Although China has enacted progressive laws designed to promote the development of renewable energy, existing regulatory hurdles continue to present significant barriers to financing clean energy projects. In a report entitled Financing Energy Efficiency in China, William Chandler of the Carnegie Endowment for International Peace concludes that restrictions on debt financing and foreign equity investments in China, a heavy-handed tax policy, and onerous regulations for investing in emissions reductions projects under the Kyoto Protocol’s Clean Development Mechanism make foreign investment in renewable energy projects risky and burdensome.

Chandler recommends that China take action at the national and local level to exempt renewable energy projects from foreign exchange and foreign-invested enterprise policy controls, provide tax holidays or exemptions for companies investing in clean energy, provide loan guarantees for energy-efficiency projects, and streamline the country’s Clean Development Mechanism regulations.

For further information about this topic, please contact Akin Gump.