2023 Annual Meeting of the International Institute of Green Finance, Central University of Finance and Economics

Climate change has become one of the major challenges facing human society at present. Addressing climate change is a common task of the international community. In 2015, 193 United Nations member states, including China, jointly adopted the "2030 Agenda for Sustainable Development", establishing 17 Sustainable Development Goals (SDGs), aiming to promote change and transformation in a thorough and comprehensive manner from the three dimensions of economy, society and environment, and lead all mankind towards a sustainable future.

Multiple crises such as the COVID-19 epidemic, regional conflicts, food security and extreme weather have warned that it is urgent for mankind to achieve sustainable development goals. However, due to the slowdown in global economic growth after the epidemic, urgent tasks such as addressing climate change and ecological and environmental protection have become important for all countries. Brings greater financial pressure. Limited fiscal funds and growing needs for green development have put forward higher requirements for countries to improve budget systems to improve the efficiency of fund use and coordinate economic, ecological and environmental benefits. In this context, green budgets can become a powerful planning tool for countries around the world to implement government responsibilities and stimulate green capital investment. They are conducive to unifying green development goals and efficient use of fiscal funds, and are receiving increasing attention from governments of various countries.

The International Institute of Green Finance of the Central University of Finance and Economics cooperated with the United Nations Development Program (UNDP) to carry out research, focusing on sorting out the progress of global green budgets and policies related to China's green budget, analyzing the feasibility of China exploring green budgets, and summarizing reference suggestions through comparative practical experience between China and foreign countries, with a view to providing assistance for my country to promote green development through green budgets, achieve ecological civilization strategies and double carbon goals, and coordinate green finance through green budgets. Form policy synergy to expand space for market cultivation and development.

1. Progress in global green budgets

The practice of green budgeting began in the early part of this century. Italy is a pioneer in green budget practice, starting to try it as early as 2000, and later formally introducing related concepts in the 2009 Accounting and Public Finance Act 196/2009. The 2011 Italian government working document provided for the first time a calculation method of the "green" degree of budget items and practical guidance for functional departments, and required information disclosure, but the relevant practice was not promoted to other countries in a short period of time. It was not until after 2017, thanks to multiple international initiatives and actions, that green budgets were able to form a "multi-point flowering" trend on a global scale.

(1) Proposal of green budget concept

1. The Organization for Economic Co-operation and Development (OECD) led the launch of the "Paris Green Budget Cooperation" project in 2017, and gradually summarized and built a relatively comprehensive green budget conceptual framework.

2. The green budget framework proposed by OECD includes four parts: strategic and fiscal planning, budgeting tools with complete information and policy synergy, disclosure reports that promote accountability and transparency, and a healthy budgeting environment.

(2) Overview of green budgeting practices in OECD and EU member states

1.2020 In 2008, the OECD and the European Commission jointly conducted the world's first green budget questionnaire survey. The results showed that green budgets are generally in the early stages of development, with large differences in practices among countries, but they also face many common challenges.

2.2023 The update of the Green Budget Survey released by the OECD in 2009 showed that nearly two-thirds of member states have implemented green budgets, and all member states were scored and ranked.

3.2023 An update to the green budget survey released by the European Union in 2000 showed that 12 of the 27 countries have implemented green budgets and 5 countries have plans to introduce them. At the same time, they face challenges such as insufficient methodology, professional knowledge and personnel.

(3) Two main practical methods of green budgeting

1. Countries such as Italy adopt a "labeling quantitative" green budget approach, focusing on quantitative methods, attaching importance to the coordination between finance and functional departments and drawing more accurate data conclusions to reflect the scale of green finance.

2. Countries such as Sweden adopt a "performance tracking" green budget approach, usually combining quantitative and qualitative methods, attaching importance to pre-and post-evaluation of the impact of green budgets, and paying attention to its consistency with national green development goals.

3. China's green budget-related fiscal policies

As the planning level of fiscal policy, budget policy is the core of national fiscal policy. The implementation of fiscal policy should take the budget system as the basic institutional framework and meet the important principle of "no budget, no expenditure". Although China has not systematically proposed the concept of green budget, it is reflected in fiscal policy's general public expenditure policy, tax policy, green government public investment and national debt policy.

1. At the central budget level, China focuses on green areas in both central-level expenditures and central-to-local transfer payments. In particular, among transfer payments, which account for about 70% of the central budget, it adopts a variety of general transfer payments and special transfer payments. The mechanism supports green development in areas such as ecological environmental protection and low-carbon energy conservation.

2. China's current green tax revenue exceeds 2 trillion yuan, accounting for about 14% of the total tax revenue. In addition to environmental protection taxes that directly affect green development, they are mainly implicit in various taxes in an indirect form, such as resource taxes, cultivated land occupation taxes, urban maintenance and construction taxes, etc., as well as taxes on the consumption of high-carbon emission products such as automobiles and refined oil.

3. China's government green procurement system was launched in 2004, and the green procurement system framework for the government procurement list of energy-saving and environmentally friendly products was basically established in 2007. By 2018, the scale of government procurement of energy-saving products and environmental label products had reached more than 90% of similar products.

4. China has started to support green development from the field of green government funds. For example, in 2020, the Ministry of Finance, the Ministry of Ecology and Environment and the Shanghai City People's Government jointly initiated the establishment of a National Green Development Fund to focus on solving the financing problems of various green projects; In terms of green government bonds, China has not yet issued green government bonds, but local governments and policy banks have made certain explorations in local government green bonds and quasi-sovereign green bonds.

III. Basis for the Reform of China's Green Budget System

From international experience, green budgets need to be based on a mature budget system. China's budget system has undergone a number of reforms in the past few decades, constantly integrating with the modern budget system, reforming from four aspects: budget preparation, budget execution, budget supervision and full-process budget performance management to establish a mature budget system. Lay a feasible foundation for the implementation of green budgets.

1. In terms of reform in the budget preparation stage, a classification system with parallel economic classification and functional classification will be established for budget expenditures to improve the scientificity and transparency of the budget. We will start from both aspects of departmental budget reform and medium-term fiscal planning reform to improve the ability to strengthen revenue and expenditure during the budget preparation process. Management, coordinating different development goals, and taking into account short and long-term development.

2. In terms of budget execution management reform, the implementation of green budgets requires the financial department to uniformly implement fiscal revenue and expenditure on the premise that each functional department provides professional knowledge and technical support and completes the preparation of each budget category. In this regard, China is continuing to promote the construction of a unified treasury system and government procurement system.

3. In terms of budget supervision reform, the effective implementation of green budgets requires effective supervision of the preparation, implementation and evaluation of green budgets through a sound budget supervision mechanism. China has continuously improved the supervision mechanism related to green budgets through laws, regulations and policies such as the Budget Law and Opinions on Financial Support for Carbon Peak and Carbon Neutralization.

4. In terms of full-process budget performance management reform, the implementation of green budgets requires the establishment of a complete budget performance management mechanism to summarize social and environmental impacts, improve budget implementation performance in the coming year, and ensure that budgets serve green goals in the long term. China has implemented budget performance evaluation pilots since 2000, and has continued to expand and deepen since then. The current budget performance integration construction is steadily advancing.

5. Comparison of Chinese and foreign practical experience

Through budget management in aspects such as taxation, transfer payments, and government procurement, China has carried out a series of practices with green budget effects. At the same time, various budget system reforms that have been continuously promoted in the past can also become necessary for implementing green budgets. Pre-steps. In comparison with international advanced experience, this report further analyzes what can be strengthened in the current process of promoting green budget construction in China.

1. Compared with the green budget "labeling and quantification" model represented by Italy and other countries, China's green budget has a certain foundation in terms of target guidance and legal basis, but it still lacks the green budget methodology needed for labeling and quantification. Legal and policy basis required for corresponding processes, and construction needs to be strengthened in terms of relevant provisions on green budget output reporting.

2. Compared with the green budget "performance tracking" model represented by Sweden and other countries, China's green budget has certain deficiencies in legal basis and target refinement. It does not include green goals and evaluation systems in various aspects such as budget preparation, approval, execution, supervision, reporting and information disclosure. Make clear provisions on incorporating green goals and evaluation systems.

3. On the whole, China's current green budget practice is still in the early stage of development. A relatively complete budget management mechanism has been established mainly in special transfer payment funds with clear ecological and environmental protection purposes at the time of establishment, but it has not yet been formed within the full budget. A clear and unified green evaluation indicator system and systematic green budget management mechanism have room for development and improvement in the future.