Central Bank Provides $13.4 Billion to Back Carbon Reduction

What’s new: China’s central bank distributed the first batch of 85.5 billion yuan ($13.4 billion) of low-cost loans to financial institutions in support of lending for green projects.

The lending program launched in November is part of China’s effort to use monetary policy tools to promote its carbon neutrality goals. Commercial banks can apply for funds under the program to lend for businesses’ emission reduction projects.

With the backing of the lending facility, financial institutions have extended 142.5 billion yuan of loans to 2,817 companies, supporting their efforts to reduce carbon emissions by 28.76 million tons, a central bank official said Thursday.

The background: The People’s Bank of China (PBOC) lending facility fits into a broader set of fiscal and monetary supports laid out in China’s roadmap for achieving net-zero carbon emissions by 2060. Carbon dioxide emissions are the main contributor to climate change.

Apart from the low-cost lending facility, the State Council last month also unveiled a plan to establish a special relending facility of 200 billion yuan to support the clean use of coal.

The clean coal loans and the carbon-reduction support tool will act as two pillars at the central bank to promote green low-carbon development, analysts said.

Quick Takes are condensed versions of China-related stories for fast news you can use.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (hello@caixin.com)

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