CHINA’S $243BIL NEW ENERGY INVESTMENT GAP

China Faces $243 Billion Climate Finance “Gap” Per Year By 2020, Exploring Reforms To Expand Clean Tech Investment

22 March 2013 (The Clean Revolution)

“China will need to raise up to US$243 billion of additional funds per year by 2020 in order to adequately finance action to curb the impacts of climate change and invest in low carbon development, according to… [Shaping China’s Climate Finance Policy, [commissioned by the Chinese government’s powerful National Development and Reform Commission (NDRC) and]authored by The Climate Group and the Research Centre for Climate and Energy Finance at [China’a] Central University of Finance and Economics…calls for a two stage plan to reform China’s climate finance mechanisms by 2020…[In 2012, China] accounted for one quarter of global investment in renewables, spending US$67.7 billion – a 20% increase on 2011. China’s goal is to have 15% of its total energy demand sourced from non-fossil energy by 2020.

“…[T]he report’s authors estimate that achieving China’s 2015 and 2020 emission intensity targets (a 17% cut vs 2010 levels and a 40-45% cut vs 2005 levels respectively), will require a total investment of up to US$333 billion by 2015, escalating to US$413 billion by 2020…Current public and private funds are not sufficient to cover the required investment, resulting in a financing “gap” of around 2% of China’s projected GDP in 2015 – or up to US$214 billion - increasing to US$208-243 billion by 2020…Plugging this gap will depend on both increased public sector finance, but also on a larger role for private sector financing especially after 2015. To ensure this happens, China will need to create the framework and incentives that can leverage large amounts of private finance using the still significant – and increasing – levels of public funding…”

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“…[T]he key climate finance challenges China currently faces…[include, 1] Implementation of national climate change laws…[2] Establishing a 'horizontal' coordination agency to connect government bodies…and commercial banks to…foreign investment…[and] development finance institutes, including a National Climate Fund (NCF) and a Green Investment Bank...[and,3] Establishing a Carbon Trading Regulatory Commission…

“…[A] range of policy reforms could also be made…[including, 1] ‘Green’ the current tax system…[2] Reform environmental pricing policy…[3] Improve environmental finance services and through reforms make it easier for low carbon enterprises to publicly list and issue bonds…[4] Use market mechanisms to promote energy efficiency…[5, Pursue] International climate funds…[6], Use China’s Sovereign Wealth Funds (SWFs)…total assets of some US$1.1 trillion…[and] capital managed by the National Council for Social Security Fund…[7] Accelerate implementation of national carbon market…[8] Reduce fossil fuel subsidies…[9] Strengthen Green Credit Policy…[and, 9] Leverage non-traditional sources of capital…”

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