STANDARD CHARTERED BANK

March 2023

Abstract

China has made many key climate commitments in recent years. Among these are pledges to achieve peak emissions by 2030 and carbon neutrality by 2060, increase support for developing countries in developing green and low-carbon energy, and to stop building new coal-fired power projects abroad. As one of the world’s largest CO₂ emitters, China’s role in the global transition to net zero is critical.

The challenges facing China’s carbon neutrality goal include its energy-intensive growth pattern, coal-based energy consumption system, and the relatively short time available to move from peak emissions to carbon neutrality. This report explores likely paths to achieve these two carbon goals. China may need to change to a low carbon economic structure, and increase the share of modern services, low carbon, and high-tech industries in its overall GDP. China may also need to transform its power sector from fossil fuel to renewable energy. This process will create significant investment opportunities, demanding the mitigation of transformation costs in the short term. We estimate that China will generate new investment opportunities amounting to CNY 127-192 trillion by 2060, equivalent to CNY 3.2-4.8 trillion of related investment per year. However, there is a substantial funding gap at present. Given this pressing need to significantly scale up clean energy investment, the domestic and international financial sectors are pivotal to China’s low-carbon transition. This report focuses on further improvement of green finance, the financial sector’s risk management, and the effectiveness of China’s Emission Trading System (ETS).

Download the full report：STANDARD CHARTERED BANK：Matching Decarbonization Goals with Actions