Abstract

Green development is expected to become a more important new driver for sustainable and high-quality growth in the coming decades. However, China’s green agenda is faced with the problem of insufficient green technology innovation capability and the resulting high costs of green products and services. To accelerate green technology innovations, it is necessary to address a series of financing problems faced by green technology companies. In this report, we propose a series of reforms to develop a new financial services system to support green tech innovation. The new system will be featured by: (1) multi-tier financial services, including the stock market, PE/VC funds, venture loans, guarantee and insurance mechanisms, to solve the problem of overreliance on bank financing which does not have the right risk appetite; (2) government support and incentives, including incubation, guarantees, interest subsidies, to reduce the financing costs and risk premiums of green technology companies; (3) funding sources with longer-term investment horizon to align with the development cycles of green technologies; (4) an enabling environment including green tech taxonomies and standards for estimating and disclosing environmental benefits, application of digital technologies to improve the quality of green verification and reduce evaluation costs.

Full Text: Improving Financial Services for Green Technology Development