撰写What is the development of green finance in China in recent years? The People’s Bank of China published a column today (15th) for authoritative interpretation.
The column pointed out that China is an active advocate and an important participant in the global response to climate change, and in 2020, it solemnly proposed a major strategic decision and solemn commitment to promote peak carbon dioxide emissions’s carbon neutrality. Vigorously developing green finance and supporting green industries and project construction will help to achieve the goal of carbon neutrality in peak carbon dioxide emissions. Promoting the effective connection between green finance and transitional finance, summarizing and refining the effective practices and beneficial models of green finance development, and applying them to the field of transitional finance is an important link to improve the quality and efficiency of financial support for green and low-carbon development and serve the high-quality development of the economy.
Green finance and transitional finance complement each other and jointly serve peak carbon dioxide emissions’s carbon neutrality goal.
The column pointed out that the construction of China’s green financial system has achieved remarkable results, and now a multi-level diversified green financial market with green loans and green bonds has been formed, which has provided a strong impetus for serving the green and low-carbon development of the real economy. By the end of the third quarter of 2023, the balance of green loans in China was 28.58 trillion yuan, a year-on-year increase of 36.8%, ranking first in the world; The domestic green bond market balance is 1.98 trillion yuan, ranking second in the world.
Constrained by the structure of energy industry and the stage of economic development, while vigorously developing green industries, promoting the low-carbon transformation of traditional industries and economic activities with high or difficult emission reduction in a steady and orderly manner has a direct role in achieving the goal of carbon neutrality in peak carbon dioxide emissions. In practice, the necessity of research and development of transitional finance has become increasingly prominent. Transformation finance focuses on industries and projects with significant carbon emission reduction benefits, provides reasonable and necessary financial support for low-carbon transformation in high-emission or difficult-to-reduce areas, and can promote the proportion of green industries and green projects in economic activities to increase continuously on the premise of ensuring "safe carbon reduction".
The People’s Bank of China has always emphasized the following aspects in the process of jointly promoting the development of green finance and transitional finance:The first is systematic thinking.Based on the whole chain transformation of supply chain or the overall transformation of business entities, we will carry out green and low-carbon transformation activities step by step and in stages.The second is to stand first and then break.Coordinate the present and the long term, and handle the relationship between energy transformation, economic development and people’s livelihood security. Encourage financial institutions to continuously improve their ability to identify green and low-carbon economic activities, actively respond to financial risks related to climate change, avoid "sports-style" carbon reduction, and help green and low-carbon development to be stable and far-reaching.The third is based on national conditions and technical reality.In accordance with the principle of "urgent need first", we will start with the transformation of financial standards in key areas such as coal, electricity, steel, building materials and agriculture, and give priority to supporting areas with advanced technology and significant carbon emission reduction effects.Fourth, domestic green and low-carbon development and international coordination and cooperation of sustainable finance promote each other.The People’s Bank of China has successively co-chaired the Green Finance Research Group and the Sustainable Finance Working Group of the Group of Twenty (G20), vigorously promoted the research and work related to international green finance and transitional finance, and contributed China’s wisdom and China’s plan. Important achievement reports such as the G20 Transition Financial Framework drafted by the working group have been officially released after being approved by the G20 Leaders Summit.
Draw lessons from the beneficial experience of green finance, and fully incorporate the relevant factors of climate change into the design of transitional financial policies and tools.
The column pointed out that in the next step, the People’s Bank of China will further strengthen the top-level design of financial support for green and low-carbon development, adhere to the principle of marketization, promote the development and effective connection between green finance and transitional finance, and systematically improve the ability of financial system management to prevent climate risks.
First, improve the standard system and lay a solid foundation for the development of green finance and transitional finance.Drawing lessons from the experience in formulating green financial standards, we will gradually introduce transitional financial standards that are applicable to all kinds of financial products. Encourage transformation subjects to formulate scientific, reasonable and feasible transformation plans to ensure carbon reduction and emission reduction at the overall level. At the same time, taking the formulation of transitional financial standards as an opportunity, we will adjust and update the current green financial standards to make the transition greener and more comprehensive and systematic. Gradually build a financial statistical system that can measure the effect of carbon emission reduction, and further improve the incentive and restraint mechanism for green finance and transitional finance. Actively advocate global transitional financial issues and enhance the comparability and consistency of global sustainable financial standards.
The second is to strengthen carbon accounting and environmental information disclosure requirements.Further improve the carbon accounting system of enterprises, study and establish the carbon accounting methodology of financial institutions by benchmarking international advanced practices, and promote the formulation of national standards. Improve the consistency and comparability of carbon accounting data of financial institutions under the premise of cost control, and establish an information sharing mechanism between departments. Further expand the scope of environmental information disclosure, improve the comparability of environmental information, strengthen the disclosure requirements for climate information such as carbon emissions and carbon emission reduction, and realize the mandatory disclosure of environmental information by financial institutions step by step. Actively participate in the formulation and trial use of global sustainable information disclosure standards.
The third is to improve the incentive and restraint mechanism and fully reflect the continuity of policies.Improve the monetary policy support for green and low-carbon development. We will continue to make good use of carbon emission reduction support tools and support special refinancing for clean and efficient use of coal to support green and low-carbon economic transformation.Further improve the effectiveness and pertinence of green finance evaluation., improve the index system, study and gradually incorporate indicators such as green finance and transition financial performance, climate-related financial risks, green mechanism construction, green finance and transition financial services, and climate and environmental benefits into the evaluation system; Incorporate more mature products and businesses into the evaluation scope; Expand the application scenarios of evaluation results, and link the evaluation results with green finance and transitional financial support policies.Regularly carry out climate risk stress tests.Continue to improve climate risk stress testing methods and enrich stress scenario settings; Organize more financial institutions and some regions to carry out climate risk stress tests and explore the inclusion of climate change-related risks in the regulatory framework; In-depth stress testing of macro-scenarios of climate risk.
The fourth is to enrich the financial products and service system. Vigorously develop financial products and markets in transition.According to the different transformation subjects, stages and uses of funds, we will research and develop targeted transformation financial products, support the development of bonds linked to sustainable development, and comprehensively use diversified tools such as credit, bonds, equity investment and trust to provide financial support for transformation activities. Encourage the development of private equity (PE), venture capital (VC), merger and acquisition funds, debt-to-equity swaps, mezzanine investments and other financial products with greater risk tolerance. At the same time, we will popularize the concept of green investment, expand the participants in green finance and transitional financial markets, and guide green investors to pay attention to and support transitional economic activities.Accelerate the development of the national carbon emission trading market.Improve the trading mechanism and rules of the carbon market, and clarify various systems such as registration, trading and settlement. Actively study various financial products linked to carbon emission rights. According to the principle of investor suitability, the scope of trading subjects in the carbon market will be expanded in an orderly manner. Reasonably control the total amount of carbon emission quotas, and scientifically allocate the initial carbon emission quotas. Enhance the liquidity of the carbon market and optimize the pricing mechanism of the carbon market.
Fifth, fully mobilize the enthusiasm and initiative of the grassroots, and try to promote the overall development of green finance and transitional finance with local leaders.Since 2017, the construction of 10 green financial reform and innovation pilot zones in China has achieved positive results, forming a series of beneficial experiences to be replicated and promoted throughout the country. In 2022, the first batch of pilot areas successfully closed. Encourage more qualified and willing regions to base themselves on regional reality, continue to explore diversified green financial reform and innovation experiments, support the upgrading of original experimental areas with characteristics and foundations, encourage the development of transitional finance, and continue to contribute to the overall development of green finance and transitional finance.
(CCTV reporter Dong Bin)