China’s first ever report on climate finance at sub-national level released

Reading time: 4 minutes
16 October 2014

BEIJING: A new report by The Climate Group and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH analyzes for the first time China’s existing climate finance policies and mechanisms at the sub-national level.

Analysis of Climate Finance Policies and Innovative Finance Mechanisms in Guangdong: Policy Mapping and Case Studies provides three case studies of real-life climate finance projects, and presents a set of policy recommendations. The aim of the report is to stimulate a broader discussion on climate finance in China.

China, like many other countries in the world, is faced with the challenge of how to finance the transition to a sustainable, low-carbon economy. The challenge is further complicated by the twin processes of rapid industrialization and urbanization, and the fact that the government continues to be the key player in the economy.

Government climate action

At present, low carbon development is mainly funded by the government, with new policies on energy saving, carbon emission reductions, clean energy and environmental protection in place. The reports makes clear that effective institutional governance mechanisms in the climate financing sector are needed.

The report focuses on Guangdong, the Chinese province with the largest population and the highest GDP. Guangdong, which has the most ambitious emission reduction target in China (18%) and the biggest of the country’s seven pilot carbon trading markets, is becoming a leader in regional low carbon growth and has a pressing need for comprehensive local climate finance policies.

“This is the first ever study on China's climate finance and policy environment at the sub-national level,” explains Changhua Wu, Greater China Director, The Climate Group. “It maps Guangdong’s climate finance policies with an overview of the national climate finance system and identifies knowledge gaps and barriers to the implementation of climate finance mechanisms."

The three locally-implemented project case studies (photovoltaic rooftop power station, green truck technology and industrial LED lighting) cover various industries and innovative finance mechanisms, provide the 'micro perspective' on climate. The concluding set of recommendations provide policymakers with a means of improving the climate finance management system and mechanisms in Guangdong.

“Stable policy environment is key to innovative climate financing mechanisms, so sharing learning among provinces is critical as it will help pave the way for scale-up at a national level," Changhua Wu added.

Sub-national leadership

The report suggests that challenges to climate finance at the sub-national level in China could be overcome by implementing new financial mechanisms and funding expansion through public-private partnerships and the promotion of carbon market as China's most promising finance resource.

The study was conducted by The Climate Group on behalf of GIZ. A Guangdong Climate Finance Advisory Board, consisting of key policy implementers, financial agencies and other stakeholders was set up and has contributed to the research process, particularly in the areas of exploring key barriers to scaling up climate finance and identifying the capacity building needs of major actors.

Findings are expected to support constructive collaboration on climate finance in the framework of the Sino-German Climate Partnership, which GIZ is implementing on behalf of the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety.

The report is available in both English and Mandarin Chinese. Read it now: Analysis of Climate Finance Policies and Innovative Finance Mechanisms in Guangdong: Policy Mapping and Case Studies

For more information, please contact Handuo Cai, The Climate Group, HCAI@theclimategroup.org.

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