Yang Zaiping, founding secretary general of the Asian Financial Cooperation Association: The key to green finance's promotion of the "double carbon" goal is to be just right

Per reporter: Tu Yinghao Per editor: Chen Xu

On October 22, at the 2021 China Financial Development Forum hosted by the Daily Economic News, Yang Zaiping, founding secretary general of the Asian Financial Cooperation Association and former full-time vice president of the China Banking Association, said in the keynote speech of "Stable Double Carbon Standard, Waiting for Green Financial Innovation" that the recent power curtailment incidents encountered in some places mean that we encounter "energy impossible triangle", and also suggest that we cannot engage in sports-style, "one-size-fits-all" carbon reduction, but to smoothly achieve "double carbon" standards. To this end, green finance should set clear and detailed goals.

Yang Zaiping believes that the "double carbon" goal cannot be without financial support. Carbon peaking, carbon neutrality process will create a large number of investment and financing needs, Chinese Min min bank president Yi Gang previously said that before 2030, China's carbon emission reduction needs to invest 2.2 trillion yuan per year; from 2030 to 2060, it will need to invest about 3.9 trillion yuan per year.

In Yang Zaiping's view, in addition to the total amount of investment, the key to green finance's promotion of the "double carbon" goal is to be just right.

<h2>To smoothly achieve the "double carbon" standard, it is necessary to set clear goals</h2>

The "14th Five-Year Plan" and the outline of the long-term goals for 2035 put forward that looking forward to 2035, it is necessary to extensively form a green production and lifestyle, the carbon emissions will stabilize and decline after reaching the peak, the ecological environment will fundamentally improve, and the goal of building a beautiful China will be basically realized.

Since the third quarter of this year, many provinces and cities in China have seen the phenomenon of power curtailment, and even residential electricity consumption in some areas has also been affected, and the highest electricity load of the country's major power grids this year is significantly higher than the average level of the same period in the past five years.

In Yang Zaiping's view, there is a certain connection between the power rationing and the completion of the annual "energy consumption double control" goal, and taking the initiative to limit electricity in order to complete the goal has become a helpless move in some places.

In order to smoothly achieve the "double carbon" standard, Yang Zaiping believes that first of all, we must formulate clear goals, have a clear measurable, reportable, verifiable indicator system, and go deep into all walks of life. Fundamental data is critical to how the task of reducing emissions is broken down, performance appraisals and pricing of carbon markets, so it is important to make the underlying data solid. "At what point in time, what kind of industry meets what kind of standard, this problem must be solved."

Yang Zaiping stressed that the technical channels for carbon compliance include energy efficiency improvement, energy replacement, carbon capture, industrial adjustment and digital upgrading.

Data show that since 2012, China's unit OF GDP energy consumption has been reduced by 24.4%, which is equivalent to reducing energy consumption by 1.27 billion tons of standard coal. From 2012 to 2019, the average annual growth rate of energy consumption of 2.8% supported the average annual growth of the national economy by 7%.

However, in 2020, China's energy consumption per unit of GDP (10,000 yuan of GDP consumes standard coal) is 0.49 tons, which is still 1.5 times the world average. Yang Zaiping believes that there is still room for this compared with the world average.

"Market mechanisms should be allowed to transmit the pressure generated by the 'double carbon' standard." Yang Zaiping said that the price increase of bulk commodities is not transmitted downstream, which is actually contrary to the law of the market, and the cost of clean energy is higher, so the cost of carbon peaking and carbon neutrality should be shared by the whole society.

<h2>Support the diversity of financial instruments to meet the needs of "double carbon"</h2>

At the policy level, the General Office of the CPC Central Committee and the General Office of the State Council "Opinions on Deepening the Reform of the Compensation System for Ecological Protection" (hereinafter referred to as the "Opinions") proposed to expand market-oriented financing channels. Research and develop financing tools based on various resource and environmental rights and interests such as water rights, pollutant discharge rights, and carbon emission rights, establish green stock indexes, and develop carbon emission futures trading. Expand the pilot scope of the Green Finance Reform and Innovation Pilot Zone, and take the innovation of ecological protection compensation financing mechanism and model as an important pilot content.

The "Opinions" also proposed to promote the financial model of the ecological industry chain. Encourage banking financial institutions to provide green credit services that meet the characteristics of green project financing. Encourage eligible non-financial enterprises and institutions to issue green bonds. Encourage insurance institutions to develop innovative green insurance products to participate in ecological protection compensation.

Yang Zaiping said that at this stage, enterprises are still mainly engaged in indirect financing in the use and development of clean energy, energy conservation and emission reduction, and commercial banks are still the main force of the green financial market, with advantages in credit support and risk prevention. At the end of 2020, China's green loan balance was about US$1.8 trillion, and the stock of green bonds was about US$125 billion, ranking first in the world and second in the world, respectively. Recently, market players have issued more than 40 carbon-neutral bonds, with a scale of more than $10 billion.

"To support the diversity of financial instruments and meet the need for diversity of 'double carbon' targets." Yang Zaiping believes that carbon financial products and services will continue to innovate. Taking the EUROPEAN Union as an example, carbon financial products mainly include carbon futures, carbon funds, carbon asset pledge financing, carbon asset repurchase financing, carbon quota custody, green structured deposits, etc.

With the proposal of carbon neutrality goals, the construction process of China's carbon market will also accelerate. In 2017, the construction of the national carbon market was officially launched, with the continuous introduction and improvement of relevant systems, the carbon market gradually developed and matured, the carbon financial products developed and participated in the transaction were continuously enriched, and carbon financial transactions became increasingly active, providing more opportunities for commercial banks to carry out carbon financial transactions.

Yang Zaiping said that based on the prediction and monitoring of the risk-adjusted returns of relevant investment projects by digital technology, the credibility of investors on green investment projects has been continuously enhanced, and correspondingly, the number of public investors has also increased. By the end of 2019, global green bond issuance reached $770 billion. China officially launched the green bond market five years ago, as of February 23, 2021, the total number of green bonds issued is 1159, with a total scale of 1.2 trillion yuan, and in early February this year, the first batch of carbon-neutral bonds (sub-varieties of green bonds) were successfully issued.

Daily economic news