The Chinese government has responded to the challenge of increasing energy consumption and environmental pollution with ambitious targets for renewable energy generation. In the 12th Five-Year Plan, running from 2011 to 2015, a target was introduced to generate 15 per cent of primary energy from renewable sources by 2015. To date, this expansion has been financed by an electricity surcharge, raising funds from electricity consumers to support renewable energy projects. To continue to fund the transition to renewable energy, attention has turned to using environmental fiscal measures to generate other possible sources of revenue. This report addresses the main issues facing the proposed introduction of a carbon pricing mechanism with some of the revenues hypothecated for renewable energy. This report will lay the groundwork for subsequent reports and research, which will focus on stakeholder views and research on the design of such a measure. This report discusses the role of public finance in supporting renewable energy and highlights international examples and experiences that may be relevant to China as it continues plans to develop fiscal instruments that will provide public support to renewable technologies, including wind energy, hydro-electric generation and solar photovoltaic (PV) installations. In addition, China provides support to distributed generation of wind, solar, biomass, ocean and geothermal energies. This report is chiefly concerned with on-grid renewable energy technologies.