Innovative Mechanisms of Sustainable Investment in Environment and Climate

China’s green transformation reflects, to some extent, the role of economies of scale and market competition in continuously reducing the cost of new types of energy. However, relying mainly on capacity expansion of existing mature technology industries to drive the green transformation will become increasingly challenging. There are three main reasons for this. First, as China’s task of reaching its carbon peak, carbon neutrality will become the primary goal of the green transformation. Achieving carbon neutrality will rely on technological innovation. Second, as demand for land resources in the green industry expands, diseconomies of scale in land use will increasingly constrain the advantages of economies of scale. Third, amid the new geopolitical landscape, countries around the world are placing greater emphasis on security over economic efficiency, and the fragmentation of the global market could restrict China’s green industry from fully leveraging economies of scale.