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Although China is the world's largest investor in renewable energy, its overseas energy investments are primarily in fossil fuels. This is a cause of major concern as countries across the globe need to transition toward low-carbon development trajectories to meet the 1.5-degree warming target of the Paris Agreement. In this paper, we present data up until and including 2019 showing that power generation investment in renewables domestically (excluding medium and large hydro) is 77% while only 22% overseas. We add to the literature on the institutional environment surrounding Chinese overseas investment by finding that in addition to general barriers to renewables, such as higher up-front costs and different income cycles, Chinese renewable firms face significant structural financing disadvantages vis-à-vis conventional energy firms. We find that the underlying reason is that Chinese fossil fuel companies are largely state-owned while renewable companies are largely private-owned. The disadvantage then materializes through the Chinese financial system's preference for state-owned enterprises. Lastly, we identify concrete policy options to overcome the disadvantage by addressing five types of actors: 1) policy banks that can emphasize their development focused mandate, 2) state-owned commercial banks currently financing the majority of Chinese overseas energy projects, 3) smaller financial institutions currently not involved in this type of financing overseas, 4) Sinosure, currently focusing on insuring fossil fuel projects, and 5) Chinese energy, utility, and construction companies that would benefit from further diversifying into renewables. Key policy insights The proportion of renewables in Chinese power generation investment is 77% domestically while only 22% overseas. Chinese fossil fuel companies are largely state-owned, while renewable companies are largely private-owned. The key barrier for Chinese renewable energy companies going overseas is their lack of access to finance. Chinese financial institutions favor state-owned over privately-owned organizations, both domestically and overseas. Consequently, a key reason for renewable/fossil disproportions is that Chinese renewable energy companies are largely private-owned. The favoritism can be overcome through policies targeting 1) policy banks, 2) state-owned commercial banks, 3) smaller financial institutions, 4) Sinosure, or 5) Chinese energy, utility, and construction companies. [ABSTRACT FROM AUTHOR]

China's pilot carbon trading policy is expected to be both efficient and flexible in reducing carbon emissions through incentivising low-carbon innovation. This paper analyses the effects of this pilot policy on low-carbon innovation using a difference-in-difference model, based on a sample of selected enterprises and carrying out a series of robustness tests to corroborate the results. The analysis shows that the pilot carbon trading policy is predicted to have a significantly positive effect on the low-carbon innovation of enterprises that fall under its scope, notably by alleviating obstacles to the financing of low-carbon innovation. Furthermore, a heterogeneity analysis of enterprises' characteristics and carbon allowance allocation methods in different pilots indicates that the effect of the pilot carbon trading policy on enterprises' low-carbon innovation will be reflected mainly in enterprises in China's eastern provinces, and in state-owned enterprises. Compared with the grandfathering and historical intensity allocation methods, the findings of this study suggest that the extent of low-carbon innovation is significantly greater when the benchmarking method is used. The results of this paper offer some key insights into improving the policy design of a nationwide carbon trading market in China, as well as a reference point for other countries and regions, especially developing countries, in establishing a carbon trading market. Key policy insights China's pilot carbon trading policy can promote low-carbon innovation. Easing the financing constraints of enterprises can promote low-carbon innovation. Compared with the grandfathering and historical intensity allocation methods, using the benchmarking method significantly improves the enterprises' low-carbon innovation. [ABSTRACT FROM AUTHOR]