With the rapid economic development, China is now facing serious pollution problem due to the increasing demand for energy which is mainly generated by combusting fossil fuel. In order to achieve sustainable development, the Chinese government actively promotes the use of renewable energy (RE). This provides a great opportunity for investing in RE projects, while investors have to secure stable financing sources to support the projects with a long payback period. This paper reviews the current status of RE development in the Pearl River Delta to identify the potential opportunities and barriers of RE investment in the region. It also provides a case study of a proposed Clean Development Mechanism (CDM) project utilizing biomass for power generation in Singapore to illustrate the application of emission trading as a financing tool. Based on the above studies, the possible roles of the Hong Kong Special Administrative Region in the regional RE development and the factors for establishing possible business models for Hong Kong-Guangdong cooperation are explored. A regional emissions trading scheme is suggested to provide financial incentive for the stakeholders in Hong Kong and Guangdong to implement RE projects.