Financing Efficiency in China
Monday, August 24, 2009 1:57
When speaking of barriers to sustainability the role of finance is often understated, but in their recent paper Financing Energy Efficiency in China, William Chandler and Holly Gwin of Carnegie Endowment do an excellent job of showing that in many ways the financing is as important as the technology itself… or the political negotiations that have been in the recent press:
Removing barriers to clean energy investment in China may contribute more to climate protection than any global climate treaty.
That without it, even the best technologies (assuming they would be developed), cannot be rolled out.
The paper looks at 4 financial hurdles (Restrictions on debt financing, Restrictions on foreign equity investments, Asymmetric policies at the central and local levels, Confiscatory tax policy) to put forward a list of recommendations:
- Exempt clean energy investments from foreign exchange, foreign-invested enterprise, and industrial policy controls
- Provide VAT and income tax holidays or exemptions for clean energy companies and services:
- Shift CDM from payment-on-delivery to payment-as investment
- Make it worthwhile for banks to do risk-based clean energy lending
- Replicate the successful experience of the IFC in providing loan guarantees for energy-efficiency projects in China
- Reduce the paperwork necessary to make clean energy investments in China
IT is a paper that I would recommend spending the 15 minutes to read (20 pages), and it can be downloaded by right clicking here, or viewed through Scrib here
contribute more to climate protection than any global climate
treaty.
