Keywords

1 Introduction

The industrial revolution not only contributed to the great progress of social and economic development, but also caused great damage to the ecological environment. Since the 1990s, in order to control and reduce carbon dioxide emissions, the concept of “carbon neutrality” came into being. So far, more than 370 countries have made carbon neutrality commitments, and countries around the world have made positive progress in addressing climate change and promoting carbon emission reduction. This commitment not only reflects China’s determination and confidence to firmly take the path of green development as a responsible major country, but also is an inherent requirement of China’s sustainable development. China hopes that by accelerating the quantitative target of green economic development, it can realize the transformation of old drivers of growth from new drivers, take this as an important starting point to promote economic transformation and upgrading, and point out the direction for China’s green and low-carbon development and ecological civilization construction.

As one of the three major energy consumption fields in China, the green development of the construction industry has become an important support to achieve the goal of “dual carbon”. According to the Research Report on Energy Consumption and Carbon Emissions of Buildings in China (2022), the total carbon emissions from the whole process of buildings in China in 2020 were 5.08 billion tCO2, accounting for 50.9% of the national carbon emissions, accounting for more than half of the total. Among them, the carbon emission in the production stage of building materials is 2.82 billion tCO2, accounting for 28.2% of the total carbon emission in China; The carbon emission in the construction phase was 100 million tCO2, accounting for 1.0% of the total carbon emission in the country; The carbon emission of buildings in the operation stage is 2.16 billion tCO2, accounting for 21.7% of the total carbon emission in China. According to the constraint target of carbon emission peak and carbon intensity decline set by our country, the problem of carbon emission reduction in the construction field has reached the point of urgency. Promoting the green development of buildings has become an inevitable demand of China’s economic and social development, and the state has issued a series of policies and measures for this purpose. Development cannot be separated from finance, and green development cannot be separated from green finance. Ma (2018) believed that green building standards should be transformed into green financial standards and green building insurance should be used to realize the support of green finance for green buildings [1]. Ma (2018) believed that green bonds would play a positive role in promoting green buildings [2]. Therefore, carrying out research on green finance to promote the green development path of the construction industry is conducive to the realization of the “dual carbon” development goal.

2 Connotation of Green Finance

2.1 Definition of Green Finance

As the name suggests, green finance is a kind of “green” finance, which is the financial behavior that supports the development of green economy and supports environmental and climate-friendly economic activities. The term Green Finance first appeared in the 1990s, when some scholars proposed that green finance was the product of combining the financial industry with the green industry and incorporating environmental benefits into financial innovation [3]. In recent years, green finance has been clearly defined by some official institutions and international groups. In the G20 Green Finance Report, green finance is defined as “investment and financing activities that generate environmental benefits to support sustainable development” [4], while in China’s Guiding Opinions on Building a Green Finance System, green finance is defined as: Economic activities that support environmental improvement, climate change response and resource conservation and utilization mainly include financial services provided for project investment and financing, project operation and risk management in the fields of environmental protection, energy conservation and green building (Fig. 1) [5].

Fig. 1.
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Green financial service system

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2.2 Importance of Green Finance

Since the 1970s, a series of major environmental pollution has prompted people to reflect, and the value concept of green, low-carbon and environmental protection has entered people’s vision. As the problem of climate change has been paid more and more attention, we have come to realize that it is not only an environmental problem, but also a development problem. With the deepening of the concept of sustainable development and building a community with a shared future for mankind, the development of green finance has emerged. Jeucken (2001) Green finance is an objective requirement for the financial industry to achieve sustainable development, which makes banks and other financial institutions actively promote green finance business, increase the proportion of green finance in investment and financing activities, help financial institutions improve their own credibility, and effectively promote risk management [6]. When the discussion on financial support to reduce carbon dioxide and other greenhouse gas emissions and deal with climate change gradually appeared in people’s life, a series of concepts such as climate finance and carbon finance were also derived. People began to use the corresponding financial means to support the activities of protecting the environment. Abroad, with the European Union as a pioneer, the United States as an innovation leader, and Japan as a participant, with the help of the top-level design of green finance and the promulgating of relevant laws and policies, after decades of development, it has formed a market-led and government-guided development model, and its green finance system is becoming increasingly mature. China has started to build a green finance policy framework and explore the development mode of green finance on a pilot basis.

3 Green Buildings and Their Development

Green building refers to the building that saves resources to the greatest extent during the whole life period, including energy saving, land saving, water saving and material saving, so as to protect the environment and reduce pollution, provide people with green, healthy, comfortable and convenient activity space, and coexist in harmony with nature. Compared with ordinary buildings, green buildings will generate a certain amount of additional investment, but foreign practice shows that green buildings will effectively solve the problem of environmental deterioration and resource bottleneck by its good environmental protection, energy saving and emission reduction, and transform the low-carbon, green and sustainable development of buildings into feasible. The United States Green Building Council (USGBC) estimates that green buildings consume 32% less electricity and 36% less total energy than ordinary buildings. From the results of saving a lot of energy consumption and reducing greenhouse gas emissions, choosing green buildings is a wise choice for both the national economy and families, and the promotion of green buildings in developed countries began as early as the 1980s. But in our country the start time of green building is relatively late, our country in June 2006 before the official implementation of the “green building evaluation” standard, the first batch of “green building design evaluation mark” was officially announced in August 2008.

In 2021, China’s carbon dioxide emissions per unit of GDP decreased by 50.3% from 2005. Therefore, the advocacy of low-carbon life and the development of low-carbon economy will contribute to the development of our urbanization to the direction of low-carbon city construction, and provide more possibilities for the development of green buildings. In the process of urbanization, the development of green buildings will realize the application of a variety of new technologies such as comprehensive integration of environmental protection and energy saving in the construction field, promote the transformation of construction production mode, promote the new energy-saving and environmental protection building materials, new energy and other related industries, and complete the optimization and upgrading of industrial structure. It is of great significance to promote sustainable economic and social development.

Improving the investment and financing mechanism of green building and correctly evaluating its economic benefits are the key to the development of green building at present. At present, although some green buildings can obtain certain subsidies and other channels of financing, these funds are often not directly related to the energy conservation and emission reduction effect of green buildings. It wants to promote the innovation of building energy-saving technology and promote green and low-carbon buildings, so as to make living more comfortable and achieve energy conservation and emission reduction. It is necessary to use various market means including carbon finance to quantify the emission reduction effect of green buildings through the pricing of carbon emissions, and incorporate the emission reduction into the carbon market for trading, so as to realize the organic correlation between economic benefits and the emission reduction achieved by green buildings, and consider the energy conservation and emission reduction benefits when evaluating the economic benefits of green buildings. Providing more financial services to green building enterprises makes the investment and financing mode of green building operable and attracts social capital and financial capital to enter the field of green building.

4 Current Situation and Existing Problems of Green Finance in Helping Green Buildings

4.1 Development Status of Green Building Industry Aided by Green Finance

Under the background of “dual carbon” development, all parts of the country are actively promoting the green transformation and development of the building field, and the development of green building and green finance is identified as an important direction of development. At present, the collaborative development of green finance and green building in China is still dominated by local exploration, and some replicable experiences have been obtained in the process of exploration and practice. The People’s Bank of China and other departments have also taken green buildings as an important support area (see Table 1), but the support of green finance for green buildings is still sufficient in terms of scale.

As the first pilot city in China, Huzhou, Zhejiang Province, took the lead in issuing local standards such as Opinions on Accelerating the Development of Green Building Quality Improvement and Guidelines for Green Building Evaluation of Huzhou City. As the first municipal green finance promotion regulation in China, it has effectively linked the development of green buildings with green financial products and services, forming a system and framework. It has developed 114 green finance related products such as “green loan” and “green purchase and construction loan”, built the first green financial service platform “Green Loan”, and built the first “carbon neutral” sub-branch. It has promoted the green development of the whole industry chain of “green construction, green building and green building materials” in the construction industry [7], formed a “five-step” system of policy guidance, standard first, product innovation, science and technology support and demonstration drive, which has achieved remarkable results and explored an effective practical path for realizing carbon peak and carbon neutrality [8].

Table 1. Green building support projects in each green finance standard
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4.2 There are Problems in Green Finance Helping Green Building Industry

Green buildings need to implement the concept of energy conservation and emission reduction into the whole process of building design, construction mode, operation and management, recycling and disposal, and achieve harmonious coexistence with nature through improving the standard system and innovative technology. Compared with traditional construction enterprises, green construction enterprises need to incorporate the social responsibility for environmental protection into their business decisions and cost input. At present, green finance faces a variety of problems in the process of helping the development of green buildings, including at least: Lack of clear and detailed implementation policies, lack of management methods and mechanisms, financing difficulties and maturity mismatch, consumer demand for green buildings has not been activated, supporting financial products and services need to be improved and innovated, which also make green buildings cannot be recognized at both ends of supply and demand.

Lack of Clear and Detailed Implementation Policies

The central bank has only made preliminary guidance and norms on the definition of green industry projects, the investment of raised funds, the management of funds during their existence, information disclosure and the evaluation or certification of independent institutions, and other relevant policies still need to be further established and improved. At the same time, since 2019, the central government has made a series of statements on the real estate industry, indicating to the public its resolute attitude on real estate regulation. In view of the large amount of financial resources occupied by the real estate industry, relevant departments have clearly proposed to control real estate credit and non-bank financing. This makes the green building in the national macro adjustment is also affected. Although it is a green industry encouraged by the state, the “one-size-fits-all” strict regulation policy does not distinguish green building from general real estate development. In turn, many commercial banks and non-bank financial institutions are afraid, unable or unwilling to support green building developments when it comes to obtaining financing. It worries that its support for green buildings will be “identified” as an opportunity to support property development and hit the red line of national regulation policy. The development and operation of green building projects are restricted by real estate regulation policies, which makes construction enterprises increasingly take a “wait-and-see” attitude towards the development of green building.

Lack of Management Methods and Mechanisms

At present, the total amount of green building projects in China is relatively small, and the proportion of high-quality identification is relatively low. According to the provisions of the “new National Standard” for green building in 2019, after the construction drawing design of the construction project is completed, green financing can be obtained from financial institutions and the market according to the pre-evaluation (pre-evaluation does not grant identification). However, the management method of green building operation identification after the completion of the project and the evaluation mechanism after the completion of the project are currently missing. As for the green building industry in the operation stage, the regulatory agencies have not been able to follow up, evaluate and supervise, and the information disclosure mechanism of green buildings has not been established. Once the “green” benefits of green buildings in the operation stage are not guaranteed, the motivation of financial institutions to support green buildings and the interest of owners/consumers to purchase and rent green buildings will be greatly reduced, and the market will lose confidence in the development of green buildings.

Facing Financing Difficulties and Maturity Mismatch

The purpose of green finance to promote the development of green buildings is to solve the financing problem. Due to the lack of effective evaluation of green benefits of green buildings and timely information disclosure mechanism, it is difficult for financial institutions and guarantee institutions to directly measure the value of green technology of small and micro enterprises in the industrial chain of green building industry. The credit risk assessment for these enterprises is also difficult due to the imperfect evaluation system, resulting in the inability of small and micro enterprises in the color construction industry chain to obtain financing or guarantee from financial institutions in a timely manner. Financing difficulties also hinder the long-term development of the entire green building industry. In addition, the incremental cost caused by the use of green technology, equipment and materials, the cost of project design, simulation and demonstration, and the additional cost of applying for green building identification make the incremental cost account for 2.7%–9.3% of the overall cost of green building, and the payback period of investment is long [9]. When developers try to solve the maturity mismatch between incremental costs (incurred in the short term) and incremental benefits (incurred in the long term) by raising housing prices or rents, the problem is solved. However, due to the low willingness of consumers and the lack of incentives from financial institutions and the government (such as price limit relaxation, floor area ratio relaxation, etc.), it is difficult to achieve. Finally, the amount of credit invested in green building accounted for only 1.59% of the total green credit in China; green bonds started late and 30% were not labeled; and green funds lacked mature cases, making it difficult to match the huge financing needs of green real estate enterprises.

The Demand for Green Buildings on the Consumer End is not Activated

Green building itself started late in our country. As far as most consumers are concerned, they lack awareness of the concept of green building and its benefits (energy saving benefits, environmental improvement and health impact, etc.). In addition, the majority of consumers are still sensitive to housing prices. Even if there is publicity about the benefits of green buildings by developers, it is difficult to directly understand the economic benefits of energy saving and water saving of green buildings. At the same time, due to the lack of corresponding monitoring and information disclosure mechanism in the later green building operation and maintenance stage, consumers are not willing to bear relatively high prices for green buildings. Therefore, there is no spontaneous demand for green buildings on the consumer side, which also brings uncertainty to real estate developers’ investment in green building projects. However, in the actual use process, consumers cannot intuitively understand the energy saving benefits of green buildings.

Due to the above reasons, the consumer market of green buildings in China has neither obvious price advantage nor effective activation. This has become one of the important factors hindering real estate developers from investing in green buildings, and has also directly and indirectly led to the lack of demand for related financial products.

Supporting Financial Products and Services Need to Be Improved

Green financial products have not yet been able to well meet the needs of the development of China’s green building market. The lack of data on indicators of green building-related financial products makes it impossible for some commercial banks to know the default rate, default loss rate and “carbon emission reduction” index of green bonds, which hinders the formation of pricing mechanism and product innovation of green building-related financial products. In addition, the existing green building-related financial products are not highly differentiated in terms of credit conditions, cycles and interest rate differences.

5 Path Suggestions

Based on the above analysis of the problems existing in green finance in supporting the development of green buildings, this part puts forward the following preliminary ideas on promoting the development of green building market through green finance from the perspectives of macro-control, industry supervision, consumer market and financial product innovation (Fig. 2).

Fig. 2.
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Green finance boosts green building operation processes

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5.1 Further Improve Policies Related to Green Buildings

At present, the government’s regulation of the real estate industry is a “one-size-fits-all” restrictive measure in financing. This paper suggests that to distinguish green from non-green construction enterprises, key restrictions should be imposed on “non-green” real estate enterprises and projects, relatively loose financing conditions should be given to those qualified green developers and green projects, and “structural adjustment” under the requirement of “total volume control” should be realized. So as to stimulate the endogenous power of industrial transformation of real estate enterprises. We will increase policy support for green buildings from both the supply side and the demand side. Housing developers can be encouraged to participate in green building development from the supply side through floor area ratio incentive, financial subsidy, tax reduction and other ways. On the demand side, consumers’ consumption costs of green buildings should be reduced through deed tax incentives and other means to guide them to purchase and lease green buildings.

5.2 Improve the Standard System

Further improve the green building evaluation system, improve the evaluation and supervision of the building operation stage and the corresponding trust-breaking punishment mechanism, to ensure that the building with green building logo “always green”. From the design stage, it is necessary to make clear project evaluation and strengthen the relevance with green financial services. Establish green building project management system and green financial service management mechanism to ensure the promotion of projects, the standardization of financial services and capital risk supervision, and carry out the compilation of green financial service standards. Establish a complete green financial service process of application acceptance, preliminary screening, due diligence, project evaluation, loan review, loan approval, loan issuance and post-loan management [10].

5.3 Activate the Demand for Green Buildings

By building a platform for exchange, discussion and display of the integration of green finance and green building, strengthen the publicity of the coordinated development of green finance and green building with the help of various media prices, and improve the public’s awareness of green finance and green building; Through the development and holding of relevant lectures and training, the publicity and promotion of green finance and green buildings to eliminate consumers’ doubts, while strengthening the establishment of supporting measures such as information disclosure of green buildings and punishment for trust-breaking, so as to realize the guarantee of “green benefits” that consumers deserve. In order to make consumers feel the “green benefits” brought by the choice of green buildings, financial institutions can provide them with calculation tools such as the “electricity and water Saving Calculator” APP to take consumers to calculate the benefit account and help them intuitively understand the benefits brought by the choice of green buildings due to energy saving in the future.

5.4 Innovate Green Financial Products and Services

Combined with the characteristics of the green construction industry to innovate and develop a number of green financial service products, effectively expand the financing channels of green building. Encourage the development of “green development loan”, “mortgage loan”, “securitization products of building photovoltaic assets”, “green building insurance” products, as well as trading mechanisms related to carbon emission reduction of green buildings. With the improvement of the carbon financial system, carbon emission quota and certified emission reduction are no longer just tools for the performance of the carbon market. In terms of credit rating index design, differentiation should be implemented for construction enterprises that develop more green buildings, and their financing costs should be moderately reduced.

6 Conclusion

As an industry with high carbon emissions, if the construction industry can realize the transformation to green building industry, it will reduce the carbon emissions by 90% compared with the traditional construction industry, and green building has become an inevitable choice. Based on the current situation and existing problems of the development of green buildings, this paper carries out research work, and puts forward development suggestions from the aspects of improving policies, improving the standard system, and innovating financial products, so as to further enrich and improve the development path of green buildings promoted by green finance, and help the green and low-carbon development in the construction field.