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Amid the Accelerated Building of Carbon Market, Industrial Bank Establishes its First-mover Advantages

Time: December 29, 2014 Source: www.iNewsweek.cn

Introduction: As the building of carbon market is accelerated across China, Industrial Bank (IB) establishes its first-mover advantages in carbon finance services.

The building of carbon market which is planned as a whole is being accelerated across China, and IB, which has actively got involved in the carbon market for over 7 years and pushed the building of domestic carbon-trading market, establishes its first-mover advantages in carbon finance services.

On December 24, 2014, Beijing Carbon Emission Right Trading Platform was open to individual investors. Thus, the rest 7 carbon-trading pilot markets apart from Shanghai have all been open to individuals. At the beginning of December, the National Development and Reform Commission (NDRC) signed and issued the first batch of Chinese Certified Emission Reduction (CCER).

On December 9, Xie Zhenhua, Deputy Director of NDRC said at the thematic side event of Chinese Carbon Market Prospect of the United Nations Climate Change Conference in Lima that, by the end of November, China had traded 14.36 million tons of carbon dioxide, with the value topping RMB 500 million in total. “A good preliminary effect has been achieved.”

“Our bank is happy to the progress in domestic carbon market.” For this, General Manager Liang Pingrui of the Environment Finance Department of IB, the only Equator bank in China, told the reporter that, as an active participant in building the domestic carbon-trading market for 7 years as well as a pioneer in domestic green finance, IB has signed cooperation agreement with six national carbon-trading pilot cities, including Shanghai, Shenzhen, Guangdong, Tianjin, Hubei and Chongqing, by now, and could provide a package of products and services in various areas such as consulting for the design of carbon trading rules, development of trading and clearing systems, carbon assets pledged credit, and financing for energy conservation and emission reduction projects.

In this November, IB officially launched the first agency account opening system for carbon trading in China, becoming the first and only commercial bank providing agency account opening for carbon trading with an internet platform in China Emissions Exchange. Domestic institutions and individuals participating in the carbon-trading market can directly open accounts of the exchange via the personal internet banking system of the bank.

“Within less than a month, 21 accounts have been opened”, said Liang Pingrui.

According to his introduction, IB has got involved in the domestic carbon market as early as 2007. By introducing special talents and making in-depth research in international carbon market, the bank has innovatively designed a number of carbon finance products for the international carbon market, and released integrated carbon finance services covering the front, middle and back stages of carbon trading as the first Chinese bank.

He gave some examples, “For instance, IB independently developed the tool for evaluating carbon assets, and innovatively developed and implements the first international carbon assets pledged credit business in China; The bank established long-term cooperation relations with dozens of international carbon purchasers which are most active in China and facilitated more than 10 projects in the execution of Emissions Reduction Purchase Agreement (ERPA); The bank issued the first carbon delivery L/G at home; The bank provided trading settlement and funds custody services for the first voluntary carbon emission reduction transaction at home”.

The building of domestic carbon-trading market is originated from the “Notice on Implementing Carbon Trading Pilot Program” issued by the NDRC in 2011, in which it is decided that the trading pilots for carbon emission right will be established in 7 provinces and municipalities including Beijing, Shanghai, Tianjin, Chongqing, Guangdong, Hubei and Shenzhen. In September 2014, the NDRC printed and issued the National Plan for Addressing Climate Change (2014-2020). In the plan, it is specifically put forward that, in order to respond to climate changes, China will further implement the trading pilots for carbon emission rights and speed up the building of carbon emission trading market across the country.

So far, the 7 carbon-trading pilots in China have accepted more than 2,000 enterprises according to their own respective admission standards and issued quota about 1.2 billion tons in total each year, with the market price ranging from RMB 20 to RMB 130.

In the piloting process in various regions, it became a headache of many enterprises under emission control how to save energy and reduce emission to the largest extent while revitalizing carbon quota assets to alleviate the pressure of capital occupation. Considering the demand of enterprises, in September 2014, IB, in collaboration with China Hubei Emission Exchange, provided Yihua Group with the loan support of RMB 40 million, which helped to revitalize its carbon quota assets simply based on the guarantee by pledging domestic carbon emission right quota, without other additional mortgage and guarantee conditions, and the loan became the first carbon emission right pledge-based loan in China.

In this way, from boosting the building of carbon market system to offering integrated carbon finance services to enterprises and individuals, IB has established an ecological system for carbon finance.

“We will throw ourselves into the building of carbon-trading market around China with greater enthusiasm, continue focusing on the carbon market, and make innovation in carbon finance, so as to contribute the efforts of financial enterprises to the building of a consolidated trading market for carbon emission rights in China”, said Liang Pingrui.