China has called for financial institutions to ease access to funding for high-tech industries that will help the world’s biggest-emitting nation rely less on energy-intensive, high-polluting manufacturers.
Eight ministry-level government institutions, including the central bank and the National Development and Reform Commission, on Tuesday issued a statement urging the financial industry to help restructure the Chinese economy.
Low-cost manufacturing of commodities such as cement, iron and steel has driven China’s economic growth for three decades, but massive over-capacity and heavy debt in those sectors are now weighing on the economy.
At the same time, the government sees restructuring the economy as a crucial weapon in the fight against China’s enormous pollution problems.
The statement called on local administrators overseeing banks to ensure that lenders prioritise industrial borrowers that contribute to the “Made in China 2025” plan, an industry strategy released last year.
The plan seeks to get China’s industry in good shape and shed dead weight, but it also has a number of environmental targets.
Under the plan, industry must cut its carbon intensity levels by 40% over the next decade compared to 2015 levels. The target sets industry on a much steeper emission reduction path than China’s Paris pledge to cut CO2 intensity 60-65% below 2005 levels by 2030.
Tuesday’s statement also said clean, high-tech industrials would be given the flexibility to use more sophisticated financial tools to secure funding, such as bonds, private and public funding sources, insurance, and loans backed by receivables, such as energy saving revenues and carbon permits.
Meanwhile, it reiterated the government’s previous pledge to withdraw or deny lending to manufacturers that fail to meet environmental and safety standards, indicating that companies failing to comply with the national emissions trading scheme that begins next year might lose access to funding.
GREEN BONDS
China is already pushing to find new sources for innovative, clean funding. The central bank in December released rules for green bonds as part of a push to raise 300 billion yuan ($46 billion) annually to cut carbon emissions, improve energy efficiency and clean up the environment.
Last month, two banks held the first two green bond auctions, raising 30 billion yuan between them.
One of them, the Shanghai Pudong Development Bank, has now published selection criteria for energy saving and clean energy projects interested in access to some of the 20 billion yuan it raised in January.
By Stian Reklev – stian@carbon-pulse.com
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