Page 100 - Low Carbon Development in China and India
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term emission reduction mechanism and encouraging enterprises 2.1
to participate in carbon emission reduction. The fiscal revenue from
the auction of carbon emission credits can be utilized as a major
financial source for China and India to develop a low carbon economy.
Meanwhile, both China and India can borrow experiences from other
countries to encourage the development of financial products, such
as forward carbon trading, carbon options, carbon futures, and the
securitization of carbon financial products.
Traditional Financial Market
There are already some innovative products of green credit to
finance low carbon development programmes in China, such as
energy conservation and emission reduction fixed asset loans, energy
conservation and emission reduction working capital loans, contract
energy management financing, carbon asset mortgage credit, and
international carbon (CDM) market. Both China and India may consider
providing a government guarantee for low carbon programmes,
cooperating with local banking and credit systems, and adopting the
PPP model more often to use the credit market and these innovative
credit instruments as a financing channel for developing low carbon
technologies. In addition, climate bonds may become a major source
of climate change financing, and an instrument for investors in low
carbon sectors to avoid policy risks in the future. The respective
Governments of China and India may support enterprises in low carbon
economic sectors in bond issuance and reduce their financing costs
with government guarantee. Venture capital investment and private
equity investment are also key sources of climate funds. Providing
risk management services for sectors related to low carbon economic
investment can effectively reduce the risks of low carbon investment
and attract more funds from the private sector. The Governments of
China and India can cooperate with insurance companies to provide
risk guarantee or insurance services for low carbon programmes
or investment.
International financing is also an important instrument for
financing low carbon technologies. As two major developing countries,
attracting international funds is a priority for China and India to
finance low carbon technologies. International financial sources for
both central and local governments to develop low carbon technologies
can be multilateral (e.g., the World Bank and the Asian Development
Bank) and bilateral (e.g., Agence Française de Développement,
KFW Bankengruppe, and Japan International Cooperation Agency).
Chapter 1 Low Carbon Technology and Innovation Policy 65
to participate in carbon emission reduction. The fiscal revenue from
the auction of carbon emission credits can be utilized as a major
financial source for China and India to develop a low carbon economy.
Meanwhile, both China and India can borrow experiences from other
countries to encourage the development of financial products, such
as forward carbon trading, carbon options, carbon futures, and the
securitization of carbon financial products.
Traditional Financial Market
There are already some innovative products of green credit to
finance low carbon development programmes in China, such as
energy conservation and emission reduction fixed asset loans, energy
conservation and emission reduction working capital loans, contract
energy management financing, carbon asset mortgage credit, and
international carbon (CDM) market. Both China and India may consider
providing a government guarantee for low carbon programmes,
cooperating with local banking and credit systems, and adopting the
PPP model more often to use the credit market and these innovative
credit instruments as a financing channel for developing low carbon
technologies. In addition, climate bonds may become a major source
of climate change financing, and an instrument for investors in low
carbon sectors to avoid policy risks in the future. The respective
Governments of China and India may support enterprises in low carbon
economic sectors in bond issuance and reduce their financing costs
with government guarantee. Venture capital investment and private
equity investment are also key sources of climate funds. Providing
risk management services for sectors related to low carbon economic
investment can effectively reduce the risks of low carbon investment
and attract more funds from the private sector. The Governments of
China and India can cooperate with insurance companies to provide
risk guarantee or insurance services for low carbon programmes
or investment.
International financing is also an important instrument for
financing low carbon technologies. As two major developing countries,
attracting international funds is a priority for China and India to
finance low carbon technologies. International financial sources for
both central and local governments to develop low carbon technologies
can be multilateral (e.g., the World Bank and the Asian Development
Bank) and bilateral (e.g., Agence Française de Développement,
KFW Bankengruppe, and Japan International Cooperation Agency).
Chapter 1 Low Carbon Technology and Innovation Policy 65
