As noted by President Xi Jinping in the report to the 19th CPC National Congress in 2017, we will advance green development by stepping up efforts to establish a legal and policy framework for green production and consumption, and a sound economic structure that facilitates green, low-carbon, and circular development. We will create a market-based system for green technology innovation, develop green finance, and spur the development of energy-saving and environmental protection industries as well as clean production and clean energy industries. By comprehensively expounding the background, current situation, philosophy, priorities and goals of green development, the report has emerged as its guideline for a period to come. This suggests that propelling the green transformation of China’s economy has become the choice of our times. At the Fourth Plenary Session of the 19th CPC Central Committee, it was further proposed that “We should uphold and improve the systems to promote eco-civilization so that humanity can live in harmony with nature.” Therefore, ecological progress is an important part of modernizing the state governance system and governance capacity.
Building a state governance system in sync with green development and ecological progress puts forward new and higher requirements for public finance. Fundamentally, green development intertwines economic growth, environmental protection, and even promotion of social harmony. The core challenge in this intricate interplay lies in coordinating between current interest disputes and managing ambiguous risks. While performing necessary functions in environmental protection, pollution prevention and natural ecological protection, fiscal policy significantly aids in catalyzing the green shift in industrial structure, elevating the green competitiveness within industries, and propelling the economy towards greener development. Given the context of green development, prior policies primarily centered on economic growth clearly fall short of meeting the contemporary needs of social development.
In recent years, to stimulate economic recovery and cope with climate change, the US, the EU, Japan and South Korea have also proposed green development strategies and initiated the Green New Deal. The green economy has burgeoned as a new driving force for international economic development, and green finance has taken on a significant role in the transition of fiscal policies among major countries.
Then what underpins the theoretical framework of green finance? What characterizes its conceptual evolution, logical origin, and mechanism of action? How can we fine-tune the prevailing fiscal policy system to tackle China’s green development challenges? Comprehending these questions is critical to better leverage the role of finance in modernizing the state governance system and governance capacity.
The first part of this book expounds the theoretical and policy framework of green finance, and summarizes its policy system and practices in recent years, in order to clarify the functional role of green finance in green development and ecological progress both theoretically and practically. The ensuing part focuses on carbon peaking and carbon neutralization. Following an overview of carbon peaking and carbon neutralization, it analyzes the technological innovation, institutional innovation and their interaction in the process of achieving the dual carbon goals from such perspectives as transition in high-carbon industries, low-carbon transition of energy, low-carbon transition of resource-based cities, and government investment and financing innovation. On this basis, the innovation path and institutional guarantee of fiscal policy for achieving the dual carbon goals are presented.