Industrial Chains Connected by Green Finance
Date: December 11, 2013 Source: Economic Daily
Customizing green financial service solutions, providing special financing up to RMB 20 billion, and giving preferential loan terms and interest rates for the financing of key low-carbon, energy conservation and environmental protection projects, Industrial Bank (IB) will infuse green finance power into the energy conservation and environmental protection industry of Inner Mongolia during the “12 th Five-year Planning” period.
On December 6, the “2013 Beautiful China Tour of IB” arrived at the last stop, Inner Mongolia, a region boasting abundant energy resource. Before the stop, the campaign has left its footprint in a number of provinces and cities including Hebei, Shandong, Chongqing, Heilongjiang, Ningbo, Guangzhou, Sichuan, Xinjiang, Hubei, Hunan and Jiangsu.
As learnt by the reporter, in the first half of this year, the energy consumption each unit GDP of Inner Mongolia witnessed a YoY decrease of 4.39%, overrunning the set annual energy conservation target of 3.2%. The development of energy conservation and emission reduction showcased a desired momentum. Of the 30 licensed enterprises with energy conservation and emission reduction projects certified by IB Head Office across China in 2013, two are located in Inner Mongolia. “One is China Coal Eerduosi Energy Chemical Co., Ltd. meeting the ‘Equator Principles', and the other is Inner Mongolia Power (Group) Co., Ltd.”, introduced Liang Pingrui, General Manager of the Environment Finance Department of IB.
Over years, IB has customized green financial service solutions for a large group of typical enterprises pursuing green development including Inner Mongolia Power (Group) Co., Ltd. and China Coal Eerduosi Energy Chemical Co., Ltd., giving priority to support many projects in the areas including electric power, coal washing, and centralized heating. In total, the bank has provided financing of nearly RMB 9 billion for the area of energy conservation and environmental protection in the region.
Behind such customization is the enormous support of IB's professional team. At the level of Head Office, IB set up the Environment Finance Department, a Class I department, and established five professional teams for market research, energy efficiency, environmental protection, technical service and the Equator Principles review; at the branch level, the bank set up departments for driving forward green finance businesses and appointed product managers in charge of green finance, and established “green finance business departments”, organizations specialized in green finance.
The implementation of customized service solutions requires suitable partners. In this regard, Huang Zhijun, Vice President of Finance of China Coal Eerduosi Energy Chemical Co., Ltd., said in great emotion, “it does not merely depend on common businesses and interests, but the common values shared on the cause of energy conservation and environmental protection”.
“The Equator Principles is an international standard, and we have a strict assessment system in selecting enterprises”, Liang Pingrui said.
“This is an interactive process, and it takes months altogether from contact and arrangement of negotiation to declaration and onsite evidence collection.” According to Huang Zhijun, the cooperation with IB started with the “project of 100 million t/a synthetic ammonia and 1.75 million t/a carbamide”. “Of the estimated RMB 10 billion for investment in infrastructure, we have the capital funds of RMB 3 billion. However, where the loan of RMB 7 billion can be granted?” It is easy to imagine that he was in urgent need of financing.
In the opinion of Huang Zhijun, a remarkable feature of an “Equator Bank” is what can be invested and what cannot, and this is also embodiment of social responsibility. An enterprise and the bank could serve each other as an urging force. Where the enterprise fails to meet the environmental protection targets, it may be promoted and improved in the process. “Environmental risks will also transmit toward credit risks, Doctor Cheng Feng from the Environment Finance Department of IB pointed out, “it is also one of our initial intents in exerting ourselves to develop green finance”.
“We almost accepted all the advice and proposals given by IB. To some extent, we were touched by their clinging attitude and we hoped to do something for environmental protection.” According to the conservative estimation of Huang Zhijun, RMB 700 million out of the RMB 10 billion to be invested in infrastructure construction would be purely used for “green” construction.
According to statistics, by the end of this November, IB has granted green finance based financing of RMB 333.1 billion to over 1,000 enterprises across China accumulatively, with the financing balance hitting RMB 174.6 billion, reducing the emission of CO 2 , SO 2 and chemical oxygen demand (COD) by 68.6775 million tons, 901,200 tons, and 43,600 tons respectively.