Climate change is one of the most severe challenges humankind has ever faced. To manage the impacts and minimize the risks, strong, rapid and sustained global actions are required to limit cumulative CO2 emissions in the coming decades, reaching at least net zero CO2 emissions, along with strong reductions in other greenhouse gas (GHG) emissions (IPCC 2021). An increasing number of countries are adopting carbon neutrality as a national strategy and making long-term low-carbon emissions plans. By the end of 2021, 136 countries and regions had proposed or were preparing to propose carbon neutrality goals, covering 88% of GHG emissions, 90% of Gross Domestic Product (GDP) and 85% of the population worldwide. However, economic development and the carbon emissions status and trends vary greatly among countries. Most developed countries have achieved carbon dioxide peaking and are in the emissions reduction stage on the path towards carbon neutrality, while numerous developing countries are in the carbon emissions growth stage or plateau stage or have not yet started industrialization, bringing stringent pressure and uncertainty to the achievement of global carbon neutrality. As most of the latter category is distributed along the Belt and Road, more attention should be given to how to promote the low-carbon transition of these countries.
Since the launch of the Belt and Road Initiative (BRI) in 2013, 146 countries have become signatories, including 46 in Africa, 44 in Asia, 26 in Europe, 19 in the Americas and 11 in Oceania. From 2013 to 2019, the GDP of BRI countries (including China) increased from $26,024 billion to $33,655 billion, with the percentage of global GDP increasing from 36.86–39.78%. Moreover, BRI countries are the main source of global carbon emissions, driving the increase in global carbon emissions from 56.86% in 2013 to 58.72% in 2019 (Fig. 1a) (OWD 2021, WDI 2021). Although the growth rate of carbon emissions in BRI countries is lower than that of GDP, the share of carbon emissions of BRI countries is much higher than that of GDP, and the share of fossil fuels in primary energy consumption is over 90%, indicating economic development in the mode of "high growth, high emissions, and high energy consumption" (Fig. 1b) (EIA 2021). Therefore, on the one hand, it is very difficult for BRI countries to achieve low-carbon transitions and the carbon emissions reduction targets they propose. On the other hand, BRI countries usually have fragile ecological environments and insufficient environmental capacity and are vulnerable to climate change risks, making their low-carbon transitions much more urgent.
Generally, the low-carbon transition paths of BRI countries include industrial transformation, energy transformation, energy saving and efficiency improvement, technological innovation, and low carbon consumption. As energy consumption is the main driver of carbon emissions, low carbonization of the energy structure is vital to achieve carbon neutrality, in which the development of a high proportion of renewable energy is key. It is estimated that the global share of renewable energy generation will increase from 29% in 2020 to 70% in 2050, with solar PV and wind power accounting for approximately 50% (IRENA 2018). BRI countries have advantages for the development of renewable energy. Many BRI countries have excellent light radiation and wind resource conditions. For example, the light intensity in Southeast Asia and the Middle East and the wind density in Central Asia, Eastern Europe, and South America are both higher than the global average of existing projects. In addition, the running hours of renewable energy projects in the operation of BRI countries are relatively high compared to the global average. Moreover, the growth rate of energy demand will be much higher than the global average, there will be sufficient land resources and resource distribution, and load centres can be matched geographically. It is estimated that the total renewable energy investment potential is $678 billion in BRI countries (Munoz et al. 2018). However, BRI countries have limited finances for renewable energy and other climate-related areas, and without the strong support of developed countries, it is difficult to implement a low-carbon transition and achieve net zero emissions.
To support developing countries in addressing climate change, the United Nations Framework Convention on Climate Change (UNFCCC) has established a climate finance mechanism since 1997 (Charlene Watson 2021, UN 1997). As the main recipients of international climate finance, BRI countries have received climate finance support through various bilateral and multilateral channels, with a total amount of 71,485 climate aid projects and a total funding of over $322 billion from 2000 to 2019, which accounts for over 60% of the global total (over $535.4 billion) (OECD 2021). In regard to time, climate aid funding was only a few billion USD before 2009, and after the Copenhagen Accord of 2009, in which developed countries pledged to raise $100 billion per year by 2020, the scale of funding increased significantly, exceeding $50 billion in 2019. In regard to finance type, climate aid is dominated by mitigation finance of approximately $229.1 billion (71.1%) and adaptation finance of approximately $121.6 billion (37.7%) (Fig. 2). In regard to finance usage, $91.7 billion is distributed to energy, accounting for approximately 28.5% of total climate aid, versus $50.6, $38, and $36.5 billion for transport and storage, water supply and sanitation, agriculture, forestry and fishing, respectively. As BRI countries receive a large amount of climate aid and a large portion is directed towards energy, it is sensible to examine whether climate aid has effects on carbon emissions reduction and the role that energy plays.
Therefore, this paper aims to examine the impact of climate aid on carbon emissions in BRI countries, to clarify the mechanism of climate aid and energy structure on carbon emissions in BRI countries, and to provide a theoretical and empirical foundation for better utilizing climate aid and building low-carbon energy systems. For these, we theoretically proposed a dynamic panel data model to explore the relationship between climate aid and carbon emissions. We further analyzed the carbon emissions reduction mechanism and empirically explored the relationship between climate aid, energy structure and carbon emissions by using a mediation model. The rest of the paper is organised as follows. In Section 2, we review the literature on the impact of climate finance on carbon emissions and the emissions reduction mechanism. In Section 3, we introduce the empirical model and describe the data. In Sections 4 and 5, we discuss the results, and in Section 6, we summarise with policy implications.