AFD is supporting the creation and financing of a pilot “green” investment fund dedicated to climate- friendly projects in the highly industrialized province of Shandong. “Climate” funds do not exist in China, so this project will act as a pilot scheme to help accelerate the financing of new climate projects.
Context
Shandong Province, in eastern China, is highly industrialized and is one of the most polluting provinces in the country. It is a priority province for the Chinese government in the framework of its commitment to the Paris agreement. The Shandong provincial government has set itself the target of reversing the curve of greenhouse gas emissions by 2027, i.e., three years earlier than the 2030 deadline set for the country by China. However, public funding alone cannot cover the investment requirements for the fight against climate change.
Description
Jointly financed by the Asian Development Bank, the KFW and the Green Climate Fund, the Shandong Green Development Fund is a pilot investment fund in China dedicated to the development of “green” infrastructures. With a target total of CNY 10 billion (approximately USD 1.5 billion), the fund will be earmarked for financially sustainable projects aimed at CO2 mitigation and climate change adaptation, in particular in the highest-emitting industries.
The structure of the fund is innovative in several ways:
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long-term funding from donors and local government will make the risk-return profile of investments attractive, ensuring that they appeal to private, institutional and commercial investors;
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once the loans for the first projects have been repaid, the funding from donors can then be reinvested in other projects;
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the fund will apply a method used by the Green Climate Fund assessment process to evaluate projects’ performance in the fight against climate change and thus contribute to the dissemination of internationally recognized standards for assessing climate benefits.
Impacts
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Estimated reduction in CO2 emissions of at least 37.5 million tons;
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Better resilience to climate risks for at least 7.5 million people;
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Development of new types of investment dedicated to the fight against climate change and a pilot project that may be replicated in other regions of China.
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on the same region
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on the same topic
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on the same financial tool
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