A new report has concluded that $1 trillion in investment is necessary across the next five years to build low-carbon cities in China.
The new research report series, Green Finance for Low-Carbon Cities, is authored by the Paulson Institute, Energy Foundation China, and the Chinese Renewable Energy Industries Association, and was released at the second China-US Climate-Smart/Low-Carbon Cities Summit being held in Beijing. The aim of the report series is, according to Michael R. Bloomberg, to set “out a path for overcoming” the current obstacles “to making the kinds of investments that both protect public health and improve the economy” in China’s cities. Writing in the introduction to the report’s English-language executive summary (PDF), Bloomberg further claims that the report “identifies opportunities for cities to attract more private funding on projects to reduce emissions in the building, transport, and energy sectors.”
The primary conclusions from the report is that, as it currently stands, 6.6 trillion RMB (or $1 trillion) is required over the next five years to build low-carbon cities in China. Investment is needed for efficient buildings, low-carbon transportation, and clean energy technology.
“China has set an ambitious goal of peaking national carbon emissions around 2030, wisely recognizing that economic growth and fighting climate change go hand in hand,” said Bloomberg, UN Secretary-General’s Special Envoy for Cities and Climate Change, and Founder of Bloomberg L.P. and Bloomberg Philanthropies, which supported the research. “That leadership helped make the Paris climate agreement possible – and now, China is looking for creative ways to finance the low-carbon infrastructure needed to reach its climate goals.”
“Finance is at the heart of the economy, and green urban development in China cannot happen without support from green finance,” said Ma Jun, Chief Economist, Research Bureau of People’s Bank of China, who chairs the Green Finance Committee, China Society for Banking and Finance, who also supported the research. “Greening of buildings, transportation and energy will be crucial as these sectors are the main sources of urban emissions.”
Three separate reports are included in the overall series, focusing individually on buildings, transportation, and energy.
The buildings report claims that China will need to invest approximately RMB 1.65 trillion ($254 billion) if it is to meet its own green building targets, and the large-scale retrofits of existing houses and commercial buildings.
One of the big obstacles facing the ‘greenfication’ of China’s buildings is the lack of funding. According to the report, “Although energy efficiency practices are often included in designs” for new buildings in the rapidly urbanizing cities, “without sufficient funding few projects develop past the design phase.” A similar lack of funding is available for retrofitting existing buildings.
“The government has made a strong commitment to promote building efficiency through improved building codes and public subsidies, and we have seen mounting interest from the private sector to provide capital investment to these projects as well,” explained Dr. Kevin Mo, Managing Director at the Paulson Institute, who wrote the report. “We are working on innovative green financing mechanisms, and a government guarantee program for green buildings backed up by a third-party rating system would deliver enormous potential for economic growth in this area of sustainable buildings.”
China has made similarly ambitious plans for its transportation sector, which the authors of the transportation report believe will require a total investment of RMB 4.45 trillion ($684.9 billion) into modes of transport including urban rail, bus, electric vehicles, bike, and urban roads. Existing funding received a healthy boost during the recent period of the 12th Five-Year Plan, but the country’s “overall development of green transportation infrastructure … still lags behind many foreign cities that enjoy advanced green transportation development.”
“One challenge for financing urban transportation projects is the heavy reliance on local government debt for both the capital investments and the operations, which exposes cities to high credit risks,” said Dr. Wang Zhigao, City Program Director at Energy Foundation China, who led the Transportation study. Dr. Wang suggested that “financing models such as public-private-partnership (PPP) can help diversify sources of funding and secure more investments for low-carbon transportation projects.”
The rapid population growth in China and accompanying urbanization is expected to see “some less-developed cities in China … facing increasing pressure arising from their energy mix, while other developing small and medium cities are expected to experience huge growth in energy consumption.” The authors of the report therefore advise that “city administrators need to achieve triple targets: ensuring adequate supply of energy, minimizing energy costs, and protecting the environment,” and that an estimated RMB 500 billion ($77 billion) is needed to fulfill China’s growing energy needs.
“Support for the growth of distributed solar PV is the most important way for cities to help decarbonize the energy sector,” added Peng Peng, Policy Research Director at the Chinese Renewable Energy Industries Association (CREIA). “Besides distributed solar PV, we also encourage cities to explore ways to purchase green electricity from other cities, to expand the market demand for clean energy and to help cities achieve their low-carbon goals.”
I don't like paywalls. You don't like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong — and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it! We just don't like paywalls, and so we've decided to ditch ours. Unfortunately, the media business is still a tough, cut-throat business with tiny margins. It's a never-ending Olympic challenge to stay above water or even perhaps — gasp — grow. So ...
Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!
Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.