Evaluating the Potential of Green Municipal Bonds as a Financing Solution for Chinese Cities

Pollution, environmental degradation, and greenhouse gas emissions are byproducts of China’s rapid urbanization, industrialization, and economic growth over the past four decades. In order to address climate challenges, China must develop cities that integrate sustainable solutions for their buildings, energy provision, transportation networks, waste recycling, and other infrastructure. As much as 6.6 trillion RMB is needed to construct low-carbon cities across China from 2016-20, of which 15% can come from the public sector and the remaining 85% must be catalyzed from the private sector. Green bonds can play a key role in meeting high urban green investment needs in years to come through private capital.