The Potential for Scaling Climate Finance in China

This report by the Climate Policy Initiative examines the landscape of green and climate finance in China, highlighting the gap between current investment levels and the funding required to meet climate targets. It analyzes the dominance of the public sector, regional investment patterns, and the barriers preventing private capital from scaling, while offering recommendations for policy improvements and the greening of outbound investments.

• China requires a significant increase in annual green investment to meet its 2015 climate targets and environmental protection standards. While annual green finance averaged RMB 2.1 trillion (USD 320 billion) during 2017/2018, it must scale up by at least four times, with annual investment needs estimated at as much as USD 1.4 trillion over the next decade.
• Climate finance in China is heavily dominated by the public sector, which accounts for at least 51% of total green finance. Nearly 95% of this public funding is attributed to policy banks, other major state-owned banks, and Central State Owned Enterprises (CSOEs). While Green PPP projects represent a fifth of climate finance, they are largely subsidized by government budgets and offer few incentives for private participation.
• Green investment is geographically concentrated in the north and southeast, particularly in coastal provinces. Solar energy investments are led by Inner Mongolia, Shaanxi, Shanxi, and Hebei in the northeast, while wind energy is prominent in Henan, Guangdong, and Jiangsu in the southeast.
• Private climate finance faces significant barriers despite the mobilization of large capital pools. Access to these funds is concentrated among public actors, leaving private companies and investors with limited access to investment pipelines and formal financing channels, resulting in high 'search costs'.
• There is a significant opportunity to green China's outbound finance, particularly regarding the Belt and Road Initiative (BRI). Between 2013 and 2019, USD 739 billion (37% of total outbound investment) went to BRI partner countries, with energy-related investments totaling USD 292 billion, half of which was directed toward fossil fuels.

APA

Climate Policy Initiative (2021). The Potential for Scaling Climate Finance in China. https://www.climatepolicyinitiative.org/publication/the-potential-for-scaling-climate-finance-in-china/

Chicago

Climate Policy Initiative. The Potential for Scaling Climate Finance in China. 2021. https://www.climatepolicyinitiative.org/publication/the-potential-for-scaling-climate-finance-in-china/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=The Potential for Scaling Climate Finance in China |date=4 February 2021 |url=https://www.climatepolicyinitiative.org/publication/the-potential-for-scaling-climate-finance-in-china/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2021potential, author = {{Climate Policy Initiative}}, title = {{The Potential for Scaling Climate Finance in China}}, institution = {Climate Policy Initiative}, year = {2021}, month = feb, url = {https://www.climatepolicyinitiative.org/publication/the-potential-for-scaling-climate-finance-in-china/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }