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include the government, investments of the private sector, and 2.2
financing of financial institutions. Since most low carbon industries
and service sectors are still at the early stage of development with
immature technology, low degree of marketization, and high cost
of operation, they bear higher investment risks than traditional
industries for the private sector. Government support and assistance
will effectively reduce the above investment risks. The use of public
funds can effectively boost the growth of low carbon industries and
reduce the uncertainties of investment. Compared with the financing
of the private sector and financial institutions, data of government
expenditure is readily available. We focus on the analysis of government
expenditure structure of major cities in low carbon development.
First, if we consider the source of government expenditure to
develop low carbon economy in cities, such expenditure is normally
shared by the central and local governments. Also, because of
different structures and systems of different countries, the division of
low carbon expenditure between the central and local governments
of different countries in the world varies greatly. Thus, as far as
government expenditure is concerned, low carbon financing for local
governments is complex, not typical and not entirely comparable.
Figure 2.1 summarizes the expenditure percentage of the Central
government and local governments in fixed-asset investment sectors
for environmental protection and developing green economy in 20
developed countries. We can see that in France, Germany, Hungary,
Ireland, Israel, South Korea, the Netherlands, Norway, Poland, and
Switzerland, more than 90 per cent of the fixed-asset investment in
the environmental protection field comes from local governments,
making them typical countries in which local governments dominate
the government expenditure on low carbon city development.
In Austria, Belgium, Denmark, Italy, and Portugal, the figure is
between 20 per cent and 45 per cent, making them typical countries
in which local governments and the central government share nearly
equally the expenditure in environmental protection sectors. It is
only in Greece, Iceland, Spain and the UK, that the expenditure of the
central government—including state governments in some countries—
exceeds that of local governments on fixed-asset investment in
environmental protection sectors, accounting for more than 50 per cent
of the total expenditure. In particular, in Iceland, the expenditure of
the central government is more than 80 per cent. In these countries, the
Central government dominates the government expenditure on low
carbon city development. On the whole, the government expenditure
Chapter 2 Innovative Financing for Low Carbon Development 77
financing of financial institutions. Since most low carbon industries
and service sectors are still at the early stage of development with
immature technology, low degree of marketization, and high cost
of operation, they bear higher investment risks than traditional
industries for the private sector. Government support and assistance
will effectively reduce the above investment risks. The use of public
funds can effectively boost the growth of low carbon industries and
reduce the uncertainties of investment. Compared with the financing
of the private sector and financial institutions, data of government
expenditure is readily available. We focus on the analysis of government
expenditure structure of major cities in low carbon development.
First, if we consider the source of government expenditure to
develop low carbon economy in cities, such expenditure is normally
shared by the central and local governments. Also, because of
different structures and systems of different countries, the division of
low carbon expenditure between the central and local governments
of different countries in the world varies greatly. Thus, as far as
government expenditure is concerned, low carbon financing for local
governments is complex, not typical and not entirely comparable.
Figure 2.1 summarizes the expenditure percentage of the Central
government and local governments in fixed-asset investment sectors
for environmental protection and developing green economy in 20
developed countries. We can see that in France, Germany, Hungary,
Ireland, Israel, South Korea, the Netherlands, Norway, Poland, and
Switzerland, more than 90 per cent of the fixed-asset investment in
the environmental protection field comes from local governments,
making them typical countries in which local governments dominate
the government expenditure on low carbon city development.
In Austria, Belgium, Denmark, Italy, and Portugal, the figure is
between 20 per cent and 45 per cent, making them typical countries
in which local governments and the central government share nearly
equally the expenditure in environmental protection sectors. It is
only in Greece, Iceland, Spain and the UK, that the expenditure of the
central government—including state governments in some countries—
exceeds that of local governments on fixed-asset investment in
environmental protection sectors, accounting for more than 50 per cent
of the total expenditure. In particular, in Iceland, the expenditure of
the central government is more than 80 per cent. In these countries, the
Central government dominates the government expenditure on low
carbon city development. On the whole, the government expenditure
Chapter 2 Innovative Financing for Low Carbon Development 77
