Investments of $1 trillion (6.6 trillion RMB) will be needed over the next five years to build sustainable, low-carbon cities in China, a series of reports commissioned by Bloomberg Philanthropies and the Green Finance Committee of the China Society for Banking and Finance, in partnership with the Paulson Institute, Energy Foundation China, and Chinese Renewable Energy Industries Association, finds.
Released at the second China-U.S. Climate-Smart/Low-Carbon Cities Summit, the series, Green Finance for Low-Carbon Cities (executive summary, 13 pages, PDF), is part of an initiative to develop innovative financing solutions for sustainable urbanization in China. The series includes reports focused on buildings, transportation, and energy, respectively — sectors that account for a large share of China's carbon emissions — and examines the potential of green finance tools and mechanisms such as green loans, green bonds, green industry funds, and carbon finance to spur private investment in low-carbon urban infrastructure.
According to the reports, the Chinese government is likely to fund only up to 15 percent of the $1 trillion needed for investments in green buildings, low-carbon transportation systems, and clean energy. In order to build low-carbon cities that can help China meet its commitment to reduce its carbon emissions by 2030, it will be necessary to leverage those funds by creating green building funds and insurance; providing diversified green financial instruments; establishing early-warning and risk-sharing mechanisms; introducing policy incentives; and defining standards for and monitor implementation of projects.
"The [Chinese] government has made a strong commitment to...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," said Paulson Institute managing director Kevin Mo, who wrote the report on buildings. "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."