China’s central bank is mulling imposing mandatory requirements on the country’s sprawling state-owned financial institutions to help promote green economic activity as part of the country’s ambitious push towards carbon neutrality by 2060, South China Morning Post reported.
China aims to hit peak emissions before 2030 and achieve carbon neutrality – by balancing new emissions with removal – by 2060 as pledged by President Xi Jinping to the United Nations General Assembly in September. To turn the world’s largest greenhouse gases emitter into a carbon-neutral country in less than four decades will cost around US$5 trillion and prompt social upheaval as coal-mining jobs are lost.
“To meet this climate objective, China needs to speed up its transition to low carbon production and consumption,” Yi Gang, Governor of the People’s Bank of China (PBOC), told a virtual fintech conference hosted by Singapore on Wednesday, while laying out his plans to muster financial resources to the cause.
The country’s financial regulators are banding together to rally financial institutions to fund the shift towards greater reliance on wind and solar energy, led by the powerful central bank.
Green bonds and green loans could play a big part in financing low carbon energy and manufacturing technologies and infrastructure. As of June, China’s banks had extended more than 11 trillion yuan (US$1.7 trillion) in green loans, the most by a nation globally. Green bonds totalled 1.2 trillion yuan, the second-largest in the world.
The PBOC has already strengthened its oversight of green finance, including evaluating banks’ performance in supporting green finance. The mandatory requirements would be a step further.
Source: South China Morning Post