic particulate matter to sniff around.

There is much for the Philippine president to take home, not only in trade deals but in long-term investment insights as well. Ultimately, what will matter is not the size of economic cooperation Duterte’s state visit will produce, but which side of China he will bring home.

On offer is the approach China is eager to leave behind – a wasteful, power-guzzling model of development choking its very citizens. Or, the future the Asian economic powerhouse is headed to, thrumming with innovation and efficiency.

Years ago, climate agreement skeptics said China would never sign on because it had to catch up with the developed world in terms of per capita GDP. They said, as a matter of climate justice, that reductions should come exclusively from those responsible for the problem. But now that China is the number one emitter of greenhouse gases and one of the countries to be severely affected by global warming, China’s leaders have realized no realistic agreement could be crafted without credible emissions reduction commitments from the country itself. It was a matter of self-interest for China.

President Duterte would do well to approach the relationship he seeks to build with China with similar self-interest, with a keen eye to the way Chinese leaders are transitioning to a far more efficient and sustainably-powered economy.

When China and the US clasped hands and together approved the Paris Climate Agreement, it signaled a new global polity intent on pursuing low carbon development pathways. But was the new Duterte government paying attention? We are hopeful the Philippine president took notice.

The unprecedented collaboration of the world’s clean energy superpowers opens up massive investment opportunities the Philippines can take advantage of.

With the early entry into force of the Paris Agreement, the Philippines needs to ratify the climate pact it had championed last December. The Duterte administration should use the opportunity to show it remains ready to play the role not only of a responsible country but of a global leader too.

President Duterte vowed in his first State of the Nation Address last July that climate change will be a top priority of his government. To realize this, he needs to urgently integrate climate ambition into the development plans of the Philippines while seeking out the kind of investments China itself is presently fostering.

According to Bloomberg New Energy Finance (BNEF), China invested over $100 billion in renewable energy by 2015. Industry observer Lauri Myllyvirta noted how in 2015, all of China’s new power demand was met by wind and solar power alone. In fact, power generation from just wind and solar already produces energy equal to twice the entire electricity demand of Ireland in 2015.

China’s financial sector likewise presents an opportunity for collaboration. Financial institutions China helped set up such as the Asian Infrastructure Investment Bank (AIIB) can play a huge role in helping the Philippines transition to a sustainable energy-powered, energy-secure economy, according to Sara Ahmed, energy finance analyst of the Institute for Energy Economics and Financial Analysis.

“The bottom line to spurring investments in the Philippines is to de-risk and incentivize. AIIB is critical to addressing risk allocation and increasing bankability in project-financed transactions. Since the AIIB is not a commercial bank and does not have a credit rating limitation to observe such that of typical multilateral banks, it is best placed to absorb risks via grants, guarantees, and insurance facilities. This can only drive more investment from the private sector including commercial banks, multilateral banks, bilateral agencies, and export-import banks. With the right policy signals from the Philippine government, Chinese finance can spur inclusive growth and focus on clean energy, modern mass transport, and urban services,” she said.

Not everything on China’s shelf is rosy, of course. BNEF notes China has reached peak coal – with an oversupply of the most carbon intensive fossil fuel for the next 15 years. China is now under pressure to look for new markets. Among the options under consideration is for China to extend cheap loans for dirty coal-fired power plants to the Philippines.

The Philippines can quickly become a coal dumping ground, which can only bring to mind unsavory memories of mendicancy. In the form of trade, the Philippines accepted Canadian waste. And in the guise of aid, the country received defective Huey helicopter discards from the United States.

Which option in the Chinese menu will President Duterte choose? The polluting path China wishes to shed? Or the clean, viable future China is determined to pursue?

Renato Redentor Constantino is the Executive Director of Institute for Climate and Sustainable Cities, a climate and energy policy group based in the Philippines.