Public Finance for Renewable Energy in China

The report examines the financing of renewable energy in China, highlighting the transition from an electricity surcharge system to potential environmental fiscal measures. It analyzes global investment trends, the types and risks of renewable energy subsidies, and provides a framework for designing a carbon tax to fund the energy transition, drawing on international examples from Europe and North America.

• China was the world's largest investor in renewable energy in 2013, with asset finance for renewable energy projects totaling US$56.3 billion that year.
• The cost of renewable energy generation has decreased significantly since 2009, with crystalline PV systems falling by 53 per cent and wind turbines by 15 per cent.
• China's renewable energy subsidies are substantial; the China National Renewable Energy Center (CNREC) estimated a total subsidy cost of US$8.6 billion in 2012, with total costs for the 12th Five-Year Plan period expected to reach US$48.5 billion.
• China has primarily funded renewable energy through an electricity surcharge, which increased from CNY0.002 per kWh in 2006 to CNY0.008 per kWh in 2012.
• Renewable energy projects in China have been heavily supported by low-cost financing from state-owned banks, such as the China Development Bank, often utilizing on-balance sheet financing rather than non-recourse project finance.
• Subsidy policies face risks such as 'boom and bust' cycles, where rapid deployment leads to unsustainable costs and subsequent industry collapse, as seen in Spain between 2007 and 2008.
• China has implemented seven pilot emissions trading schemes (ETS) in Shenzhen, Shanghai, Beijing, Tianjin, Guangdong, Hubei, and Chongqing as of June 2014.
• The report suggests a carbon tax for China could start at CNY5–10 per tonne of carbon dioxide equivalent and escalate over time.
• International experience shows that hypothecated carbon revenues can be managed through dedicated funds or independent enterprises, such as Denmark's Public Service Obligation (PSO) tariff, to ensure predictable funding without impacting the general government budget.

APA

Bridle, R., & Kitson, L. (2014). Public Finance for Renewable Energy in China. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/public_finance_renewable_energy_china.pdf

Chicago

Bridle, Richard, and Lucy Kitson. Public Finance for Renewable Energy in China. International Institute for Sustainable Development, 2014. https://www.iisd.org/system/files/publications/public_finance_renewable_energy_china.pdf.

Wikipedia

{{cite report |last1=Bridle |first1=Richard |last2=Kitson |first2=Lucy |title=Public Finance for Renewable Energy in China |publisher=International Institute for Sustainable Development |date=August 2014 |url=https://www.iisd.org/system/files/publications/public_finance_renewable_energy_china.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bridle2014public, author = {Bridle, Richard and Kitson, Lucy}, title = {{Public Finance for Renewable Energy in China}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = aug, url = {https://www.iisd.org/system/files/publications/public_finance_renewable_energy_china.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }