Uncovering the evolution of the public climate finance policy mix for renewable energy in China

Abstract

As a critical element for energy transition and carbon neutrality, climate finance is receiving increasing attention from policymakers. However, existing studies mainly focus on the environmental economic performance of individual climate finance policy instruments, with limited discussion on the policy mix rationale. To uncover the evolutionary dynamics of public climate finance policy mix and understand its underlying mechanisms in facilitating low-carbon transition, this paper systematically examined the policy documents released from 2006 to 2023 in China. The results indicate that since the enactment of the Renewable Energy Law, China has introduced 121 public finance policy documents to support renewable energy development, marking a gradual shift from government-led subsidy policies to a market-based green electricity trading scheme. The policy mix dynamics vary across different phases: Phase I (2006-2010) witnessed a predominant utilization of special funds, Phase II (2011-2016) focused on the establishment and implementation of feed-in tariffs, while Phase III (2017-2023) marked a transition toward market-based policy instruments. Overall, China's experience shows that a comprehensive array of policy instruments, rather than relying on a single tool, is necessary for facilitating a low-carbon transition. Instead of prescribing an optimal combination of policy instruments once and for all, it is crucial to dynamically adjust and calibrate these instruments over the long term. This study not only assists China in exploring an appropriate policy mix for energy transition and carbon emission reduction, but also provides valuable references for other countries with similar development modes.

Keywords

Climate finance / policy mix / renewable energy / carbon dioxide peaking and carbon neutrality

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