Huge gap in climate funding, China still supports half of green finance

China, as an important force in the global response to climate change, is also the country under the greatest pressure. It is strengthening the capacity of cities to cope with climate change through carbon reduction and adaptation. In addition to low-carbon development in pilot areas, more cities should adjust their urban planning system to meet the requirements of low-carbon development. However, China's climate funding gap is huge and can not be alleviated in the short term. In the financial field, China's green finance starts late, and its innovative products are single.

China, as an important force in the global response to climate change, is also the country under the greatest pressure. It is strengthening the capacity of cities to cope with climate change through carbon reduction and adaptation.

In early August, the National Development and Reform Commission and the Ministry of Housing and Construction issued the Notice on the Printing and Issuing of Pilot Climate-Adaptive Cities, and decided to select 30 or so typical cities nationwide to carry out pilot projects on climate-adaptive cities. In view of the outstanding problems faced by cities, they carried out prospective and innovative exploration.

On the other hand, the "13th Five-Year" period will promote key industries and regions to take the lead. In 2015, 11 provinces and cities such as Beijing, Guangzhou and Zhenjiang formed the "Peak City Alliance" to provide strong support for the peak of carbon dioxide emissions in China by 2030.

Six years ago, China launched a pilot project for low-carbon cities, with two batches of 36 cities and six provinces as pilot areas. Liu Qiang, director of the Strategic Planning Department of the National Center for Strategic Research and International Cooperation on Climate Change (NCSC) of the National Development and Reform Commission (NDRC), regarded these pilot provinces and cities as the pioneering areas, as very helpful for the guidance and construction of low-carbon cities in the 13th Five-Year Plan period.

However, how to raise funds for these projects will be a major challenge during the "13th Five-Year" period. According to the research of the Center for Climate and Energy Finance of the Central University of Finance and Economics, China's demand for climate funds will reach 256 trillion yuan by 2020, but the average supply of climate funds in China will be 525.6 billion yuan between 2008 and 2012.

Low carbon cities from pilot to demonstration

"In terms of indicators, China is an important force in the global response to climate change, but also the most stressed country." Liu Qiang said at a recent forum on "Paths and Experiences of Urban Response to Climate Change" sponsored by the Energy Foundation (China).　　

To this end, the Chinese government has proposed that carbon emissions reach a peak by 2030 and strive for an early peak, carbon emissions per unit of GDP decreased by 60-65% compared with 2005, and non-fossil energy accounted for about 20%. According to the 13th Five-Year Plan, production and lifestyle are green, low carbon levels are rising, total carbon emissions are effectively controlled, and carbon dioxide emissions per unit GDP are down by 18%.

"From the perspective of reducing carbon emissions, cities are the main battleground for tackling climate change." Wang Zhigao, director of the sustainable urban project of the Energy Foundation (China) said.

During the Twelfth Five-Year Plan period, China carried out pilot projects in 42 provinces and municipalities, conducted carbon trading pilot projects in 7 provinces and municipalities, and carried out pilot projects in low-carbon industrial parks, low-carbon communities, low-carbon cities (towns) and low-carbon transportation.

However, there are still many difficulties and challenges in these leading areas. At present, the pilot work is still more qualitative and less quantitative. We must further identify the main sources of emission and identify the main potential of low carbon development.

Although many experiments have taken a lot of attention to low-carbon, they have not changed completely. Many cities are still pursuing high carbon efficiency, and have not really changed their thinking, and have not regarded low carbon development as an opportunity or even an advantage.

Most of the existing low-carbon construction schemes are strategic planning. During the 13th Five-Year Plan period, it is necessary to combine some projects to implement these schemes and integrate new ideas such as big data and intelligent transportation, so that these low-carbon schemes can be implemented.

Liu Qiang believes that during the 13th Five-Year Plan period, it is necessary to deepen the pilot work, from the pilot to demonstration, not only to explore an innovative low-carbon development path in line with their own characteristics, but also to be able to replicate, providing a useful reference for low-carbon development of other cities.

Incorporating carbon emissions assessment into town planning

Low-carbon development in pilot areas is only a part of urban carbon reduction, and more than 600 cities across the country generally face a difficult problem: the existing urban planning system does not meet the requirements of low-carbon development.

Wang Zhigao said that in order to achieve low-carbon development of the city, we should not only focus on optimizing the city's spatial structure, but also pay attention to the use of advanced technology, so that the two are well integrated. Good space can guide people to low-carbon travel, form a low-carbon lifestyle, but also provide the basic conditions for technical means to play a role. Urban spatial form is an important factor to determine whether a city can achieve low-carbon, and has a long-term lock-in effect, it must arouse enough attention of urban planners and builders.

Sun Shengyang, Sustainable Transportation Project Manager of the German International Cooperation Agency, took Beijing as an example to explain the link between urban road space design and low carbon. In Beijing, the proportion of cars traveling less than 5 kilometers is very high, about 30% to 40% of the scale, and this part of the bicycle and walking can cover. If we can improve the urban travel design, increase the density of road network, increase accessibility, so that people can transfer the mode of travel, for carbon reduction, the effect is very good.　　

"I think the first step must be done, all the general regulations, regulatory regulations to prepare urban carbon emissions thematic planning, carbon emissions assessment into the planning process." Ye Zuda, a professor at the School of Urban Planning and Design of the Shenzhen Graduate School of Peking University and a former president of the Hong Kong Institute of Planners, said that so far no city has been required to publish carbon emissions.

Carbon reduction is designed to slow down global climate change, and adaptation has become another way for cities to cope with climate change.

As early as the 1970s, Germany began to explore the application of urban climate, and developed the application platform of urban climate information - urban environmental climate map. Climate-adapted regional planning and urban planning practices have also been carried out to encourage public transport, pedestrian and bicycle traffic, advocate land-saving residential structure, functional layout for climate protection and site selection for construction sites.

In February this year, the State Development and Reform Commission and the Ministry of Housing and Construction jointly issued the Action Plan for Urban Adaptation to Climate Change, proposing that by 2020, relevant indicators of climate change adaptation should be universally incorporated into urban and rural planning systems, construction standards and industrial development plans; by 2030, scientific knowledge of climate change adaptation should be widely disseminated and cities should respond to climate change. The ability to change has increased significantly and the ability of cities to adapt to climate change has been upgraded.

In early August, the two ministries and commissions issued the Circular on the Printing and Issuance of Pilot Climate-Adaptive Cities (hereinafter referred to as the "Circular"), and decided to select about 30 typical cities nationwide to carry out pilot projects on climate-adaptive cities. By 2020, the pilot cities will universally realize the integration of climate change adaptation into the overall planning of economic and social development, urban planning and industrial development-related special planning and construction standards.

Ye Zuda suggested that urban planning should first revise the standards, because many urban planning still uses historical data. For example, based on historical rainfall data from a place that was once seen in 50 years ago, extreme weather and climate changed precipitation, and now it could be once in 30 years. Urban planning requires reexamining all data to correct design standards.

In addition, we need to assess the risk of extreme weather to the city. For example, after 50-year rainfall becomes 30-year rainfall, whether the current drainage system can withstand, what needs to be improved. For existing urban space, we need to consider whether we need to rebuild or move.

According to the circular, the pilot cities should carry out climate change adaptation activities in four areas: urban climate change impact and vulnerability assessment; the introduction of urban climate change adaptation action plan; the organization of climate change adaptation action; and strengthening capacity-building for climate change adaptation.

Climate funding gap

According to the circular, pilot cities should organize climate change adaptation activities in accordance with their own major risks and problems of climate change, investment and financing.

But in fact, China's climate funding gap is huge. In December 2015, the RCCEF in Paris released the 2015 China Climate Finance Report, China will reach the peak demand for climate funds in 2020 2.56 trillion yuan. According to the center's previous estimates, China's average climate capital supply in 2008-2012 was only 525.6 billion yuan.

China's climate funding gap will not be alleviated in the short term. According to the report, this is due to the existing policy setting and institutional arrangements, resulting in large-scale capital intervention facing more investment barriers; the diversity of technology characteristics and application areas caused by information asymmetry; low-carbon technology as a prerequisite for large-scale application of infrastructure investment costs, risk, long cycle; coping with the climate; The economic benefits generated by changing adaptation activities are difficult to estimate and are insufficient for the attraction of funds.　　

Specifically in the financial field, Ye Zuda believes that China's green finance started late, innovative products are single, almost equal to green credit, that is, to reduce the amount of loans to enterprises with high pollution, high energy consumption and high emissions.

Among the main green financial instruments designed by him, investment banks or enterprises have eight kinds of financing tools, such as project financing loans, green bonds, emission rights mortgages, etc. There are also carbon funds, green project investment funds, green equipment rental funds and other asset management tools; retail banks provide energy-saving to enterprises or consumers. Residential mortgage credit, energy-efficient commercial real estate mortgage, new energy vehicles/equipment credit, green credit cards and other tools; and finally carbon emissions trading, mortgage/repurchase, carbon asset custody and carbon insurance and other carbon financial instruments.

Moreover, the green financial information disclosure platform is not perfect, financing investors lack information to evaluate enterprises, and consumers lack information of correct choice. At present, there is no effective and timely information communication platform. Financial institutions, enterprises, financial supervision and environmental protection departments can establish information communication and sharing through joint meetings, credit reporting systems and other means.

In this regard, he suggested that the government should provide multiple channels to attract social resources into green investment; reduce the return on investment in polluting projects and increase the cost of investment or funds; strengthen the green preference of enterprises and consumers, encourage consumers to do green consumption through different means, such as banks; and give appropriate places to do so. Decentralization allows them to have green building financing capability.

China attaches more and more importance to the development of green finance. As the rotating chairman, China has for the first time made green finance a key topic of the G20 summit.

During the G20 meeting of central bank governors and finance ministers, Zhou Xiaochuan, governor of the People's Bank of China, revealed that in the first quarter of 2016, green bonds issued in China accounted for about half of global green bond issuance, equivalent to $8 billion.

The G20 Green Finance Research Group, initiated and promoted by China, submitted the G20 Green Finance Report to the G20 Central Bank Governors and Finance Ministers'Meeting in late July. The seven points proposed in the report have been adopted by the G20 meeting of central bank governors and finance ministers and written into the communique of the G20 meeting of finance ministers and central bank governors, which will be discussed in depth at the G20 Hangzhou summit to reach a consensus.