Five Chinese authorities, including the Ministry of Ecology and Environment, NDRC, PBoC, CBIRC and CSRC, on October 26 jointly issued guidance to boost climate financing activities in the country, as reported by China Securities Journal on the same day. Under the regulatory guidelines, by 2022, China will establish basic regulations in support of climate investments and financing. In addition, in the next three years until 2025, China will implement climate change-related policies in industries ranging from investment, finance, industrial, energy and environmental protection. Meanwhile, by 2025, China expects to foster international climate finance platforms and invest significantly in activities to help fight climate change.
According to the aforementioned guidance, the five Chinese policymakers will encourage the nation’s financial institutions to innovate on climate-friendly financial instruments and support climate-friendly companies to raise funding and refinancing. Additionally, financial institutions shall bear the responsibility of motivating micro and small firms and the general public to participate in actions to deal with climate change. Notably, the Chinese regulators also proposed to ramp up setup of a domestic market-oriented mechanism for trading carbon emission, and consequently enable investment institutions and individuals to take part in the trading. Meanwhile, various financial institutions are welcome to develop carbon emission-related financial products, services, and derivatives.
During the 75th session of the UN General Assembly (UNGA 75) on September 22, Chinese President Xi Jinping claimed that China would achieve carbon neutrality by 2060. This goal implies both opportunities for easing climate change but also presents challenges to the country’s economic development.
According to Climate Action Tracker (CAT), an international, independent, scientific research organization, China currently has a rating of “highly insufficient” on carbon emissions, indicating that China’s post-2020 climate efforts are not consistent with keeping global warming below 2°C, let alone the Paris Agreement’s 1.5°C limit. Citing Li Gao, the director-general for climate change at the Ministry of Ecology and Environment, China’s climate commitment will involve all aspects of industrial and energy infrastructure, finance, investment, pricing, and technology, covering various market industries and regions in order to reduce its contribution to global warming.