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Green finance support for development of green buildings in China: Effect, mechanism, and policy implications

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  • He, Wenhua
  • Liu, Pei
  • Lin, Borong
  • Zhou, Hao
  • Chen, Xuesheng

Abstract

The building sector accounts for a major portion of China's total energy use and energy-related CO2 emissions. Promoting the development of green buildings (GBs) via the application of green financial instruments (GFIs, including green fiscal investment, green credit, green insurance, and green bonds) is crucial for China to achieve carbon mitigation goals. This study explores the effect and mechanism of GFIs on supporting the development of GBs using time series econometrics. Results show that the overall green finance system exhibits significant supporting effects on the development of GBs. Among four types of GFIs, green fiscal investment plays a critical and an indispensable role. The effects of alternative GFI combinations on GB development are compared. The combination of green fiscal investment, insurance, and credit shows the most satisfactory supporting effect. In this combination, insurance plays a bridging role, as it better ensures that GBs' actual energy performance meets expected performance, thus promoting green credit financing for GBs. However, the results also indicate that the current green finance market is still in a government-driven pattern. To facilitate its transformation to a market-driven pattern, policies should focus on designing more targeted GFI-combination products, bridging GBs' performance gaps, and updating GBs' rating system.

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  • He, Wenhua & Liu, Pei & Lin, Borong & Zhou, Hao & Chen, Xuesheng, 2022. "Green finance support for development of green buildings in China: Effect, mechanism, and policy implications," Energy Policy, Elsevier, vol. 165(C).
    • Handle: RePEc:eee:enepol:v:165:y:2022:i:c:s0301421522001987
    DOI: 10.1016/j.enpol.2022.112973
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    1. Shaoliang Li & Xiazhong Zheng & Qin Zeng, 2023. "Can Green Finance Drive the Development of the Green Building Industry?—Based on the Evolutionary Game Theory," Sustainability, MDPI, vol. 15(17), pages 1-17, August.
    2. Lei Nie & Purong Chen & Xiuli Liu & Qinqin Shi & Jing Zhang, 2022. "Coupling and Coordinative Development of Green Finance and Industrial-Structure Optimization in China: Spatial-Temporal Difference and Driving Factors," IJERPH, MDPI, vol. 19(17), pages 1-22, September.
    3. Qianyi Du & Haoran Pan & Shuang Liang & Xiaoxue Liu, 2023. "Can Green Credit Policies Accelerate the Realization of the Dual Carbon Goal in China? Examination Based on an Endogenous Financial CGE Model," IJERPH, MDPI, vol. 20(5), pages 1-26, March.
    4. Yu Cao & Cong Xu & Syahrul Nizam Kamaruzzaman & Nur Mardhiyah Aziz, 2022. "A Systematic Review of Green Building Development in China: Advantages, Challenges and Future Directions," Sustainability, MDPI, vol. 14(19), pages 1-29, September.
    5. Pei Xu & Penghao Ye & Atif Jahanger & Siwei Huang & Fan Zhao, 2023. "Can green credit policy reduce corporate carbon emission intensity: Evidence from China's listed firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2623-2638, September.
    6. Md. Shajul Islam & Mohammad Rabiul Basher Rubel & Md. Mahedi Hasan, 2023. "Environmental and Social Performance of the Banking Industry in Bangladesh: Effect of Stakeholders’ Pressure and Green Practice Adoption," Sustainability, MDPI, vol. 15(11), pages 1-24, May.
    7. Viktor Koval & Olga Laktionova & Dzintra Atstāja & Janis Grasis & Iryna Lomachynska & Roman Shchur, 2022. "Green Financial Instruments of Cleaner Production Technologies," Sustainability, MDPI, vol. 14(17), pages 1-17, August.

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