environmental issues

[OPINION] Kaliwa Dam project tests China’s new ‘green’ rules and standards for overseas projects

Tom Xiaojun Wang
[OPINION] Kaliwa Dam project tests China’s new ‘green’ rules  and standards for overseas projects

Graphic by Alejandro Edoria, photo courtesy of Laurie Mae Gucilatar

'Can indigenous communities affected by the Kaliwa Dam expect a new round of conversations with a team of both Chinese constructors and local agencies such as the MWSS?'

In July, China’s Ministry of Commerce and Ministry of Ecology and Environment jointly released the Green Development Work Guide for Overseas Investment and Cooperation (the Green Guide). The guidelines specifically call for the need to adhere to the “green development concept” throughout the entire process of foreign direct investment and cooperation; encourage the practice of environmental impact assessments and due diligence in accordance with internationally accepted standards; apply high standards at the planning and design phase of infrastructure projects, and strengthen contact with host country governments, media, local people and environmental protection organizations; and support investment in solar, wind, nuclear and biomass energy, and other forms of clean energy.

The Green Guide is targeted mainly for central state-owned enterprises (SOEs), but also copied to policy banks such as the China Development Bank, the ExIm Bank of China, and the China Export & Credit Insurance Corporation, all of whom are key players in China’s overseas investment and trade program known as the Belt and Road Initiative (BRI).

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What do these new guidelines mean for the Kaliwa Dam, with China Energy Engineering Corporation as the construction contractor and the ExIm Bank of China as the funder, as well as other Chinese-funded projects in the Philippines? With the Philippines government determined to proceed with the controversial project despite lack of proof of compliance with environmental prerequisites and failure to submit necessary permits, this project could put to test China’s new green guide.

The project still lacks Free Prior and Informed Consent (FPIC) from the Indigenous People communities and Special Use Agreement in Protected Areas (SAPA) for the use and development of land, resources, or facilities within protected areas. The Commission on Audit (COA) has also called out the Metropolitan Waterworks and Sewerage System (MWSS) for proceeding with the implementation of the P12.2-billion Kaliwa Dam project despite failure to comply with the preconditions under the environmental compliance certificate, i.e., submission of an approved reforestation program, waste management plan, integrated watershed management plan, comprehensive social development program, ancestral domain and cultural heritage sustainable development plan, and cultural heritage protection plan, as well as the creation of a multipartite monitoring team and inventory and assessment of threatened species that may be affected during clearing operations.

By the Green Guide, the Ministry of Commerce and the Ministry of Ecology and Environment are sending Chinese SOEs two strong signals. One is that best environmental practices will help them become more competitive in the global market, and the other one is that weak environmental governance means high investment and even political risks. 

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The Green Guide is also the first official document in which Chinese SOEs are told to aim high and go beyond the minimum. For a long time, when addressing complaints from locals about environmental damage and weak environmental impact assessments, Chinese SOEs would argue that they “follow local relevant regulations and standards.” Even China’s Ministry of Foreign Affairs took a defensive tone earlier this year, when asked about China’s support for overseas coal power plants while making global carbon neutrality commitments, by passing the blame back to host countries, with the narrative that those countries “opt for coal-fired power generation first in light of their national conditions and available resources so that they could at least manage to have access to affordable electricity. ” 

Lax environmental regulations and standards in host countries have been convenient excuses for Chinese SOEs. In Indonesia and Pakistan, which do not have much of any air quality standards, Chinese companies have built coal power plants whose emission standards for pollutants, such as nitrogen oxides (NOx), particulate matter (PM), and sulfur dioxide (SO2), would be completely unacceptable back in China. 

Empowered with the new guidelines from China’s commerce and environmental ministries, communities and environmental groups in the Philippines can now hold Chinese companies up to a higher standard, at least as high as those in China. The Green Guide ends with a call for Chinese SOEs to “enhance communications with the governments, media, people, and environmental groups in host countries.”

Can indigenous communities affected by the Kaliwa Dam expect a new round of conversations with a team of both Chinese constructors and local agencies such as the MWSS? Will the two Chinese ministries give teeth to this Green Guide and ensure their SOEs practice the highest environmental and social standards by respecting local communities’ concerns?

The Kaliwa Dam is the first test for the Green Guide. The score is yet to be marked, by the communities and groups in the Philippines, as well as groups in China. The civil society groups in both countries are not only the ones marking the test paper. We are here to support such projects to achieve a win-win outcome with the best environmental and social performances. – Rappler.com

Lidy Nacpil is coordinator of the Asian Peoples’ Movement on Debt and Development (APMDD).

Tom Xiaojun Wang is director of People of Asia for Climate Solutions (PACS).