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Green finance: how can it help Chinese power enterprises transition towards carbon neutrality

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Abstract

China’s power sector must cut its carbon emissions by 90% by 2060 to become carbon neutral. Green finance, as a crucial link in sustainable development, is garnering attention for its role as a mechanism for the green transformation of power enterprises. The process of green transformation development is highly challenging and requires a lot of financial support. This paper discusses the design of schemes for fiscal and financial support mechanisms for the green transformation of power enterprises, financing mechanisms to strengthen green finance, and financial support mechanisms to promote carbon trading. The utilization of green finance by power enterprises is assessed after defining the impact routes of green finance on clean energy power firms and highly polluting power firms. Using the SBM-GML model with variable returns to scale, the dynamic change of the use efficiency of green finance in power enterprises is calculated. At the same time, the enterprises are classified by power generation methods, and the changes in the power generation structure of power enterprises are analyzed. Compared with 2014, the total power generation in 2021 increased by 59.14%, wind power generation increased by 170.78%, and photovoltaic power generation increased by 974.31%. Hydropower, by contrast, grew by 94.14% and thermal power by only 45.09%. The results show that the evolution of total factor productivity and green total factor productivity of the 24 listed electric power enterprises is “M” shaped, that the main cause of the fluctuation is the serious phenomenon of “Triple Abandonments” of wind, light, and water in China’s power industry, and that the main means to improve total factor productivity and green total factor productivity of the power industry is to improve green power production technology. Classified by power generation mode, it is found that hybrid power generation enterprises have the highest average efficiency value, followed by wind power generation. China’s power enterprises are still dominated by thermal power generation; before the “Double Carbon” target, green power generation enterprises have not significantly improved the efficiency of green finance. The series of green finance mechanisms of action described in this study have a beneficial impact on the green transition of energy, according to a predictive analysis that combines existing policy objectives and practical mechanisms. Even without green financial support, the composition of China’s major clean energy sources will account for 86.85% of total electricity generation by 2060, while with green financial support, coal generation will fall to 0% around 2056, with hydroelectric, wind, and photovoltaic generation accounting for 11.81%, 50.00%, and 38.19% of electricity sources, respectively, and green finance will drive important technological changes, and the “Triple Abandonments” phenomenon will be fundamentally corrected. Finally, countermeasures and suggestions for the healthy development of green finance in power enterprises are proposed based on the findings of the study.

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Data availability

All used data have been included in the manuscript.

Funding

This work was supported by the National Natural Science Foundation of China (71803181, 72263026); National Planning Office of Philosophy and Social Science of China (22BJY051); Foundation for Distinguished Young Talents in Higher Education of Henan (2021-CX-019); Key R&D and Promotion Project of Henan (Soft Science Research) (222400410123); Research project of the Chinese Society of Academic Degrees and Graduate Education (2020MSA396); and Cultivation Fund for Key & Major Projects of Zhengzhou University of Light Industry (Philosophy and Social Sciences) (22ZDPYSK01).

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Authors and Affiliations

  1. School of Economics & Management, Zhengzhou University of Light Industry, Zhengzhou, 450001, China

    Chengyu Li, Conghui Zhu, Xueni Wang & Haisheng Xiang

  2. International Education College, Henan University of Science & Technology, Luoyang, 471000, China

    Shuchang Ren

  3. Simon Business School, University of Rochester, New York, 14620, USA

    Pengrui Xu

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  1. Chengyu Li
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  2. Conghui Zhu
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  3. Xueni Wang
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  4. Shuchang Ren
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  5. Pengrui Xu
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  6. Haisheng Xiang
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Contributions

C. Li: methodology, software, validation, formal analysis, writing-review and editing, visualization. X. Wang: methodology, investigation, data curation, writing-original draft. C. Zhu, S. Ren: conceptualization, resources, project administration, supervision. P. Xu, H. Xiang: data curation, resources, visualization. Chengyu Li and Xueni Wang are co-first authors. All authors contributed to the article and approved the submitted version.

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Correspondence to Chengyu Li or Xueni Wang.

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Li, C., Zhu, C., Wang, X. et al. Green finance: how can it help Chinese power enterprises transition towards carbon neutrality. Environ Sci Pollut Res 30, 46336–46354 (2023). https://doi.org/10.1007/s11356-023-25570-z

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