On October 22, at the 2021 China Financial Development Forum hosted by the Daily Economic News, Yang Zaiping, the founding secretary-general of the Asian Financial Cooperation Association and the former full-time vice president of the China Banking Association, presented in “Stable dual-carbon compliance, awaiting green financial innovation” In his keynote speech, it is stated that the recent power-cutting incidents in some places mean that we have encountered the “energy impossible triangle”, and it also reminded us that we should not engage in sports and “one size fits all” carbon reduction, but that we must steadily realize the “double” “Carbon” meets the standard, for which green finance must set clear and detailed targets.
Yang Zaiping believes that the “dual carbon” goal cannot be without financial support. The carbon peaking and carbon neutral process will create a large amount of investment and financing needs. The Governor of the People’s Bank of China Yi Gang previously stated that before 2030, China’s carbon emission reduction needs to invest 2.2 trillion yuan each year; from 2030 to 2060, it needs to invest annually. About 3.9 trillion yuan.
In Yang Zaiping’s view, in addition to the total input, the key to green finance’s promotion of the “dual carbon” goal is to be just right.
To achieve the “dual-carbon” achievement steadily, clear goals must be set
The “14th Five-Year Plan” and the 2035 long-term goal outline proposed that, looking forward to 2035, green production and lifestyles should be widely formed, carbon emissions will steadily decrease after peaking, the ecological environment will fundamentally improve, and the goal of building a beautiful China will be basically achieved.
Since the third quarter of this year, many provinces and cities in China have experienced power cuts, and some areas and even residents’ electricity consumption have also been affected. This year, the highest electricity load of the main power grids across the country is significantly higher than the average level of the same period in the past five years.
In Yang Zaiping’s view, there is a certain connection between power cuts and the completion of the annual “dual energy consumption control” goal. In order to achieve the goals, active power cuts have become a helpless move in some places.
To steadily achieve the “dual carbon” standard, Yang Zaiping believes that we must first set clear goals, have a clear measurable, reportable, and verifiable indicator system, and go deep into all walks of life. Basic data is crucial for how to decompose emission reduction tasks, performance evaluation, and carbon market pricing. Therefore, basic data must be verified. “At what time, what kind of industry meets what kind of standard, this problem has to be solved.”
Yang Zaiping emphasized that the technical channels for achieving carbon standards include energy efficiency improvement, energy replacement, carbon capture, industrial adjustments and digital upgrades.
Data show that since 2012, China’s energy consumption per unit of GDP has been reduced by 24.4%, which is equivalent to reducing energy consumption by 1.27 billion tons of standard coal. From 2012 to 2019, an average annual growth of 2.8% in energy consumption has supported an average annual growth of 7% in the national economy.
However, China’s energy consumption per unit of GDP in 2020 (10,000 yuan GDP consumes standard coal) is 0.49 tons, which is still 1.5 times the world average. Yang Zaiping believes that there is still room for this compared with the world average.
“The market mechanism should be allowed to transmit the pressure generated by the’dual carbon’ compliance.” Yang Zaiping said that commodity price increases are not transmitted downstream, which is actually contrary to market laws. Clean energy costs higher. Therefore, carbon peaks. , All the costs of carbon neutrality should be shared by the whole society.
Support the diversity of financial instruments to meet the “dual carbon” demand
At the policy level, the “Opinions on Deepening the Reform of the Ecological Protection Compensation System” (hereinafter referred to as the “Opinions”) proposed by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council to expand market-oriented financing channels. Research and develop financing tools based on water rights, pollution rights, carbon emission rights and other resources and environmental rights, establish green stock indexes, and develop carbon emission rights futures trading. Expand the scope of pilot areas for green finance reform and innovation, and take ecological protection compensation financing mechanism and model innovation as an important pilot content.
The “Opinions” also proposed to promote the ecological industry chain financial model. Encourage banking financial institutions to provide green credit services that meet the characteristics of green project financing. Encourage qualified non-financial enterprises and institutions to issue green bonds. Encourage insurance institutions to develop innovative green insurance products to participate in ecological protection compensation.
Yang Zaiping said that at this stage, enterprises still focus on indirect financing in terms of clean energy utilization and development, energy conservation and emission reduction. Commercial banks are still the main force in the green financial market and have advantages in credit support and risk prevention. At the end of 2020, China’s green loan balance is approximately US$1.8 trillion, and the stock of green bonds is approximately US$125 billion, ranking first and second in the world in scale respectively. Recently, market players have issued more than 40 carbon neutral bonds with a scale of more than 10 billion U.S. dollars.
“It is necessary to support the diversity of financial instruments and meet the needs of the diversity of the’double carbon’ target.” Yang Zaiping believes that carbon financial products and services will continue to innovate. Taking the EU as an example, carbon financial products mainly include carbon futures, carbon funds, carbon asset pledge financing, carbon asset repurchase financing, carbon allowance custody, and green structured deposits.
With the introduction of the goal of carbon neutrality, the construction of China’s carbon market will also accelerate. In 2017, the construction of the national carbon market was officially launched. With the continuous introduction and improvement of relevant systems, the carbon market has gradually developed and matured. The carbon financial products developed and participated in transactions have been continuously enriched. Carbon financial transactions have become increasingly active. Carbon financial transactions have been carried out for commercial banks. Provides more opportunities.
Yang Zaiping said that based on the prediction and monitoring of the risk-adjusted returns of related investment projects based on digital technology, investors’ credibility in green investment projects has continued to increase, and accordingly, public investors have also continued to increase. As of the end of 2019, global green bond issuance reached US$770 billion. China officially launched the green bond market five years ago. As of February 23, 2021, the total number of green bond issuances totaled 1,159, with a total scale of RMB 1.2 trillion. In early February this year, the first batch of carbon neutral bonds (green bonds) Sub-variety) successfully issued.
Cover image source: Daily Economic News
