China Green Bulletin: Struggling to Balance Green Goals With Energy Needs

The Caixin ESG biweekly has been upgraded to the China Green Bulletin!
China Green Bulletin brings you insights on ESG practices, energy updates and decarbonization efforts that drives China's green transition, helping to identify business and investment decisions in the world’s second-largest economy. Stay tuned.

In Depth

Under Beijing’s 2060 carbon neutrality goal, slashing fossil fuel consumption will be crucial. However, the massive power crunch that’s darkening businesses and homes in many parts of China shows the challenge of world’s largest coal-burner to balance its ambitious goals for reducing greenhouse gas emissions with its need for energy to power the economy. Read more here.

Expert View

Hello China Green Bulletin readers, this week we have expert view from Dr. Ma Jun, chairman of Green Finance Committee and co-chair of G-20 Sustainable Finance Working Group. Here are some takeaways from his recent speeches.

Ma highlighted the role of “Green Investment Principles (GIP) for the Belt and Road” Initiative in accelerating the decarbonization efforts of the countries involved. The GIP were jointly launched by the China Green Finance Committee and City of London Corp., as a set of voluntary principles to promote green finance and green investments. Working groups are established for climate risk assessment, information disclosure and development of innovative products.

Ma also pointed out that the loss of biodiversity and climate change posed similar risks to financial stability. He claimed that the two issues are interlinked and often self-reinforcing. Therefore, he called on regulators to guide financial institutions by issuing more detailed guidelines to define biodiversity-friendly projects, assessing the impact of investment activities, and providing incentives for eco-friendly projects, such as monetizing carbon sinks.

On behalf of the China Green Finance Committee, Ma released a study report on the roadmap of China’s green finance market, estimating that China would need $74 trillion in green and low-carbon investment over the next three decades. “China’s green finance system is still in an early stage of generating investor awareness and appetite for green investment products, and we need to incentivize all private sector participation,” Ma said.

Top News Items

Premier Urges Greater Energy Self-Sufficiency as Power Outages Continue

Oct. 9 — At a meeting of a national energy committee, Premier Li Keqiang urged China to improve its energy self-sufficiency. Li pointed out that supply shortages present the largest threat to China’s energy security as demand inevitably continues to grow. Li’s instructions came after regions across the country grapple with power shortages and blackouts, reflecting the struggle to balance green goals with energy security.

China Promotes Construction of Carbon-Neutral Urban Communities

Oct. 17 — China’s Special Climate Envoy Xie Zhenhua advocated for building carbon-neutral urban spaces. “As spatial concentration of human activities, urban communities are faced with the dual goals of reducing emissions and maintaining growth, which means extensive and profound reforms are needed,” he said. Xie made the comments at the 2021 Dameisha Carbon Neutrality International Forum, which was held in Shenzhen by the China Center for International Economic Exchanges (CCIEE), a public policy think tank. During the event, the Dameisha Declaration for Action was made.

China Lifts Curbs on Coal-Fired Electricity Prices Amid Power Crunch

Oct. 12 — The National Development and Reform Commission (NDRC) allowed coal-fired power plants to price electricity based on market rates. Coal-fired power prices will be allowed to fluctuate by as much as 20% from base levels, an increase from previous limits of 10% to 15%. Prices for high energy-consuming firms would not be bound by the 20% limit. The change is a key step in the government’s long-running efforts to revamp the electricity pricing regime as the country suffers a massive power crunch.

New Standards for Emission Reductions to Be Established

Oct 10 — China’s State Council issued a plan to establish a standard system (国家标准化发展纲要) for achieving its carbon-reduction goals in the fight against climate change. Under the plan, China will tighten energy consumption limits for energy-intensive equipment, products and industries. It will also set standards for measuring, reporting and verifying carbon reduction techniques like carbon capture, utilization and storage.

UN Biodiversity Conference in China Concludes With Pledges for More Funding

Oct. 15 — The United Nations biodiversity conference in Southwest China’s Yunnan province concluded with the adoption of the Kunming Declaration, and several countries have pledged new funding to promote biodiversity. Under the declaration, more than 100 members committed to ensuring the development, adoption and implementation of an effective post-2020 action plan for setting protection goals for global biodiversity over the next decade. Earlier, President Xi Jinping pledged to set up a fund with an initial contribution of 1.5 billion yuan ($232.5 million) to support biodiversity in developing countries.

White Paper on Biodiversity Conservation Released Ahead of COP15

Oct. 8 — the State Council Information Office released a white paper on biodiversity conservation, the first document of its kind, to lay out the country’s actions on biodiversity conservation, noting that 90% of the country’s terrestrial ecosystems and 71% of key protected wildlife species have received effective protection. The white paper was released ahead of the 15th meeting of the Conference of the Parties to the U.N. Convention on Biological Diversity (COP15), which was in Kunming, Yunnan province.

China to Roll Out New Lending Tools to Support Cutting Emissions

Oct. 15 — The People’s Bank of China said the country is ready to launch new policy tools to provide low-cost funding to financial institutions in support of reducing carbon emissions. The new credit tools will mainly back projects in clean energy development, energy saving and environmental protection, as well as carbon emission reduction technologies. Meanwhile, the PBOC pointed out that the new lending should not affect access to bank credit for companies in coal-fired power generation and coal mining.

China Wants Paris Agreement Issues to Be Wrapped Up at Upcoming COP26

Oct. 19 — In an online press conference on biodiversity and climate change, the Ministry of Ecology and Environment (MEE) said China wants to wrap up negotiations on key issues in implementing the Paris Agreement at the upcoming U.N. Climate Change Conference (COP26) in Glasgow. The summit should focus on “implementation,” encouraging every country to achieve their climate objectives by transforming them into policies, measures and specific actions, according to an MEE statement.

Chart of the Week

Bank of Communications Co. Ltd. recently became the latest Chinese state-owned bank to support the Task Force on Climate-Related Financial Disclosures (TCFD), a global initiative to develop recommendations for businesses to disclose risks and opportunities related to climate change. This move exemplifies the growing popularity of TCFD among Chinese financial institutions, despite the fact that most of them are still in early stages of TCFD alignment.

Info Desk

Personnel moves

• Wang Jianjun (王建军), 53, will be the new deputy chair of the China Securities Regulatory Commission (CSRC), after Deputy Chair Yan Qingmin (阎庆民) reached age 60 this May, sources told Caixin. Wang was previously president of the Shenzhen Stock Exchange. He will become the youngest of the CSRC’s senior leaders.

• Ma Xianfeng (马险峰) is supposed to resign as vice president of the China Institute of Finance and Capital Markets. He is currently deputy director of the China Green Finance Committee.

Institute change

• Tsinghua University sets up research institute for carbon neutrality studies. (Sept. 22)

The research hub will focus on making breakthroughs to solve bottlenecks in major technologies to contribute more talent and resources to China’s commitment of green development.

Events calendar

Eco Expo Asia 2021: Promoting Green Recovery for Carbon Neutrality [Hybrid]

Date: Oct. 27-30, 2021 (offline), Oct. 27-Nov. 6, 2021 (Online)

Venue: Hong Kong Convention and Exhibition Centre

Organizer: Hong Kong Trade Development Council, Messe Frankfurt (HK) Ltd.

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