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International Forum of Financing Sustainable Buildings
15 Nov, 2018

On November 15, 2018, the “International Forum of Financing Sustainable Buildings” took place in Chongqing. The event welcomed 150 attendees and was hosted by the Wuppertal Institute for Climate, Environment and Energy. The GIZ Sino-German Urbanization Partnership (SGUP) was excited to co-organize the event. As an organisation which was initiated by the aims to foster collaboration between Chinese and German parties on sustainable urbanisation objectives, SGUP believes that effective solutions can only be found by involving all stakeholders in the discussion. This scheme is overseen by the Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) of the Federal Republic of Germany and the Ministry of Housing and Urban-Rural Development (MoHURD) of the People’s Republic of China

Background

In the last decade, the Chinese government has implemented multiple policies to promote sustainable buildings. Public financing particularly provides a major incentive for various actors to improve the potential of energy efficiency and green building. However, it is evident that subsidies alone cannot achieve China’s sustainable building initiative. Green financing channels and tools are also essential for attracting private investment to further fill the immense financial gaps. At the same time, green financing is becoming increasingly popular worldwide among both financial institutions and policymakers. Therefore, although the area of green financing has developed rapidly in China, the general building sector seems to have received far less attention than other sectors.

Important Ideas

Data developed by Shi Yichen, the Dean of International Institute of Green Finance, Central University of Finance and Economics, presents further insights into China’s green finance situation. According to Shi, as of June 2017, the green credit balance of 21 major banks in China reached RMB 8.2 trillion (approximately  EUR 1 trillion)  . This indicates a year-on-year increase of 12.9%, accounting for 10% of the budget of various loans. Industrial financial institutions have developed policies to support green credit and established 50 categories of green credit.  Shi offers a comprehensive explanation of green building investment and financing. According to him, the term should take into account a wide range of factors: impacts on social and economic resources, green technology and energy-saving of buildings and the potential benefits and risks of capital in investment and financing. He similarly states that ecological aspects of the building’s life cycle should be considered in financial accounting and decision-making. Similarly, economic behavior in the construction sector should also take a multi-disciplinary approach by recognizing environmental, social and economic issues in order to enhance the sector’s sustainable development.

The forum brought key players from China, Europe and international financial institutions together to discuss the challenges that green financing faces in supporting China's sustainable building development. These actors also highlighted opportunities for collaboration and potential solutions to the recognised challenges.

In his presentation, Professor Ding Yong of Chongqing University shed light on the relevant required technology as well as a cost-benefit analysis of energy-saving renovation of existing public buildings in Chongqing. According to his research, investment for renovating both school and office buildings in Chongqing remains low, but the investment recovery period is the highest when financial subsidies are not considered. It is believed that these two types of buildings do not attract high investment because of they are actively used for relatively brief periods. For example, school buildings are closed for vacation during the summer – a season when other buildings are at their peak of using air-conditioners. Therefore, school buildings save less energy through their air conditioning systems than other types of buildings each year, so the investment recovery period is longer than in other types of buildings. This indicates that school buildings have a large demand for financial subsidies. Nonetheless, after the renovation, the average energy consumption of each type of building decreased significantly, with a drop of roughly 24%.

 About SWITCH ASIA-II – Promoting Sustainable Building Mainstreaming in Western China

Overall Objectives:

  • To further sustainable building practices in less developed regions of western China;
  • To reduce climate and resource impacts of the building sector and to contribute to sustainable socio-economic growth in China.

Specific Objectives:

  • To foster sustainable building practices among Micro, Small and Medium Entreprises  (MSME)s in Chongqing City and Yunnan province and further promote these practices in western China over 2016 to 2019.

 The Challenge:

China’s unprecedented socio-economic growth has triggered a vast expansion of the country’s building sector. As a result, since 1990, the energy consumption of buildings has increased by 40%. Furthermore, China’s building sector accounts for almost 30% of the country’s final energy consumption. Hence, enhancing energy-saving practices in the building sector represents a critical way to fulfil China’s ambitions of developing a resource efficient and low carbon pathway. In fact, the Chinese government aims that 50% of the country’s new constructions will meet green building standards by 2020. At present, it is estimated that only 10% of new construction projects currently reach this standard. Out of these mentioned  10% of construction projects, a large majority (about 90%) are located in the more developed eastern part of China. In contrast, the expansion of sustainable buildings in western parts of the country, such as Chongqing and Yunnan Province, remains still in the early stages.

 The Project Consortium:

  • Environment and Energy (WI)
  • China Association of Building Energy Efficiency (CABEE)
  • Chongqing Association of Building Energy Efficiency (CQBEEA)
  • Yunnan Development Centre for Building Technology (YNBTDC)
  • Beijing University of Civil Engineering and Architecture (BUCEA)
  • Yunnan Engineering Quality Supervision Management Centre (YNEQS)
  • Chongqing Economic Promotional Centre for Building Material Industry (CEPCBM)
  • Bank of Chongqing (BOC)

 Associated Partners

  • Ministry of Housing and Urban & Rural Development (MoHURD)
  • Yunnan Provincial Agency of Housing and Urban & Rural Development (YNHURD)
  • Chongqing Municipal Agency of Housing and Urban & Rural Development
  • (CQHURD)
  • Chongqing Banking Association (CQBA)
  • Yunnan Banking Association (YNBA)
  • Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
  • econet china I Germany Industry & Commerce Greater China