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CHAPTER INNOVATIVE FINANCING
2 FOR LOW CARBON
DEVELOPMENT
2.1 Introduction 2.2
Cities are the centres of economic activities. They are also the world’s
biggest consumers of energy and major greenhouse gas emitters.
Therefore, promoting urban planning and respective policies for
climate-friendly cities can effectively improve energy efficiency,
reduce greenhouse gas emission, and facilitate the realization of the
goal of a global response to climate change. A recent research on
low carbon cities shows that cost-effective policies to reduce energy
consumption can ensure the reduction of greenhouse gas emission in
cities by 40 per cent by 2020 (Gouldson et al. 2012). Without doubt,
low carbon investment in cities’ response to climate change can
promote local economic growth, create jobs, and then stimulate the
development of a low carbon economy with structural transformation.
Measures to reduce greenhouse gas emission and adaptation to
climate change will, however, increase the pressure on the budget
of local governments and raise extra financial demands, including:
(i) adaptation-related expenditure and financial demands;
(ii) reduction-related expenditure and financial demands;
(iii) expenditure and financial demands as the result of carbon-related
energy price increase; (iv) expenditure and financial demands related
to capacity building. The current size of investment in low carbon
development to meet the needs of the development of low carbon
cities is yet far from adequate. One of the main reasons for this is the
insufficient investment in low carbon development in cities. Though
financial inadequacy for the development of low carbon economy
is universally common, it is particularly prominent in developing
countries which are more vulnerable economically. However, it is also
in developing countries that urbanization rates and urban expansion
soar. Therefore, how to prevent the lock-in effect2 and effectively finance
low carbon development in cities becomes an important question.
2 In general, the lock-in effect refers to the fact that the energy consumption and
pollution level of fixed asset investment programmes, once determined, are hard
to improve upon within a certain period due to existing technical restraints.
Therefore, high-polluting and energy-consuming investments will bring about
lasting negative impacts on energy conservation, emission reduction and low
carbon economic development within a certain period.
Chapter 2 Innovative Financing for Low Carbon Development 73
2 FOR LOW CARBON
DEVELOPMENT
2.1 Introduction 2.2
Cities are the centres of economic activities. They are also the world’s
biggest consumers of energy and major greenhouse gas emitters.
Therefore, promoting urban planning and respective policies for
climate-friendly cities can effectively improve energy efficiency,
reduce greenhouse gas emission, and facilitate the realization of the
goal of a global response to climate change. A recent research on
low carbon cities shows that cost-effective policies to reduce energy
consumption can ensure the reduction of greenhouse gas emission in
cities by 40 per cent by 2020 (Gouldson et al. 2012). Without doubt,
low carbon investment in cities’ response to climate change can
promote local economic growth, create jobs, and then stimulate the
development of a low carbon economy with structural transformation.
Measures to reduce greenhouse gas emission and adaptation to
climate change will, however, increase the pressure on the budget
of local governments and raise extra financial demands, including:
(i) adaptation-related expenditure and financial demands;
(ii) reduction-related expenditure and financial demands;
(iii) expenditure and financial demands as the result of carbon-related
energy price increase; (iv) expenditure and financial demands related
to capacity building. The current size of investment in low carbon
development to meet the needs of the development of low carbon
cities is yet far from adequate. One of the main reasons for this is the
insufficient investment in low carbon development in cities. Though
financial inadequacy for the development of low carbon economy
is universally common, it is particularly prominent in developing
countries which are more vulnerable economically. However, it is also
in developing countries that urbanization rates and urban expansion
soar. Therefore, how to prevent the lock-in effect2 and effectively finance
low carbon development in cities becomes an important question.
2 In general, the lock-in effect refers to the fact that the energy consumption and
pollution level of fixed asset investment programmes, once determined, are hard
to improve upon within a certain period due to existing technical restraints.
Therefore, high-polluting and energy-consuming investments will bring about
lasting negative impacts on energy conservation, emission reduction and low
carbon economic development within a certain period.
Chapter 2 Innovative Financing for Low Carbon Development 73
