The People’s Bank of China, the National Development and Reform Commission and the China Securities Regulatory Commission release ‘Green Bond Endorsed Project Catalogue’

climate
Jul 16, 2020

On May 29, 2020, the China “Green Bond Endorsed Project Catalogue (2020 Edition)” Consultation Version was jointly released by the People’s Bank of China (PBOC), the National Development and Reform Commission (NDRC) and the China Securities Regulatory Commission (CSRC) for public consultation. It marks the beginning of a harmonization of domestic green bond definitions as well as the consolidation of the green bond market in China for the near future. Moreover, the removal of clean coal from the green bond taxonomy presented in the Catalogue constitutes a breakthrough in offering a more stringent, truly sustainable definition of green bonds in China.

China’s green bond market was officially launched in 2015 following the PBoC’s issuance of “Green Bond Endorsed Project Catalogue (2015 Edition) in December and NRDC’s announcement of “Green Bond Guidelines” in January 2016. In 2017, CSRC issued special guidelines for listed companies.

This caused two main problems in practice. First, the domestic standards for green bonds listed in the guidelines differed from their foreign counterparts, in particular with regards to the utilization of clean coal. Second, as China’s green bond market was governed by different supervisory authorities, disparate green bond standards applied to different types of issuing entities, which resulted in a highly fragmentated market.

In March 2019, seven ministries and commissions including the National Development and Reform Commission and the People’s Bank of China jointly formulated China’s first Green Industry Guiding Catalogue, which clarified the definition and classification of green industries and green projects and laid the foundation for the new green bond catalogue.

The introduction of the updated draft version of the Green Bond Endorsed Project Catalogue indicates that China is aiming for a unification of its green bond market, which is of great significance.

The draft catalogue (Green Bond Endorsed Project Catalogue) classifies green projects into six level-I industry categories, followed by 25 level-II, 48 level-III and 204 level-IV categories. The six level-I industry categories are named as follows:

  • Energy-saving and Environmental Protection Industry,
  • Cleaner Production Industry,
  • Clean Energy Industry,
  • Eco-environment Industry,
  • Green Upgrading of Infrastructure,
  • Green Services

It is worth mentioning that the new version of the Catalogue level-IV categories no longer includes the clean utilization of fossil fuel energy. As such, the updated categories reflect the overall alignment of China’s green finance with efforts on pollution prevention and the efficient use of resources whilst paying more attention to responding to climate change, which is consistent with China’s commitment to the implementation of the Paris Agreement. Moreover, the updated version also added categories for hydrogen, sustainable agriculture, green consumer finance, green services and manufacturing.

The green finance industry both within China and abroad had a very positive response to this change, which will help enhance China’s international voice in green bond standards and align the domestic taxonomy more closely with international practices. Last but not least, it will potentially attract more offshore institutional investment in China’s domestic market.

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Sino-German Climate Partnership III

Project country
China
Political Partners
German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU); Ministry of Ecology and Environment of the People's Republic of China (MEE); National Energy Administration of the People's Republic of China (NEA)
Implementation Partners
Energy Research Institute of the National Development and Reform Commission of the People's Republic of China
Duration
09/2017 – 09/2020

Germany and China signed the Memorandum of Understanding on Cooperation in Combatting Climate Change and initiated this bilateral dialogue as "Sino-German Climate Partnership". The project has been established to support the cooperation between the German Ministry of Environment, Nature Conservation and Nuclear Safety (BMU) and the Chinese Ministry of Ecology and Environment (MEE). The new phase of the project starts in 2018 with close alignment to the restructuring at the Chinese government. In this phase, the project aims to advance the policy dialogue and cooperation with the Chinese partners domestically as well as within the international context of climate change. Part of the work will be supporting the development and implementation of China's medium- and long-term low-carbon development strategies, hence by supporting the Chinese government in strengthening the climate governance system. Domestically the SGCP project supports the policy dialogue on climate change (Sino-German Working Group on Climate Change) and enhances the exchange of German experiences and best practices, this includes strengthening capacities for the development of integrated climate and energy action plans as well as adaptation concepts for cities. On international level the SGCP project enhances the knowledge of both patterns about best practices in regard of climate policies and their implementation. For new cooperation topics identified by the Working Group on Climate Change, the project acts as an incubator for IKI development. As interface for information management, it serves a as a hub for exchange between partners of the IKI within and outside China, especially within the UNFCCC process.