On November 8, the People’s Bank of China announced the creation and launch of a structural monetary policy tool, a carbon emission reduction financial support tool, to support the development of key areas such as clean energy, energy conservation and environmental protection, and carbon emission reduction technologies in a steady, orderly, precise and direct manner, and Leverage more social funds to promote carbon emission reduction.
The target of carbon emission reduction financial support tools is tentatively determined to be national financial institutions. Carbon emission reduction support tools provide financial institutions with a direct mechanism of "loan first and then borrow". Financial institutions provide carbon emission reduction loans to all types of enterprises in key areas of carbon emission reduction without discrimination on the premise of making independent decisions and taking risks on their own. After issuing carbon emission reduction loans to key areas, financial institutions can apply for financial support from the People's Bank of China. The People's Bank of China provides financial support to financial institutions based on 60% of the loan principal, with an interest rate of 1.75%, a term of 1 year, and a renewable period of 2 times. Financial institutions need to provide qualified collateral to the People's Bank of China.
Projects supported by carbon emission reduction financial support tools:
The clean energy fields mainly include wind power generation, solar energy utilization, biomass energy utilization, pumped storage, hydrogen energy utilization, geothermal energy utilization, ocean energy utilization, heat pumps, high-efficiency energy storage (including electrochemical Energy storage), smart grid, large-scale wind power photovoltaic source grid integrated load storage project, household distributed photovoltaic whole county promotion, cross-regional clean power transmission system, emergency backup and peak shaving power supply, etc. The energy conservation and environmental protection fields mainly include energy efficiency improvement in the industrial field, and the transformation of new power systems. The technical fields of carbon emission reduction mainly include carbon capture, storage and utilization. The scope of follow-up support can be adjusted according to industry development or policy needs.
How much capital is released As of Q3 2021, the cumulative balance of green loans is 14.78 trillion yuan. The central bank's carbon reductionfinancial support tools may release a trillion-level currency.