Beijing—A new research report series Green Finance for Low-Carbon Cities, authored by the Paulson Institute, Energy Foundation China and the Chinese Renewable Energy Industries Association, estimates that 6.6 trillion RMB ($1 trillion) will be required over the next five years to build low-carbon cities in China. This includes investments in efficient buildings, low-carbon transportation and clean energy in Chinese cities. The research is supported by Bloomberg Philanthropies and the Green Finance Committee of China Society for Banking and Finance and is part of an initiative that aims to develop innovative financing solutions to support sustainable urbanization in China.
The reports were released today at the second China-U.S. Climate-Smart / Low-Carbon Cities Summit in Beijing. Over 700 city officials, business representatives and researchers from China and the U.S. attended the Summit to explore collaborative initiatives on climate actions. The English executive summary of the reports can be found here.
“China has set an ambitious goal of peaking national carbon emissions around 2030, wisely recognizing that economic growth and fighting climate change go hand in hand,” said Michael R. Bloomberg, U.N. Secretary-General’s Special Envoy for Cities and Climate Change, Founder of Bloomberg L.P. and Bloomberg Philanthropies. “That leadership helped make the Paris climate agreement possible – and now, China is looking for creative ways to finance the low-carbon infrastructure needed to reach its climate goals.”
“Finance is at the heart of the economy, and green urban development in China cannot happen without support from green finance,” said Ma Jun, Chief Economist, Research Bureau of People’s Bank of China, who chairs the Green Finance Committee, China Society for Banking and Finance. “Greening of buildings, transportation and energy will be crucial as these sectors are the main sources of urban emissions.”
Green Finance for Low-Carbon Cities Reports – Buildings, Transportation, Energy
The research series includes three reports, focusing respectively on the three key sectors – buildings, transportation and energy. The research explores the potential of different green finance tools and mechanisms, such as green loans, green bonds, green industry funds and carbon finance, as well as related policies, to spur private investment in low-carbon urban infrastructure.
According to the Buildings report, authored by the Paulson Institute, during the 13th Five-Year-Plan period, China will need to invest RMB 1.65 trillion ($254 billion) to support the construction of greener buildings and the large-scale retrofits of existing houses and commercial buildings.
“The government has made a strong commitment to promote building efficiency through improved building codes and public subsidies, and we have seen mounting interest from the private sector to provide capital investment to these projects as well,” explained Dr. Kevin Mo, Managing Director at the Paulson Institute, who wrote the report. “We are working on innovative green financing mechanisms, and a government guarantee program for green buildings backed up by a third-party rating system would deliver enormous potential for economic growth in this area of sustainable buildings.”
The 13th Five-Year-Plan has laid out ambitious development goals for green transportation in Chinese cities, requiring a total of 4.45 trillion RMB ($684.9 billion) to invest in the infrastructure for urban rail, bus, electric vehicles, bike and urban roads.
“One challenge for financing urban transportation projects is the heavy reliance on local government debt for both the capital investments and the operations, which exposes cities to high credit risks,” said Dr. Wang Zhigao, City Program Director at Energy Foundation China, who led the Transportation study. Dr. Wang suggested that “financing models such as public-private-partnership (PPP) can help diversify sources of funding and secure more investments for low-carbon transportation projects.”
“Support for the growth of distributed solar PV is the most important way for cities to help decarbonize the energy sector,” added Peng Peng, Policy Research Director at the Chinese Renewable Energy Industries Association (CREIA). The Energy report, written by CREIA and other partners, estimates that 500 billion RMB ($77 billion) is needed to fulfil the development goal by 2020. “Besides distributed solar PV, we also encourage cities to explore ways to purchase green electricity from other cities, to expand the market demand for clean energy and to help cities achieve their low-carbon goals.”
“Ultimately, this initiative creates a platform for leading sustainability experts and financial sector practitioners to come together, and propose ambitious but practical recommendations to unlock green investments for Chinese cities. We believe that the public and private sectors can collaborate and contribute to China’s green financing opportunity in meaningful ways,” said Antha N. Williams, who directs the Environment Program at Bloomberg Philanthropies.
Bloomberg Philanthropies works in more than 120 countries around the world to ensure better, longer lives for the greatest number of people. The organization focuses on five key areas for creating lasting change: Arts, Education, Environment, Government Innovation and Public Health. Bloomberg Philanthropies encompasses all of Michael R. Bloomberg’s charitable activities, including his foundation and his personal giving. In 2015, Bloomberg Philanthropies distributed more than half a billion dollars.
Green Finance Committee of China Society for Finance and Banking was initiated and administered by People’s Bank of China (PBC). The Committee consists of 140 institutional members including major banks, brokers, investment funds, and insurance companies, as well as policy makers, regulators and researchers and service providers in the area of green finance. Its mandate is to promote the establishment of the green financial system in China and build capacity for green investment by Chinese financial institutions.
The Paulson Institute is a non-partisan, non-profit “think and do” tank grounded in the principle that today’s most pressing economic and environmental challenges can be solved only if the United States and China work in complementary ways. Our mission is to strengthen U.S.-China relations and to advance sustainable economic growth and environmental protection in both countries. Our programs focus on advancing the transition to more sustainable, low-carbon economic models in China and the United States through industrial transformation, sustainable urbanization programs, and environmental conservation. We are helping develop green finance mechanisms to deploy sustainable technologies and promote energy-efficient buildings. We also promote bilateral cross-border investment that will help create jobs and strengthen U.S.-China relations. Our Think Tank publishes prescriptive and analytical papers from leading scholars and practitioners on the most important macroeconomic and structural reform issues facing China today. Founded in 2011 by Henry M. Paulson, Jr., the 74th Secretary of the Treasury and former Chief Executive Officer of Goldman Sachs, the Institute is based in Chicago and has offices in Washington, San Francisco, and Beijing.
Energy Foundation China, established in Beijing in 1999, is a grant-making charitable organization dedicated to China’s sustainable energy development. It is registered under the Ministry of Civil Affairs as Energy Foundation Beijing Representative Office and supervised by the National Development and Reform Commission of China. It is a part of the Energy Foundation, which is based in San Francisco, California, U.S.A.
The Chinese Renewable Energy Industries Association (CREIA) was established in 2000 with the support of the United Nations Development Programme (UNDP), the Global Environment Facility (GEF) and the State Economic and Trade Commission (SETC). CREIA serves as a bridge between regulatory authorities, research institutes and industry professionals in order to provide a forum to discuss renewable energy development at the national level and subsequently advise the Government of China on strategic policy formulation. CREIA acts as a window to bring together national and international project developers and investors. It promotes technology transfer and raises awareness of renewable energy investment opportunities through an online Investment Opportunity Facility and regional networking and training activities.
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