Bank to launch first China carbon trust fund

Published 10:31 on March 19, 2015  /  Last updated at 11:14 on May 12, 2016  /  China, China's National ETS, China's Pilot Markets  /  No Comments

A subsidiary of China Merchant Bank will next month launch a 50 million yuan ($8 mln) trust fund that will invest in the country’s carbon markets, expanding it to 300 million yuan when the national ETS is rolled out next year, Reuters reported.

A subsidiary of China Merchant Bank will next month launch a 50 million yuan ($8 mln) trust fund that will invest in the country’s carbon markets, expanding it to 300 million yuan when the national ETS is rolled out next year, Reuters reported.

The fund, set up by CMB Sinolink Investment with JIC Trust as a limited partner, will trade CO2 permits and offsets in the secondary market as well as invest in projects that can earn CCERs by cutting carbon emissions, Pang Binfeng, the fund manager, told the news agency.

The new fund will begin operations next month, seeking annual returns on investments of 9.5%.

Amid low liquidity in China’s seven pilot markets, the government has encouraged the financial community to get involved and develop financial instruments that can boost market activity and help ETS-regulated companies to hedge their risks.

The China Emissions Exchange in Guangzhou on Thursday announced that the Shanghai Pudong Development Bank has lent 50 million yuan to a Guangdong-based subsidiary of state-owned power company Huaneng, using 150,000 Guangdong CO2 permits as security.

The Industrial Bank, China Everbright Bank and China Construction Bank have previously entered into similar deals with emitters.

Meanwhile, Shenzhen-based GDR Carbon Asset Management on Monday launched a new fund dedicated to trading in China’s pilot markets, following recent similar moves by state-owned power company Huaneng, Haitong Securities and trading house Treasure Carbon.

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