Research On The Financial Support For The Development Of Low-carbon Economy In China

With the speeding up of industrialization process, the emissions of carbon dioxide and other greenhouse gases have sharply increased while people create unprecedented material wealth, as a result, the extreme climate change,direct economic loss and hazards to human health arising from this have been beyond the tolerance of the earth and become a serious threat to human survival and development. It has become a global consensus to transform the economic development pattern and reduce greenhouse gas emissions to achieve low-carbon economic development. China has experienced 30-year rapid growth since the reform and opening up, however, the resource and environment problems caused by the growth mode with high energy consumption, high pollution and low output makes the continuous strong power of our future economy face unprecedented pressure. Therefore, it is an inevitable choice for the sustainable economy development of our country to establish a reasonable mechanism to reduce carbon emissions is a necessary choice, facilitate the transformation of economic growth pattern and promote the development of low-carbon economy.Low-carbon economy essentially requires all micro subjects in economy change their behavior of carbon dioxide emissions. Economic subjects'selection of emission reducing depends on the tradeoffs between costs and benefits generated from the reduction. As the core of modern economy, the finance can change the benefits and costs of emission reduction for economic subjects and guide their behavior of carbon dioxide emissions through its resource allocation function to achieve the goal of emission reducing. Hence, it is of theoretical and realistic significance to study the relationship between finance and low-carbon economy development and explore feasible ways of financial support for the development of low-carbon economy in order to make recommendations for transforming China's economic growth pattern and achieving sustainable economic development.First, this paper describes the current situation and the existing problems of low-carbon economic development and significant impact on the achievement of sustainable development goals and puts forward the necessity of developing a low-carbon economy; The paper points out that as the core of modern economy, finance is important to achieve the low-carbon development goals ;Then game theory is adopted in the paper to established a theoretical model,indicating that finance can play, a positive role in the development of low-carbon economy under certain conditions; On the basis of theoretical analysis, the paper studys the role of financial development in Chinese low-carbon economy; Finally, based on the introduction of the latest condition of financial support for low-carbon economy in foreign countries and the successful experience which can be learned from, policy suggestions are put forward for how to use financial methods to promote the development of low-carbon economy in China.Focus on the financial support for the transformation to low-carbon economy in our country, the paper mainly describes the following four aspects. First,establish a reasonable index to objectively measure the low-carbon economic development level in China. Data envelopment analysis (DEA) and the unexpected output of SBM (Slacks - -based Model) Model are used in the paper to estimate the ML (Malmqulist-Luenberger) Index taking account of carbon dioxide emissions, obtaining the environmental total factor productivity(TFP) indicators which reflect the quality of economic growth in China and are used in measuring the low-carbon economic development level in our country.The calculation result shows that, compared with the average total factor productivity (Malmquist Index), economic growth achievement of China is reduced significantly while considering the factor of carbon emissions, and this reflects the objective reality of our country's extensive economic growth.Second, ,derivating the theoretical model by the use of game analysis, prove no other external constraints, micro-economic subjects can not realize a low carbon economy consciously. By changing the comparison of costs and benefits, finance induces micro-economic entities to reduce carbon emissions.Theoretical models show that financial support is conditional on the development of low-carbon economy. First, Only under the conditions of moderate financial scale , financial institutions can support low-carbon economy by changing the target allocation of financial resources, improving financial efficiency and other means; Second, low-carbon enterprises have a longer life cycle. In Short term, finance has higher profit by supporting for high-carbon enterprise, only in the long term, it is profitable to support to low-carbon enterprise.Third, for more direct observation of the relationship between financial development and low-carbon economy in our country, this paper takes the banking industry as example, from two perspectives of financial scale and financial efficiency, to make an empirical analysis of the relationship between finance and carbon dioxide emissions in China. The empirical studies demonstrate that the expansion of financial scale results in the increase of carbon emissions intensity and per capita carbon emissions, which will not last forever and present the development feature of an inverted U-shape. With the expansion of financial scale and the improvement of economic development level, enterprises can get more money to carry out the reformation of production technology, purchase and use energy saving facilities, and this can help reduce carbon emissions. The improvement of financial efficiency is not conducive to achieve carbon reduction targets, for though many financial resources are invested in private enterprises and this improves the efficiency of capital utilization, compared with that of state-owned enterprises, the environmental awareness of private ones is relatively weak, which is not good for the transformation to low-carbon economy.Fourth, a complete set of systems are required for China's financial support in low-carbon economy. Based on the detail introduction of green credit and carbon emission rights trading business of foreign economies, the paper presents that China needs to learn from the successful experience of developed countries to expand the financial support for low-carbon industry and set up carbon financial markets on the basis of carbon emission rights trading, forming an integrated system with physical and virtual combination in financial support for the development of low-carbon economy.