China Development Bank (CDB) will issue special loans equivalent of RMB500bn, including foreign exchange, to accelerate the energy sector’s transition to emission peak and carbon neutrality during the 14th Five-Year Plan (FYP) period, as reported by The Paper on June 9. Specifically, CDB will issue RMB100bn of the loan this year in support of the construction of a sustainable, safe, and efficient energy system. The first round of issuance was on March 18, involving RMB20bn bonds maturing in three years with a 3.07% interest rate.

The energy sector plays a central role in China’s progress toward peak emissions and carbon neutrality since the sector is responsible for 48% of the country’s total carbon emissions. At present, non-renewable resources such as coal and oil still dominate the power generation system in China. As a result, the special loans by CDB aim to provide financial support for hydro, nuclear, wind, solar, and other renewable power projects, as well as inter-regional transmission, pumped hydro storage, and hydrogen energy pilot projects. In addition, CDB will also offer differentiated credit policy support for these projects as a further financial incentive.

The topic of carbon neutrality is integral to China’s 14th FYP. In September 2020, the central government announced its plan to reach carbon emission peak by 2030 and achieve carbon neutrality by 2060, which puts the country on an accelerated timeline to reduce its carbon emissions compared to other developed nations. The national economic and social development plan released by the central government earlier this year also underscored the development of a modern, low-carbon energy system. Moreover, the plan set the goal of increasing the proportion of renewables in energy consumption to about 20% by the end of the 14th FYP timeframe, or 2025, up from 15.3% by 2019. The new loans by CDB laid part of the financial foundation for the nation’s energy system upgrade.

Sources:

http://finance.people.com.cn/n1/2021/0319/c1004-32055656.html

http://www.gov.cn/xinwen/2021-03/13/content_5592681.htm

http://www.gov.cn/xinwen/2021-04/22/content_5601515.htm?gov

https://ourworldindata.org/co2/country/china

https://www.statista.com/statistics/1088662/china-share-of-energy-related-carbon-dioxide-emissions-by-sector/

https://www.thepaper.cn/newsDetail_forward_13061415