China issues green bond rules to scale up clean energy investment

Published 10:01 on December 23, 2015  /  Last updated at 10:01 on December 23, 2015  /  China, China's Offset Market  /  No Comments

The People’s Bank of China (PBOC), the country's central bank, has released rules that let banks and other financial institutions issue green bonds, in a bid to raise investment of some 300 billion yuan ($46.3b) annually for environmentally friendly projects.

The People’s Bank of China (PBOC), the country’s central bank, has released rules that let banks and other financial institutions issue green bonds, in a bid to raise investment of some 300 billion yuan ($46.3b) annually for environmentally friendly projects.

Under the rules, preferential policies would be given to banks and other lenders that issue green bonds as part of China’s efforts to meet a number of targets on climate change, carbon emissions, and air, water and soil pollution.

The government has estimated China needs to invest around 2.9 trillion yuan per year to 2020 to meet those targets.

Projects that meet criteria on quality, transparency, spending requirements and independent assessments outlined in the rules will be eligible to get access to funding through the green bond market.

Eligible project types include industrial energy saving, low-emission transport and clean energy, and if the green bond market takes off like the PBOC hopes, some projects that previously typically sought funding through the carbon market may try to use the bonds market instead.

But there is also a chance that links may emerge between the green bond and carbon markets.

China General Nuclear, a major state-owned enterprise, last year issued a 1 billion-yuan carbon bond, which has a floating interest rate tied to the value of Chinese carbon offsets, or CCERs.

All funding unlocked by the green bond drive will be tracked, and can only be spent on project types described in the rules. Projects will be subject to rigid information disclosure standards, and auditing and assessment reports will be released to the market.

By Stian Reklev – stian@carbon-pulse.com

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