China Seeks Big Money’s Help Reaching Its Ambitious Climate Goal

(Bloomberg) — China is enlisting financial institutions and international investors to help fund the country’s drive toward carbon neutrality.

In a set of guiding opinions backed by five government ministries, Beijing said it would encourage private investment and foreign capital to back green bonds and fund climate-friendly projects. The government also said it plans to allow individuals and financial firms to participate at some point in its soon-to-be launched national carbon-trading scheme.

The guidelines on climate finance come a month after President Xi Jinping pledged to transform China from the world’s biggest polluter to a net zero emitter by 2060. The effort could cost as much as $15 trillion as the country invests in renewable energy, hydrogen and carbon capture to help wean itself off a deep reliance on coal.

The policy demonstrates that consensus is building in the Chinese government around the need to transition to climate-friendly overseas investments, according to Dimitri de Boer, chief China representative of ClientEarth. The Ministry of Ecology and Environment, National Development and Reform Commission, People’s Bank of China as well as the banking and securities regulators all signed off on it.

“It clarifies the targeted projects favorable under the government’s green finance framework with support by both the climate and financial regulators,” said Fu Sha, director of strategy and planning at the San Francisco-based Energy Foundation China. “It could inspire climate investment from local authorities and financial institutes.”

Some key details include:

Expanding entities allowed in the country’s carbon trading system to include individuals and financial institutions “in a timely manner,” and to support institutions to develop related derivative products such as carbon futures.

Inviting foreign entities to issue green bonds and hold yuan-denominated green financial assets.

Supporting yuan-denominated offshore trade on green financial products and cross-border green financial assets transfers, and helping domestic entities who want to build yuan-denominated climate funds for investments overseas.

Coordinating clear standards for green financing, and accelerating new standards for information disclosure for climate investing funds and projects.

Contact editor Yang Ge (geyang@caixin.com)

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