2016年-世界发展银行全球_Developing_an_Innovative_Energy_Efficiency_Financing_Mechanism_in_China_95页_1mb

Summary of "China: Developing an Innovative Energy Efficiency Financing Mechanism"

Core Content

This report, commissioned by the World Bank and funded by the Energy Sector Management Assistance Program (ESMAP), provides an analysis of the policy environment and financial mechanisms for green energy and energy efficiency (EE) in China. It outlines the need for an innovative Green Energy and Emission Reduction Fund (GEEREF) to support China's energy transition goals and address the challenges in financing for EE and renewable energy (RE) projects.

Main Viewpoints

• Policy Environment: The Chinese government has implemented aggressive energy efficiency and renewable energy policies, including mandatory energy intensity reduction targets for the 11th and 12th Five-Year Plans (FYPs), and plans to introduce a total energy consumption cap and coal consumption cap for the 13th FYP. China also aims to increase the share of non-fossil fuels to 20% by 2030.

• Green Energy Financing Needs: The report estimates that the investment required to meet the 13th FYP energy efficiency targets is about CNY 2.46 trillion (US$380 billion) from 2016 to 2020, which is 1.5 times the investment in the 12th FYP. The investment in renewable energy is estimated at CNY 2.6 trillion (US$400 billion) during the same period. Additionally, the Air Pollution Prevention and Control Action Plan (APPCAP) requires CNY 1.8 trillion (US$280 billion) nationwide and CNY 250 billion (US$40 billion) in the Beijing-Tianjin-Hebei (Jing-Jin-Ji) region from 2012 to 2017.

• Market Demand and Barriers: There is a significant market demand for green energy financing, but several barriers persist. These include the lack of project-based financing models, high perceived risk of EE investments, limited technical expertise in financial institutions, and mismatch between long-term payback periods of RE technologies and short-term banking tenures.

• International Experience: The report reviews various international green energy financing mechanisms such as credit lines, risk guarantees, green funds, green banks, and utility on-bill financing. It emphasizes the importance of technical assistance, marketing, and tailored financial products in generating deal flows.

• Chinese Experience: China has several government-funded green energy initiatives, such as the China Clean Development Mechanism (CDM) Fund and the Emerging Industries Venture Capital Plan. Most of these funds operate under a Fund of Funds (FOF) structure, with the central government contributing around 20% of the capital, local governments matching, and the remaining from commercial sources.

• Rationale for Green Fund: Establishing a Green Energy Fund is seen as a strategic move to increase financing for the green energy market, especially for small and medium enterprises (SMEs) and Energy Service Companies (ESCOs), and to leverage public funds effectively to unlock commercial financing.

Key Information

• Strategic Focus: The proposed GEEREF will focus on energy efficiency, distributed renewable energy, natural gas, and air pollutant emission reduction. It will allocate at least 50% of its investments to the energy efficiency market.

• Financing Sources: The fund is expected to be capitalized by 20% from the government and 20% from multilateral development banks (MDBs), with the remaining 60% coming from commercial sources.

• Fund Structure Options:

  1. National-Level Fund: Total size of around $2.5 billion, with $500 million from the central government, $500 million from MDBs, and $1.5 billion from commercial sources. Leverage ratio is 9.
  2. Provincial-Level Fund: Total size of around $1 billion, with $200 million from local governments, $200 million from MDBs, and $600 million from commercial sources. Leverage ratio is 9.
  3. Regional FOF Structure: Total size of around $3.8 billion, with $500 million from the central government and $500 million from MDBs for the parent fund, and $700 million from local governments and $2.1 billion from commercial sources for the subsidiary funds. Leverage ratio is 14.

• Financial Products: The fund will primarily use equity and debt financing, including quasi-preferred shares, mezzanine financing, and entrusted loans. It may also offer risk-sharing mechanisms and technical assistance, as well as mobilize donor grants and issue green bonds or securitize project assets.

• Leverage and Impact: The fund is designed to have a high leverage ratio, with the government and MDBs providing a small initial capital, allowing for significant mobilization of commercial financing. The goal is to increase investment flow to underserved markets and support the achievement of China's energy and environmental targets.

• Challenges and Lessons: While a Green Fund is not a solution to all problems, it can help overcome financing barriers and improve access to capital for EE and RE developers. The report highlights the importance of selecting professional fund managers and providing them with independent decision-making authority.

Conclusion

The establishment of a Green Energy and Emission Reduction Fund is a crucial step in supporting China's transition to a more sustainable energy system. It will complement existing commercial financing mechanisms, leverage public funds, and address the specific challenges faced by EE and RE developers, particularly SMEs and ESCOs. The report provides a preliminary design for such a fund, emphasizing the need for a tailored approach, technical expertise, and strategic governance to ensure its success.