China issues first loans to support emissions reduction finance


People wearing face masks walk past the headquarters of China’s central bank People’s Bank of China (PBOC), April 4, 2020. REUTERS / Tingshu Wang

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BEIJING, Dec.30 (Reuters) – China has granted the first batch of 85.5 billion yuan ($ 13.4 billion) of low-cost loans to financial institutions to promote green projects and companies’ efforts to reduce carbon emissions, the central bank said Thursday.

Under the Carbon Emissions Reduction Mechanism (CERF), the first of its kind to be established by the People’s Bank of China (PBOC), financial institutions can apply for low-cost financing to support loans that they grant to finance the reduction of the emissions of the companies. efforts.

CERF is part of China’s broader goal of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060, as well as protecting the economy from the economic fallout of the pandemic of COVID-19.

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Under CERF, the PBOC will provide financial institutions with funds equivalent to 60% of the principal of a loan at a one-year interest rate of 1.75%. This would be at a discount from the seven-day reverse repo rate of 2.2%.

The bank has also officially set up low-cost loans to support companies’ efforts to use clean coal, Sun Guofeng, head of the PBOC’s monetary policy department, said at a press conference. He did not say how much has already been provided.

CERF could lead to investing 1,000 billion yuan a year in clean energy projects after the monetary tool is fully deployed in 2022, according to reports from Huatai Securities and Everbright Securities.

But banks are required to certify that the loans have gone to companies that can help the economy switch to cleaner energy or improve energy efficiency.

As a targeted monetary policy tool, Sun said CERF and special clean coal loans can contribute to the overall credit supply and stable credit growth.

Next year, “China will make full use of the dual function of monetary policy tools, that is, in terms of volume (of money supply adjustment) and structure,” Sun said.

($ 1 = 6.3752 yuan Chinese renminbi)

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Reporting by Ma Rong, Cheng Leng and Gabriel Crossley; written by Ryan Woo; Edited by Christian Schmollinger

Our Standards: Thomson Reuters Trust Principles.


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