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through an international carbon (CDM) trading financial adviser, international carbon
(CDM ) factoring or international carbon asset pledge financing using international
carbon (CDM) settlement products, etc., to maintain its leading position in the domestic
commercial banks.
Bonds 2.2
In the field of green and low carbon economic development, climate
bonds cannot only become an important source of climate change
financing, but also serve as a tool for investors in the low carbon field
to avoid policy risks. The bonds are particularly suitable for providing
long-term capital support for construction of infrastructure to cope
with climate change, and play an important role in the climate field.
Theoretically, climate bonds can be of various types. Although early-
stage incremental investments are huge, cost recovery can be achieved
during the infrastructure operation period, particularly in construction,
energy, industrial, and transport sectors. It is estimated that from 2010
to 2020, global cumulative investments of about USD 10 trillion will be
required to promote the development of low carbon energy. According
to the 6:4 ratio between debt and equity in previous financing cases, it
takes about USD 6 trillion in bank loans or bonds.
Enterprise (company) bond market has gradually become one of
the sources for urban and local developments. Green bonds reached
USD 6 billion in 2011, accounting for about 3 per cent of the total size
of the ‘green bonds’, among which, the financing scale of new energy
enterprises by issue bonds increased by four times, reaching USD 4.3
billion (accounting for 72 per cent); the rest are mainly concentrated in
the transportation industry. Currently, the feasibility of China’s local
governments to issue bonds is not high, but the local government can
support local enterprises engaged in the field of low carbon economy
to issue bonds, and use government guarantees and other incentives to
reduce interest rate of the bonds, thereby reducing the cost of corporate
financing. Good corporate financing and investments in the field of
low carbon development can generate a certain degree of substitution
effect, saving part of the expenditures for local governments to support
the development of low carbon economy.
Option Tools
China’s venture capital and private equity (VC/PE) market has
witnessed rapid developments in recent years, as enterprises related to
climate change and low carbon technologies enterprises tend to be start-
ups or SMEs, making VC/PE markets a very critical source for climate
funding. In 2011, the VC/PE total investment in clean technologies
Chapter 2 Innovative Financing for Low Carbon Development 119
(CDM ) factoring or international carbon asset pledge financing using international
carbon (CDM) settlement products, etc., to maintain its leading position in the domestic
commercial banks.
Bonds 2.2
In the field of green and low carbon economic development, climate
bonds cannot only become an important source of climate change
financing, but also serve as a tool for investors in the low carbon field
to avoid policy risks. The bonds are particularly suitable for providing
long-term capital support for construction of infrastructure to cope
with climate change, and play an important role in the climate field.
Theoretically, climate bonds can be of various types. Although early-
stage incremental investments are huge, cost recovery can be achieved
during the infrastructure operation period, particularly in construction,
energy, industrial, and transport sectors. It is estimated that from 2010
to 2020, global cumulative investments of about USD 10 trillion will be
required to promote the development of low carbon energy. According
to the 6:4 ratio between debt and equity in previous financing cases, it
takes about USD 6 trillion in bank loans or bonds.
Enterprise (company) bond market has gradually become one of
the sources for urban and local developments. Green bonds reached
USD 6 billion in 2011, accounting for about 3 per cent of the total size
of the ‘green bonds’, among which, the financing scale of new energy
enterprises by issue bonds increased by four times, reaching USD 4.3
billion (accounting for 72 per cent); the rest are mainly concentrated in
the transportation industry. Currently, the feasibility of China’s local
governments to issue bonds is not high, but the local government can
support local enterprises engaged in the field of low carbon economy
to issue bonds, and use government guarantees and other incentives to
reduce interest rate of the bonds, thereby reducing the cost of corporate
financing. Good corporate financing and investments in the field of
low carbon development can generate a certain degree of substitution
effect, saving part of the expenditures for local governments to support
the development of low carbon economy.
Option Tools
China’s venture capital and private equity (VC/PE) market has
witnessed rapid developments in recent years, as enterprises related to
climate change and low carbon technologies enterprises tend to be start-
ups or SMEs, making VC/PE markets a very critical source for climate
funding. In 2011, the VC/PE total investment in clean technologies
Chapter 2 Innovative Financing for Low Carbon Development 119
