Zhang Dawei: Delivered a Speech at the Plenary Session of International High-Level Forum on Financing for Low-carbon Transition

  • Time:2022-11-23
  • source:CCIEE

Distinguished Ms.Beate Trankmann,

The topic of this session is to share successful cases and experiences of pilot projects in various regions that promote green and sustainable development through innovative ideas. Additionally, how to accelerate the development of green and sustainable finance to address the diversity of environmental and social issues will be further discussed.

The Construction and Development of Green Finance System

Due to the long-term support from the government and based on China's commitment to achieving the "dual carbon" goals, the foundation for the development of green finance in China is becoming increasingly solid. The construction of the green finance system, digital infrastructure, and the innovation of green products are all being continuously promoted. According to data from the People's Bank of China, in the first quarter of 2020, the amount of green loans denominated in domestic and foreign currencies in China reached 10.46 trillion yuan, ranking first in the world. The issuance volume of labeled green bonds reached 386.2 billion yuan in 2019, achieving consecutive high-speed growth. China has become an active advocate and promoter of many green finance issues on the international stage. Since the beginning of this year, the People's Bank of China has increased its support for market entities to achieve green development. As of the third quarter of this year, a total of 304.7 billion yuan has been issued through carbon reduction support tools and special refinancing for the clean and efficient utilization of coal, with funds of 246.9 billion yuan and 57.8 billion yuan respectively being disbursed to relevant financial institutions. Among them, Deutsche Bank (China) and Societe Generale (China) have also been included in the support scope.

Due to the influence of factors such as energy structure and industrial structure, the task of achieving green transformation and development in China is substantial. Significant investments are needed in areas such as developing new and clean energy sources, improving supply capacity and consumption levels, implementing energy-saving and emission-reduction upgrades in traditional industries, and addressing urban pollution. These investments create significant business opportunities for the development of green finance as social investors find their own balance point of profitability due to the influence of government pricing, government fee policies, and market price mechanisms.

I have always believed that for developing countries and populous nations like China to truly achieve the "dual carbon" goals and ensure sustainable development of population, environment, and society, the technical challenge may not lie in highly industrialized sectors. Instead, it lies in establishing a sound "micro-circulation" system within Chinese society. Our ecological system is constructed by numerous large-scale cycling systems and micro-circulation units. The so-called green transformation is actually a process of gradually transitioning from production and lifestyle practices that have long been in conflict with the natural ecological environment to ones that are more friendly.

In the city where we live, besides the industrial sector, there are also a large number of urban infrastructure, public facilities, urban transportation systems, buildings, residential areas, and so on. They are the main contributors to carbon emissions and also face the need for green and low-carbon transformation which requires investment and financial support. However, due to their public nature, a significant portion of them may be difficult to become the "preference" for social funds, including various green financial products.

These are not the main points of my speech today. My focus is on two areas that face greater challenges in green and low-carbon development compared to urban areas. Firstly, in rural areas of China, which have vast territories, a large population, and relatively weaker levels of productivity and social organization, the tasks of green development and carbon reduction are greater and more arduous.Secondly, there are hundreds of thousands of residential communities in Chinese cities that face insufficient coverage of public and social services. These communities not only lack resources for green development but also face issues of inadequate resources and unequal opportunities in areas such as education, culture, health, healthcare, elderly care, and childcare. These factors impact and restrict the comprehensive development of urban residents.

I would like to share a case study on how green finance can help achieve the "Rural Energy Revolution."at the conference. Lankao County in Henan Province, China, was once widely known as a poverty-stricken county. It has poor resource endowments and unfavorable climatic and hydrological conditions. Historically, the county has been affected by sandstorms, saline-alkali land, and waterlogging disasters, resulting in low crop yields and a lack of industrial support for the local economy. The rural energy consumption issue is particularly prominent throughout the entire county.

However, in recent years, with the help of energy technology experts and financial investors, the county has embarked on the "Rural Energy Revolution" advocated by President Xi Jinping. Through inclusive finance, it has guided farmers' participation in local energy transformation and vigorously developed the abundant potential of wind energy, solar energy, geothermal energy, biomass energy, and waste resources in rural China. By establishing power generation networks and rural energy internet platforms, it effectively addresses the peak-to-valley differences in electricity supply and demand, as well as challenges related to energy storage and distributed energy. This approach not only significantly increases farmers' income but also tackles issues of rural waste utilization and ecological degradation, leading to the formation of a unique rural new energy industry. It has pioneered a replicable model for green transformation and development in rural China.

At last, I would like to propose three suggestions:

1. ESG (Environmental, Social, and Governance) socially responsible investments, which reflect the level of environmental, social, and corporate governance capabilities, have become quantitative indicators for financial regulation. Firstly, the criteria for sustainable project financing and investment need to be revised and improved. Secondly, more financial institutions should be attracted to the ESG framework and Equator Principles system to play a greater role in financial activities and support green project financing.

2. To expand the scale of green credits, bonds, insurance funds, and carbon reduction tools, as well as special refinancing for supporting clean and efficient utilization of coal. Allocate a portion of inclusive finance loans to support emission reduction and green development in rural areas.

3. To establish the concept of social value investment, combining the original social value with financial returns as dual objectives. Finance is as the core for resource allocation, and leveraging its power, guide social capital and more corporate funds to participate in social value investment and activities. This will provide abundant financial support for green development.

Share to: