* China invested record $67.7 bln in clean energy last year
* Faces annual finance gap 3.5 times that amount by 2020
By Nina Chestney
LONDON, March 21 China will have to raise up to
$243 billion a year by 2020 to finance clean energy development,
said a report commissioned by Beijing which will be presented to
the government this month.
Premier Li Keqiang this month pledged more action in
tackling China's heavy pollution which sparked public anger this
Last year, China accounted for one quarter of world
investment in renewable energy. It invested a record $67.7
billion in clean energy - 20 percent more than in 2011 - in a
year when overall global clean energy investment
But it will have to spend over three and a half times that
amount by 2020 to help meet its carbon intensity cut and
low-carbon energy targets, said the report by non-governmental
organisation The Climate Group and Beijing's Central University
of Finance and Economics on Thursday.
China aims to get 15 percent of total energy demand from
low-carbon sources by 2020 and cut its carbon intensity by 17
percent from 2011 to 2015 and by 40-45 percent by 2020 versus
Carbon intensity is the amount of carbon dioxide emitted per
unit of gross domestic product (GDP).
These goals will require total investment of up to $333
billion by 2015 and $413 billion by 2020, said the report seen
by Reuters, which was commissioned by the Chinese government's
National Development and Reform Commission (NDRC).
Current public and private funds are not enough to cover
this investment, resulting in a finance gap of around 2 percent
of China's projected GDP in 2015, or up to $214 billion a year.
This will reach up to $243 billion a year by 2020.
"Although the gap in finance identified is a substantial
figure, it is also true that it represents around a relatively
modest 2 percent of GDP...China's leaders have the tools to
close this gap," the report said.
A separate study in January by Tsinghua University estimated
China would need to invest 1.8 trillion yuan ($289 billion) in
its renewable energy sector from 2011 to 2015.
Both public and private finance will be needed to plug the
finance gap but private sector finance will have a larger role
to play particularly after 2015, the Climate Group report said.
The government will have to use a number of different
sources, including international climate funds, sovereign wealth
funds, micro-financing, as well as ensure China is attractive to
It should accelerate setting up regional carbon markets and
reduce fossil fuel subsidies.
China also needs to create the right policies and incentives
to leverage private finance, such as establishing a national
climate fund and a green investment bank and a carbon trading
regulatory commission, the study said.
The Chinese government should consider preferential tax
rates for cleaner fuels, market mechanisms to promote energy
efficiency and make it easier for green bonds to be issued.
($1 = 6.2118 Chinese yuan)
(Editing by William Hardy)