Building Climate Resilient Utilities 2025

Building climate-resilient utilities in China requires not only technological and governance innovation but also robust and diversified financial support. The financial dimension of China’s resilience transition is characterized by strong public sector mobilization, the development of risk transfer mechanisms and the rapid growth of green and blue finance as a strategic tool for both mitigation and adaptation. Public sector mobilization: strategic investment and financial support China’s central and local governments have made significant, sustained investments in climate monitoring, disaster preparedness and emergency response. From 2019 to 2023, national funding for disaster prevention, mitigation and emergency management grew at an average annual rate of 8.85%. In 2024, the central government allocated ~RMB 334 billion (~$46 billion) for disaster and emergency response, providing a critical financial backbone for effective disaster management across regions and sectors.33 Targeted fiscal support has been further strengthened, with RMB 2.51 billion in central natural disaster relief funds allocated to support local flood control, drought mitigation and responses to low-temperature, snow and ice disasters.34 These funds have enabled the construction and equipping of grassroots emergency rescue teams, the enhancement of emergency management bases and the deployment of specialized water engineering rescue units. Urban resilience has also benefited from dedicated funding. In 2024, city renewal initiatives included comprehensive “health checks” for all prefecture-level cities and above, the construction or renovation of 163,000 kilometres of utility pipelines, 201 kilometres of new integrated utility corridors and the remediation of over 900 flood-prone sites. These investments have significantly improved urban capacity to withstand and recover from flood disasters.35 Risk transfer mechanisms: climate insurance and financial risk management To address the growing financial risks posed by climate change, China is rapidly developing climate insurance and public-private risk transfer mechanisms. The government has issued guidance to strengthen the integration of meteorological and financial services, establishing a climate-related financial risk monitoring and control system. This includes the exploration of climate risk stress testing for financial institutions, enabling systematic assessment of potential exposures under different climate scenarios and transition policies. The insurance sector is playing an increasingly important role. Catastrophe models for flood and typhoon risks have been developed and commercialized, providing a foundation for innovative insurance products that can be tailored to local needs. The ongoing upgrade of these models is enhancing the industry’s ability to price and transfer climate risks effectively. Additionally, new insurance products have been introduced to support marine ecosystem restoration and wetland biodiversity protection, further aligning financial incentives with climate adaptation and environmental goals. Green and blue finance: sustainable financing for resilience China is a global leader in green finance, with rapid growth in both green loans and green bonds. By the end of 2024, the outstanding balance of green loans reached RMB 36.6 trillion (~$5.09 trillion), up 21.7% year-on-year – outpacing overall loan growth by 14.5 percentage points. The outstanding balance of green bonds stood at RMB 2.09 trillion (~$290.6 billion), with cumulative issuance exceeding RMB 4.1 trillion (~$570 billion).36 Financial institutions are encouraged to innovate and tailor products to the specific needs of resilience-focused projects, under the principles of risk control and commercial sustainability. This includes the creation of specialized insurance for marine vegetation restoration and wetland biodiversity, as well as the development of differentiated financial services for climate adaptation projects. To enhance transparency and accountability, China has introduced new standards for corporate sustainability disclosure, including the trial Basic Standards for Corporate Sustainable Disclosure and the General Guidelines for Corporate Greenhouse Gas Information Disclosure. These frameworks encourage companies to disclose their climate mitigation and adaptation targets and measures, supporting informed investment and risk management decisions.37 While China is directing significant resources towards safeguarding infrastructure and promoting a resilience transition in utilities, achieving the necessary scale, consistency and geographic coverage will require stronger policy coordination and the establishment of a multi-faceted financing mechanism. 2.4 Finance: funding the resilience transition From 2019 to 2023, China’s national funding for disaster prevention, mitigation and emergency management grew at an average annual rate of 8.85%. Building Climate-Resilient Utilities: Lessons from China and Future Pathways 17