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Table 2.7 Summary of Financial Instruments Employed by Local Governments in Low Carbon
Financing
Type Content
Innovations in public finance Policy funds
Fiscally supported guarantee funds
Special green funds for local governments
Local financing platforms 2.2
Public–Private Partnerships (PPP)
Private grants
Carbon financial instrument International carbon market
Domestic carbon market
Other market-based innovations
Innovations in traditional finance Traditional credit
Carbon assets pledge credit service
International carbon factoring service
Bonds
Option tools
Risk management tools
Policy Funds
The cooperation between the national policy funds and the local
governments can effectively promote low carbon projects and reduce
the risk of the projects. At present, China has no low carbon development
funds in the strict sense of the term, but has some special funds which
are dedicated to activities and projects in the field. For example, it
established the China Clean Development Mechanism (CDM) Fund in
August 2006 to support undertakings addressing climate change. The
sources of fund of China CDM Fund include the government revenue
derived from the transfer of certified emission reductions (CERs) of
the CDM projects, fiscal appropriations, operating revenue of the fund
itself, as well as donations from organizations and individuals at home
and abroad. In addition to these sources, there is still the electricity
price mark-up imposed by the government on electric power in favour
of renewable energy for the purpose of promoting development and
application of new energies. The revenue from this price mark-up, in
combination with the special renewable energy development fund
allocated by public finance, supports the development and utilization
of renewable energy through the renewable energy development
Chapter 2 Innovative Financing for Low Carbon Development 97
Financing
Type Content
Innovations in public finance Policy funds
Fiscally supported guarantee funds
Special green funds for local governments
Local financing platforms 2.2
Public–Private Partnerships (PPP)
Private grants
Carbon financial instrument International carbon market
Domestic carbon market
Other market-based innovations
Innovations in traditional finance Traditional credit
Carbon assets pledge credit service
International carbon factoring service
Bonds
Option tools
Risk management tools
Policy Funds
The cooperation between the national policy funds and the local
governments can effectively promote low carbon projects and reduce
the risk of the projects. At present, China has no low carbon development
funds in the strict sense of the term, but has some special funds which
are dedicated to activities and projects in the field. For example, it
established the China Clean Development Mechanism (CDM) Fund in
August 2006 to support undertakings addressing climate change. The
sources of fund of China CDM Fund include the government revenue
derived from the transfer of certified emission reductions (CERs) of
the CDM projects, fiscal appropriations, operating revenue of the fund
itself, as well as donations from organizations and individuals at home
and abroad. In addition to these sources, there is still the electricity
price mark-up imposed by the government on electric power in favour
of renewable energy for the purpose of promoting development and
application of new energies. The revenue from this price mark-up, in
combination with the special renewable energy development fund
allocated by public finance, supports the development and utilization
of renewable energy through the renewable energy development
Chapter 2 Innovative Financing for Low Carbon Development 97
