Date: October 28, 2013 Source: 21st Century Business Herald
It will only take half-hour from Wuhan to Huangshi. Wuhan-Huangshi Line is one of the railways under the inter-city railway project for Wuhan “1+8” City Circle, and it will be put into operation by the end of 2013. To push the integration of city circle through integrated urban transport is one of the important task of Hubei in building the “Resource-conserving and Environment-friendly Society”.
Nonetheless, the financing for inter-city railway always remains to be an important and difficult task for a local government in planning transport. The above project has received the insurance funds of RMB 5 billion introduced by Industrial Bank (IB). As an urban rail transit project in the low-carbon economic area, its financing volume created the biggest scale of single investment in rail with insurance capital debt at home.
At the Wuhan Finance Expo held on October 25, financial reform and green finance of Wuhan became hot topics.
“Green Jingchu – Hubei Finance Expo Green Finance Forum” of the “2013 Beautiful China Tour • Green Finance” of IB was held as an important part of the Finance Expo. At the forum, IB Wuhan Branch entered into the strategic cooperation agreement with the Financial Office of Hubei Province, promising to extend new green finance based loans not less than RMB 30 billion to support the province to build the “Ecological Hubei” and “Resource-conserving and Environment-friendly Society” in the coming three years.
Meanwhile, the Bank also signed the “Strategic Cooperation Agreement” with Huaneng Carbon Asset Operation Co., Ltd., and both parties will carry out in-depth cooperation centering on the areas including domestic carbon trading market, energy performance contracting (EPC) based financing, and asset securitization for energy conservation and emission reduction projects.
Protecting the ecology of Hubei with green finance
Half month ago, Wuhan, a river city, just experienced the attack of smoky fog.
“After all, it (smoky fog) is an accumulative result brought by development.” Taking the cause of smoky fog as the start, Bie Tao, Deputy Director of the Department of Policies, Laws and Regulations of the Ministry of Environmental Protection, talked about green finance at the “Green Jingchu – Hubei Finance Expo Green Finance Forum”.
Hubei was approved as a comprehensive supporting reform pilot zone for the “Resource-conserving and Environment-friendly Society” in 2007, and it has been practiced for nearly 6 years up to now. Environmental problem has drawn increasing attention from the general public, which provides opportunities for the development of green economy. The development of low-carbon, recycling and ecological economy contains vast demands of financial service, and it requires the involvement of more financial institutions and support of the whole financial system.
Bie Tao believes that there is a big market for IB to choose developing green finance in Wuhan.
As introduced by the relevant officer of IB, across the region of Hubei, IB Wuhan Branch has accumulatively provided local energy conservation and environmental protection enterprises or projects with financing of RMB 26 billion up to now. By the end of September, the financing balance hit RMB 13.277 billion, involving 471 energy conservation and environmental protection projects. Each year, the energy-conserving and emission-reducing projects supported with such financing could save 1.36 million tons of coal equivalent, reduce 3.86 million tons of CO 2 , and save 60,000 tons of chemical oxygen demand (COD).
It is also learnt by the reporter that, in the process of supporting the development of green finance, IB has carried out in-depth research into the financial demands in the three areas of green economy: low-carbon economy, recycling economy and ecological economy, and paid attention to offering professional products and services through sustained innovation.
On May 24, 2013, the branch, Hubei United Investment Group, and Ping An Insurance jointly released the “United Investment-Ping An Insurance Capital Debt Investment Plan”. The funds raised in the first phase, RMB 3 billion, has been put into use to support the construction of 4 inter-city rails in Wuhan City Circle. The remaining RMB 2 billion will be issued within a year.
As an urban rail transit project in the area of low-carbon economy, its financing volume created the biggest scale of single investment in rail with insurance capital debt at home, lending a boost for Wuhan City Circle to develop the low-carbon economy of the “Resource-conserving and Environment-friendly Society”.
Searching green opportunities for the “Resource-conserving and Environment-friendly Society”
In the “General Plan of Wuhan for Financial Reform and Innovation (exposure draft)” issued by the city recently, it is also mentioned as an important task to support Wuhan City Circle to explore and carry out innovated financial businesses including green finance, logistics finance, shipping finance, and consumption finance, intensify financial support for the areas including urbanization, energy conservation and emission reduction, development of new energy and green production, and create a green financial product chain.
It is also mentioned in the financial reform plan to establish low-carbon development guiding funds and attract social capital to enter the areas of low-carbon economy and ecological construction. And support should be lent to special bond and trust products for ecological water network, exposition and exhibition, recycling economy, protection of wetland, forest and carbon credit, clean energy, energy conservation and emission reduction.
As indicated by Chief Economist Lu Zhengwei of IB in the interview with our reporter, Wuhan has its own advantages in terms of demands to build a regional financial center and develop green finance. As an important industrial area in China, Wuhan has its potential demand for emission of pollutants and emission reduction. Nonetheless, potential demand does not mean that it will be met.
The key, Lu believes, does not lie in the building of an exchange but the measurement of pollutants and design of trading right mechanism for Wuhan to plan a national specialized financial center and develop green finance. Can progress be made in the two aspects? If no, the city cannot surely obtain such potential opportunities. “The premise for Wuhan to enhance its influence around China is to manage its own affairs well,” said Lu.
In the future, the person-in-charge of IB Wuhan Branch indicates, the branch will further actively push forward the energy conservation and emission reduction efforts of Hubei Province and improve the development of energy conservation and environmental protection industry in the region vigorously with innovated financial forms including green credit, green investment and green insurance.
For green finance, Lu mentioned, the period of investment in an environmental protection project like the treatment of urban sewage is quite long. For instance, the short-term investment of some public utilities such as urban drainage is large, but once the project is accomplished, it will be of certain monopoly, and the investment value will be considerable with the increasing environmental protection needs.
Lu remarked: “In promoting green finance, we also need to carry out some evaluation over these projects. First, we will check whether they have any negative impact to environment and society, and second, we have to ensure that they are commercially sustainable. In practice, we stress on the social responsibility performance approach of “obtaining reasonable profits while bringing benefits to the stakeholders”, namely to combine social responsibilities with our own banking business, implement such responsibilities into the specific operation and management links of the Bank, and seek business opportunities during the performance of social responsibilities, so as to explore a sustainable and developable commercial model and social responsibility practice model in which a win-win result can be achieved between the bank and the society.”