China has introduced measures to achieve its 40-45 percent carbon intensity reduction goal by 2020, including low carbon pilot in five provinces and eight cities. These pilots are currently undertaking low carbon planning and related processes for identifying and implementing appropriate policy mechanisms. While there is an increasing focus on strengthening capacity within these areas, a noticeable gap in the area of finance exists. Understanding the importance of deploying innovative financing instruments for delivery of scaled-up investments is therefore an area that should be addressed.
Most Chinese banks are of a hybrid public-private nature, i.e. they are state-owned but increasingly required to make investments on a commercial basis. These banks are likely to have an important role in financing China’s low carbon investment agenda. As such there is an urgent need for strengthening their understanding and capacity for managing the risks and costs associated with low carbon investments.
E3G is working with a wide range of stakeholders in China to support their priorities for low carbon financing and investment. In particular, the project focuses on three areas:
- Innovative financing instruments for scaled-up low carbon investment;
- Policy and regulatory reform of the power sector; and
- Design options for China’s South-South Climate Change Fund.
This project is funded by the Blue Moon Fund.