China’s top ministries commit to green finance drive
07 September 2016 | Mitigation
China’s leading government ministries have adopted a set of principles to ensure future investments in the country are environmentally friendly.
In a statement released on 1 September, the People’s Bank of China said the “Guidelines on Establishing the Green Financial System” would now underpin domestic financing.
Under the plans, a national green development fund will be created and local governments will be told to support green infrastructure projects.
“In China, establishing a green finance system has become a national strategy,” said Zhou Xiaochuan, the bank’s governor.
Participating agencies include the influential National Development and Reform Commission, the Ministry of Environmental Protection and the Ministry of Finance.
According to the UN Environment Programme an estimated US$600 billion a year is required to develop China’s renewable energy, clean transport and energy efficiency sectors.
Subsidies will be provided for loans classed as “green”, and over time companies will be required to take part in a mandatory environmental disclosure scheme
“The Guidelines call for the development of green insurance and trading of environmental rights, as well as the drafting of laws and regulations for introducing a mandatory pollution liability insurance system,” said the statement.
“They also support the development of various carbon finance products, and promote the development of the markets for emission rights, energy rights, water rights, and other environmental rights, as well as financing tools based on these rights.”
Government departments should “faithfully implement all their requirements” it added.
The guidelines offer little clue as to what would be classed as green.
“There are some categories of qualifying green projects included in the Chinese guidelines that differ from practices in the international green bond markets, in particular fossil fuel projects, public transport projects that use fossil fuels, and supply chain investments,” says a recent report from the Climate Bonds Initiative.
Still, finance industry observers said the bank’s statement, combined with a strong G20 push on green finance, highlights the Beijing government’s commitment to the environment.
Under the G20 “Hangzhou Consensus” the world’s top economies said green funding levels need to be scaled up and agreed to collaborate on policies to support environmental protection.
“The commitment by China’s most senior leadership to greening the country’s financial system reinforces the country’s ambition to both reshape its domestic financial system and serve the needs of green inclusive development,” said UNEP chief Erik Solheim.
“We hope this will encourage other nations to do likewise.”
Source: Climate Change News