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China report reveals effective low carbon business model

Date
12 July 2011
China report reveals effective low carbon business model

BEIJING: A new report entitled The Role of International Finance Corporation in the China Utility-Based Energy Efficiency Finance Program has been published by The Climate Group Greater China. The report looks at the business model of the Chinese energy efficiency-focused IFC CHUEE program and the opportunities for its national adoption, to help China achieve its emissions reduction target and drive a Clean Revolution.

The report comes after the Chinese Government introduced a series of green incentive policies, focused on innovative low carbon technology and sustainable industrial development. Driven by these incentive policies, domestic banks are beginning to shift capital resources from traditional industries that are inefficiently consuming energy and instead investing in enterprise loans for low carbon, clean technology businesses.

New risks are emerging from this transitional process, including: immaturity of new green technologies, relatively small enterprise scales, a low ratio of fixed assets value and uncertainty of debt repayment ability. Development in the low carbon industry relies on support from private capital resources, and public funding plays a key role in the risky early stages, but using public investment as an initiative to attract further private capital is the central issue.

The business model of the China Utility-Based Energy Efficiency Finance Program (CHUEE), which is supported by the International Finance Corporation (IFC), effectively approaches these issues. To reduce investment risks and to ensure stable incomes, the model encourages cooperation with commercial banks by sharing risk management techniques and working closely with clean energy service providers.

The report provides an in-depth analysis of the business model of the IFC CHUEE program and explores the opportunity for its national wide adoption. It is made up of six sections, covering policy review, program analysis and policy advice:

1. Review of China’s Financing Policy in the clean energy sector
2. Present policy environment, existing business model and comparative case analysis
3. Analysis of the CHUEE business model
4. Case studies of successful projects under the CHUEE program
5. Evaluation of the CHUEE program
6. Conclusions and suggestions on China’s Financing Policy in the clean energy sector

These six sections make up a practical report that provides positive policy guidance, which will help China achieve its emission reduction target and drive a Clean Revolution.

Read the report on TheClimateGroup.org.cn (Chinese language)

Learn more about CHUEE

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