Exploring green finance incentives in China

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Oct 2013

As the largest emitter in the world, China has been responding to the challenge of climate change since the 11th Five-Year Plan (FYP), with mandated carbon intensity reduction targets. A more ambitious plan has been set out in the current 12th FYP, that the country will shift its current economic model, which is almost coal-based and resource-intensive, to a more sustainable model for economic development. This transformation will require massive investment, and the banking sector will need to play a key role in facilitating this change, to encourage more environmentally and socially responsible investment and to support the growth of the green sector within China. The regulators such as the China Banking Regulatory Commission (CBRC) have a key role to play in shaping green finance for China.

This project Exploring green financing policy incentives in China is commissioned by the British Embassy Beijing to enable Chinese policy makers and major or commercial banks to adopt effective and practical incentives to break the barriers to investment in energy efficiency and low carbon sectors.

There are three parts that form the report:
  • Analysis of international and domestic green financing policies and activities, identify international best practices that China could leverage and unique Chinese circumstances, and barriers that need to be overcome. Business cases demonstrate the experiences of leading Chinese banks on green finance, and an analysis of the direct link between green finance and profitability;

  • A methodology is developed to assists domestic banks to start green finance, by developing a series of tools and guidelines to produce the appropriate strategy;

  • A set of policy recommendations/incentives are provided for policy-makers to promote green finance in the banking sector.