Reporting by David Stanway; Editing by Lincoln Feast.
Finance
China’s development banks provided no green energy finance in 2022 -research
SINGAPORE, Nov 14 (Reuters) – China’s pledge to end overseas coal financing has not yet driven more funding into renewable projects, with its development banks providing no new energy sector loans for the second year in a row in 2022, researchers at Boston University said on Tuesday.
President Xi Jinping said in 2021 that China would stop providing financial support for overseas coal and fund more green and low-carbon energy projects in developing countries.
But while new fossil fuel lending has ended, China’s development banks also recorded zero new energy sector loan commitments in 2021 and 2022, Boston University’s Global Development Policy Center (GDP Center) said.
“China’s support for overseas coal projects was already on the decline before Xi’s 2021 pledge,” said Cecilia Springer, Non-Resident Fellow at the GDP Center and lead author of the report.
“However, the other half of the pledge – to step up support for green and low-carbon energy – has yet to solidify.”
From 2000 to 2022, the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM) provided a total of 331 loans worth $225 billion for energy projects, with the largest share going to exploration and extraction activities. Nearly three quarters of the total lending went to coal, oil and gas.
Though financing from the two banks has declined since 2016, it still “surpasses the energy lending offered to public entities by any other global lender,” including the World Bank, the GDP Center report said.
At the Belt and Road summit last month, China launched a new Green Investment and Finance Partnership (GIFP) to promote green energy. President Xi said around $100 billion in annual financing would be made available to support the energy transition in Belt and Road countries.
Springer said the new financing was only a “drop in the bucket” when it came to meeting the goals of the Paris Agreement, but added it was “significant that China has committed to bring financial resources back to the table after several years of lowered development finance levels”.
The GDP Center’s database shows China’s fossil fuel lending commitments since 2013 – when the Belt and Road project was first announced – have amounted to $55.4 billion, $20 billion of which was for coal-fired power generation.
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Finance
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Finance
Hong Kong introduces green finance taxonomy to boost fundraising credentials
“The release of the Hong Kong Taxonomy for Sustainable Finance marks a key milestone for Hong Kong’s sustainable finance landscape,” Eddie Yue Wai-man, CEO of HKMA, said in a statement on Friday.
“By providing a common language and framework for sustainable finance, we are equipping market participants with an important tool to make informed decisions, drive impactful cross-border investments and contribute to global efforts in combating climate change.”
The taxonomy covers 12 economic activities under four sectors: energy, transport, construction, and water and waste management.
Having a taxonomy is important to prevent “greenwashing”, the act of making unsubstantiated claims about the environmental benefits of a product or practice.
The HKMA plans to expand the taxonomy soon to cover other sectors like retail and services, said Arthur Yuen Kwok-hang, deputy CEO of HKMA, who added that the authority had received positive feedback following market consultations last May on preparing the taxonomy.
“We encourage the financial sector to use the taxonomy to assess the greenness of projects when they decide to make green loans to these companies,” Yuen said at a media briefing on Friday.
“A green taxonomy is an integral part of the green finance ecosystem. It enables investors to look for green investment opportunities and make informed decisions, thus easing the mainstreaming of sustainable finance flows.”
The taxonomy has adopted local elements such as listing out Hong Kong certifications and standards that could be used to prove the buildings or operations are environmentally friendly and also are in line with guidelines issued by mainland China and the EU.
“This will help companies operating in mainland China and Europe to consider borrowing green loans or raising green bonds in Hong Kong,” Yuen said, noting that Asia alone will require US$66 trillion in climate investments over the next 30 years.
“Addressing climate change requires the support of the financial industry, which in turn will bring about enormous opportunities,” he said. “Hong Kong, which is an international financial centre, is the ideal capital market to support these green financing activities.”
Investments on such a massive scale are needed to meet the global aim of containing global warming within 1.5 degrees Celsius of pre-industrial levels and avoid the worst effects of extreme climate events. Last year was the warmest year on record, according to the World Meteorological Organization.
“Extreme weather is clear evidence of accelerating climate change and a reminder for an urgent need for decarbonisation,” Yuen said.
The Hong Kong government’s decision to extend the US$100 billion Green and Sustainable Finance Grant Scheme for another three years will cover transition bonds and loans for companies to upgrade their equipment to save energy and cut down on pollution.
The move was announced by Financial Secretary Paul Chan Mo-po in his budget speech in February. The current scheme expires on May 10.
“The scheme will encourage more companies and industries in the region to make use of Hong Kong’s financing platform as they move towards decarbonisation,” Yuen said.
Separately, the HKMA will soon launch a cloud-based platform for banks to assess the potential impact of physical risks on residential and commercial buildings in Hong Kong under different climate scenarios, such as flooding and typhoons.
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