Op-ed by Dimitri de Boer, CCICED Special Advisor and Regional Director of Programmes for Asia, ClientEarth, and Fan Danting, Green Finance and Climate Lawyer, ClientEarth.
China’s planning ministry, the National Development and Reform Commission (NDRC), has updated its guidelines on feasibility reports for investment projects. Starting May 1, 2023, all high-emission projects will be required to assess their climate impacts. This is an important step in China’s efforts to achieve carbon neutrality before 2060.
A focus on high-quality and sustainable development
Feasibility reports inform the investment decisions about all domestic projects in China. The previous guidelines were issued early in 2002 by the former State Planning Committee as a regulatory response to the rapidly expanding role of market-led investments. The updated guidelines will now focus on high-quality development rather than mere economic growth, reflecting the United Nations Sustainable Development Goals; the World Bank Environmental Social Impact Assessment analysis framework; and environment, social, and governance concepts.
The newly released package from NDRC comprises three documents: a set of General Guidelines applicable to government investment projects, a set of Reference Guidelines applicable to enterprises’ private investments, and an Explanatory Note that explains the concepts and principles in the two main guiding documents. Domestic governments of all levels should follow the General Guidelines in principle when developing feasibility reports, which are the basis for project approvals.
The Reference Guidelines for enterprises is a softer requirement that respects corporate autonomy while encouraging enterprises to invest in a more sustainable way. However, its scope could evolve beyond a voluntary measure, as we anticipate that approval agencies and state-owned financial institutions will likely require that project developers follow the new guidelines.
Highlights in the guidelines from an environmental perspective:
Carbon peaking and neutrality analysis for high-emission projects. The guidelines on “Project Impact Analysis” are divided into five parts: economic impact, social impact, ecological and environmental impacts, resources and energy utilization, and carbon peaking and neutrality analysis. The updated guidelines on carbon peaking and neutrality assessments in feasibility reports say: “For high energy consumption and high emission projects, based on their energy and resources utilization, the report should predict and account the total annual carbon emissions of the project and the carbon emission intensity of the main products, formulate a plan to control carbon emissions, clarify the pathway and approach to reduce emissions, and analyze the project’s impact on the achievement of the carbon neutrality goal of that region.”
Ecology and environment impact analysis. According to the Explanatory Note, ecological and environmental impact analysis means “to analyze the current ecological environment of the proposed project site from the perspective of promoting green development and human nature harmony, and to evaluate the impact of the project in terms of pollution, ecological protection, biodiversity and environmentally sensitive areas.”
Full life-cycle management of projects. The guidelines embody the idea of full life-cycle management throughout project construction, operation, and exit and require future feasibility reports to draw on concepts of sustainable development.
Ecological civilization. The notion of an ecological civilization is highlighted as an overall principle in the Explanatory Note. It notes that when formulating project construction plans, green development and resource conservation shall be promoted, including land conservation, green building, ecological restoration, and resilience.
The Chinese government is developing new rules and regulations to underpin its efforts to achieve carbon peaking and neutrality. We expect rapid progress in this space over the coming months and years.
The op-ed expresses the views of the authors and not necessarily those of CCICED.