Green China丨China’s green loans and green bonds have reached 35 trillion yuan, and the transition finance policy standards may be implemented

"Green China" engages with contemporary figures, promotes an innovative spirit, and honors the power of science.

In recent years, China has made significant progress in building a green finance system, creating a diversified market centered around green loans and green bonds. However, due to the constraints posed by the current energy industry structure and economic development stage, advancing low-carbon transformation in traditional high-emission or hard-to-decarbonize industries and economic activities is crucial while actively developing green industries. This is particularly important for establishing a robust "dual carbon" policy framework.

As an extension of green finance, transition finance has become a major focus for the future development. In 2019, the Organisation for Economic Co-operation and Development (OECD) first introduced the concept of "transition finance," defining it as financial activities that support economic entities transitioning toward sustainable development goals. Since the publication of the People's Bank of China's research article, Promoting Effective Linkages between Green Finance and Transition Finance in November last year, China's research on transition finance has accelerated. Many regions have achieved notable progress in transition finance reforms, yielding valuable insights that contribute to grassroots efforts in developing transition finance and furthering green finance and transition finance on a broader scale.

Shanghai is currently accelerating its development as an international green finance hub. In December last year, the Shanghai Municipal Financial Regulatory Bureau, along with three other departments, jointly developed and published the Shanghai Transition Finance Catalogue (Pilot) and its corresponding Usage Guidelines. These resources assist entities in planning decarbonization pathways, setting emission reduction targets, formulating transition plans, and applying for transition support, providing a strong foundation for transition finance in megacities.

What exactly are the meanings of green finance and transition finance, respectively? What new highlights and signals have emerged from the latest "Inspection Report" compared to 2016? What strengths and weaknesses exist in China’s green finance efforts? How can financial leverage be used to assist “high emissions, high energy consumption, and excess capacity” industries in achieving a green transformation? Additionally, how can risks such as “greenwashing” be managed? What are the future focal points for the development of green finance? Host Li Ce delves into these questions with Ma Jun, Chairman of the Green Finance Committee of the China Society for Finance and Banking.

Ma Jun believes that with the rapid development of China’s green finance market, the transition sector, particularly in converting high-carbon activities to low-carbon ones, still lacks sufficient financial support. This need led to the creation of the new Guiding Opinions. While China’s green finance sector benefits from large scale and policy incentives, an effective transition finance framework is urgently needed. This framework requires both government incentives and market-based tools to reduce financing costs for the “high emissions, high energy consumption, and excess capacity” industries, while also addressing the risk of “greenwashing” by enterprises. In the future, transition finance will continue to be a central area within green finance, with local governments playing a vital role in promoting green finance and achieving a just transition.

Source: CCTV

Video Link: https://mp.weixin.qq.com/s/48h1uLxNIbB2_PKePWSzzg