Our reporters Hao Yajuan and Zhang Rongwang report from Shanghai and Beijing.
Actively developing carbon finance has become an important way for banks to participate in the carbon market. Recently, Industrial Bank (601166SH) landed the first batch of cross-compliance period carbon emission rights pledge financing business in the national carbon market. Bank of Shanghai (601229SH) Research and explore carbon labeling, carbon measurement, and carbon pricing, establish a multi-level product and service system by hierarchical classification, and create a one-stop comprehensive financial service based on the whole life cycle of carbon assets for traditional large-scale entities.
KPMG's "2023 China's Carbon Finance Innovation and Development" (hereinafter referred to as "*) points out that the scale of China's carbon finance-related market will reach 10 trillion yuan in the future, and the core elements such as market coverage of entities, covered industries, and product types will be gradually enriched.
Ma Jun, a member of the China Finance 40 Forum (CF40) and president of the Beijing Institute of Green Finance and Sustainable Development, pointed out that the next step is to pay attention to improving the liquidity of the carbon market and the effectiveness of carbon pricing through the introduction of financial elements, and also provide more risk management tools through market development, and the participation of financial institutions and financial instruments can increase the current annual trading volume of about 10 billion yuan in the carbon market by more than 10 times,** The participation of derivatives will also help provide medium and long-term carbon prices, and give full play to the function of the carbon market to guide medium- and long-term green and low-carbon investment.
Banks are actively involved in the carbon market
Under the "dual carbon" goal, banks continue to innovate in carbon finance. For example, IB has launched the first cross-compliance period carbon emission rights pledge financing business in the national carbon market, which not only ensures that enterprises pay quotas on time and complete the implementation of the carbon market, but also helps enterprises revitalize carbon assets and provide financing convenience. The Urumqi branch of the bank provided financing for Xinjiang Qiya Aluminum Electric, a key emitting unit in the national carbon market, with the pledge guarantee of the national carbon emission rights (hereinafter referred to as "CEA"). However, due to the fact that the CEA pledged by the enterprise needs to be fulfilled and paid by the end of 2023, there is a problem that the collateral cannot match the term of the financing business. After understanding the pain points of enterprises, IB innovatively provided a cross-compliance period carbon quota pledge financing service plan, and agreed with the enterprise that the CEA currently pledged in IB could be released for quota settlement at the end of 2023 at the time of performance, and the CEA was pledged in full and in a timely manner after obtaining the CEA in the new round of performance cycle, during which the enterprise could provide other effective guarantees. Through the above scheme, while ensuring the performance of the corporate carbon market, it also effectively protects the legitimate rights and interests of banks.
IB said that the bank actively serves the "dual carbon" strategy, shifts its business focus from pollution reduction to carbon reduction, gradually builds a green finance professional product system covering carbon reduction series, pollution reduction series and carbon finance series, actively improves the infrastructure construction of the carbon market, accelerates the layout of the carbon financial product system, and establishes a carbon financial product system covering clearing and settlement, matching transactions, pledge financing and asset management.
For another example, Bank of Shanghai will focus on green development in a new round of planning to better serve the construction and prosperity of the carbon market, mainly from the following aspects: First, explore and improve the green evaluation and certification system and green benefit accounting methods, and provide diversified green investment and financing support for industrial development. The second is to study and explore carbon labeling, carbon measurement, and carbon pricing, and establish a multi-level product and service system by stratification and classification. For traditional large-scale entities, we will create one-stop comprehensive financial services based on the whole life cycle of carbon assetsFor inclusive small and medium-sized customers, the carbon performance evaluation and management of enterprises are realized in the business process to help discover the value of carbon assets. The third is to study and promote carbon neutrality bonds, sustainability-linked bonds and other characteristic products, explore innovative business varieties such as climate bonds, and try carbon emission reduction performance-linked loans and ESG performance-linked loans.
The Research Bureau of the People's Bank of China wrote an article pointing out that the development of a national carbon emission trading market will be accelerated. Improve the trading mechanism and trading rules of the carbon market, and clarify the systems for registration, trading, and settlement。 Actively study various financial products linked to carbon emission rights. In accordance with the principle of investor suitability, the scope of carbon market trading entities will be expanded in an orderly manner。 Reasonably control the total amount of carbon emission allowances issued, and scientifically allocate initial carbon emission allowances. Enhance the liquidity of the carbon market and optimize the pricing mechanism of the carbon market.
The carbon pricing mechanism needs to be further improved
The extensive participation of financial institutions can not only introduce capital, but also promote the continuous improvement of carbon pricing mechanism and information disclosure mechanism.
** pointed out that China's carbon finance has shown three major development trends, the scale of the national carbon market will rise steadily, with the enrichment of carbon financial products and the improvement of the carbon financial trading mechanism, the future of the national carbon market trading scale will reach the level of 10 trillion;The core elements of the market coverage of the main body, the covered industries, and the types of products will be gradually enriched, and more entities such as financial institutions and investors will participate in the trading activities of the carbon market, and the scope of industries covered by the carbon market will be expanded from the current power generation industry to more industries in an orderly manner, and carbon financial derivatives trading will enter the market in an appropriate wayThe national carbon market will more fully reflect the average cost of emission reduction in society, the discovery mechanism will continue to improve, the game of the carbon market will be more active in the future, and the carbon market will promote enterprise emission reduction and promote emission reduction technology innovation through carbon prices.
Since July 2021, when the national carbon market was officially launched for online trading, China's carbon trading market has developed rapidly. How to further enhance the discovery function has become an important topic for the development of the carbon market. Lai Xiaoming, chairman of the Shanghai Environment and Energy Exchange, pointed out at the "2023 China Sustainable Investment Development Forum" hosted by the Shanghai Advanced Institute of Finance of Shanghai Jiao Tong University that carbon price fluctuations are affected by many factors. At present, the function of the carbon market still needs to be improved, the market construction is in the initial stage, which is reflected in the relatively single participant, the next step is to enrich spot products and derivatives, etc., and the corresponding market adjustment mechanism also needs to be improved. Specifically, there are the following five aspects:
First, we need to form a long-term and stable carbon market mechanism, including corresponding policies, laws and frameworks, including a normalized and continuous quota allocation policy, and an increase in the types of trading entities.
Second, promote the expansion of the industry in an orderly manner, mainly including industries with urgent industrial transformation and greater pressure for transformation, especially industries with overcapacityIndustries with a small cost of emission reduction per unit of product and a large difference in marginal emission reduction cost;Industries affected by international mechanisms;Industries with better data technology and industries with more mature key technologies for carbon emission accounting and verification.
Third, enrich the function and connotation of the carbon market. The carbon market should first be used as a policy tool, and then orderly promote the improvement of market-related functions, we should firmly grasp the positioning of the carbon market as a policy tool, steadily promote the exploration of marketization, develop carbon finance, enrich the trading subjects, varieties and methods, gradually establish a market adjustment mechanism, and promote the innovation of carbon finance in an orderly manner.
Fourth, to strengthen the guiding role of the carbon market in investment, it is necessary to establish technical frameworks such as carbon information disclosure and carbon performance evaluation to provide support services for the investment activities of financial institutions.
Fifth, promote the internationalization of the carbon market, promote cooperation with domestic trading institutions, actively participate in the multilateral or bilateral market mechanism of the international carbon market under the Paris Agreement, and build an international carbon trading center and carbon pricing center.
Editor: Zhu Ziyun Proofreader: Yan Jingning).