Green Finance Dashboard
If China is going to meet its climate and environmental goals, it will need to unlock a tremendous amount of capital. The country’s growing efforts to expand “green finance” will be a key to its success. This project explores China’s progress in five areas—carbon markets, green securities, energy transition, biodiversity finance, and carbon emissions.
The data tell an interesting story. China has an enormous challenge ahead to decarbonize an economy that is over 80 percent reliant on fossil fuels. It is—by far—the world’s largest emitter of greenhouse gases. But, at the same time, it is becoming a global powerhouse in investing in and deploying green technologies and infrastructure. It has installed more renewable energy power capacity than the US, Brazil, India, Germany and Japan combined, and its renewable energy investment has surpassed both the US and Europe. In addition, China now operates the largest national carbon market in the world, having put a price on 4.5 billion tons of carbon emissions.
The dashboard will be updated periodically as new data becomes available. To explore the dashboard, use the buttons below:
China’s national carbon market was officially launched in July 2021. Although the market only covers China’s power sector, it still constitutes the largest carbon market in the world. By the time the market incorporates its top polluting industries–electrolytic aluminum, cement, iron and steel, petrochemical, chemicals, papermaking and aviation–it will have put a price on nearly 80% of China’s emissions. A key challenge for the market is that prices are well below levels that are needed to change behavior. In 2021, average prices traded around 50 RMB, or $7.70 USD. In contrast, the IMF has estimated global average carbon prices need to reach at least $75 USD by the end of the decade to meet the Paris emissions goals.
Biodiversity protection is an increasingly salient issue in China. The country’s rapid economic growth and urbanization in recent decades have led to widespread habitat loss and nature degradation. In an effort to reverse this trend, China’s leaders are stressing the link between biodiversity and economic growth, and taking new efforts to protect nature. In 2021, China assumed the presidency of the 15th Conference of Parties (COP15) to the Convention on Biological Diversity, announced new conservation efforts, including the creation of the Kunming Biodiversity Fund, the establishment of China’s first national park system, and new financing for nature.
Clean Energy Transition
China aims to have 80% of the country’s total energy mix from non-fossil fuels by 2060. This will require a rapid transition away from coal, and massive investments in renewables and other clean energy technologies. China today is already leading the world in renewable energy capacity, and is making substantial investments for the future.
China is one of the world’s largest markets for green bonds, having issued a total value of $94 billion in domestic and overseas markets in 2021. At the same time, it is experiencing a positive trend in ESG investing. This has been led by a strong government approach which emphasizes green finance as a strategic priority. China will need 487 trillion RMB (around $77 trillion) in green investment in the next 30 years to meet its carbon neutrality goals.
China Carbon Emissions
China today is the world’s largest carbon emitter. Its emissions have tripled in the past three decades, and surpassed the US in the mid-2000s. In 2019, it accounted for 27% of global emissions–more than the combined emissions of the developed world. China’s emissions are largely driven by its heavy reliance on coal for its heating and electricity.