Industrial Bank Green Finance Facilitates the Incoming Implementation of the New Law of Water Pollution Prevention

Indulged in green water and clear ripples, Jiaxing, a summer town of water located in the Southeast China, attracts many tourists.

It is never easy to make water clean. Under the support of green finance, Jiaxing, after 4 years of unremitting “water harnessing” upon severe water pollution, restored its beautiful scenery as a water town and found a new way of transformation. The “Jiaxing Mode”, which means water pollution harnessing via green finance, has its name heard by the whole world.

Facing the more and more challenging water pollution, can “Jiaxing Mode” really be popularize? Recently, the 28th Session of the Standing Committee of the 12th National People’s Congress approved by vote the resolution of the modification of the Law of Water Pollution Prevention. The modified Law of the People’s Republic of China on Water Pollution Prevention (hereinafter referred to as the Water Pollution Law) applies the total quantity control system and pollutant discharge permit system, intensifies the prevention and control of agricultural-sourced pollution and punishment against illegal actions. The new Water Pollution Law will be enacted on January 1, 2018. A battle against water pollution is in full swing, which brings new opportunities for the development of green finance.

“The enactment of the new Water Pollution Law will motivate the government and enterprises to increase the efforts in water harnessing, and help the market to grow such as the transaction of pollutant discharge permit, wastewater disposal, administrative network construction. The involvement of financial institutions will greatly boost the construction of water pollution harnessing market and advance the progress.” Luo Shiyi, GM of Green Finance Dept, IB, said.

As the leader of green finance in China, Industrial Bank (IB) stepped into water pollution harnessing as early as in 2013, innovatively launched the comprehensive solution of water resource utilization and protection, and increased input into this sector as a key project. By the end of June 2017, IB had accumulatively invested over RMB 300 billion of green financing into the protection and utilization of water resources with a financing balance of RMB 204.3 billion, accounting for more than one third of all green financing balance of IB. The investment covers industrial water reservation, sea water desalination, sewage plant construction and upgrade, sewage network project, sludge disposal project, water area harnessing, comprehensive water environment harnessing, recycling water, heavy metal pollution prevention and harnessing, etc., thus effectively supporting the water resource utilization and protection as well as pollution prevention and harnessing.

“If you want to harness water, IB is your choice.” By virtue of its comprehensive and all-rounded financial service program of water harnessing, IB has formed reputable WOM in Zhejiang Province. Since 2013, Zhejiang initiated the “Five River Harnessing” initiative. Jiaxing was the first city to answer the call. As a town of water where rivers are interlaced, it is embarrassing that industrial development made the water quality deteriorate in the past 20 years and there was no drinkable water here. In 2012, Jiaxing was the only prefecture-level city with unsatisfactory water quality at the section layer, which rang the bell for water environment here. After learning the painful lesson, Jiaxing took water environment improvement as the first priority of the municipal party committee and the government, and was determined to harness the water environment.

IB has taken this strategic opportunity to first launch the pollutant discharge permit exchange product, making it the first national commercial bank that launched the credit extension business mortgaged on pollutant discharge permit together with Jiaxing government. In November 2013, IB signed the Strategic Cooperation Agreement on Jointly Facilitating the “Comprehensive Water Environment Harnessing” Project of Jiaxing with Jiaxing government, promising to provide RMB 20 billion of comprehensive credit amount during the 12th Five Year Plan (2013-2015), promote the application of advanced technologies in environmental protection and harnessing, support the development of low-carbon, green and environmental economic mode, and expand the “Jiaxing Mode” of financing for water resource harnessing. By now, IB has invested a green fund of more RMB 15.9 billion in Jiaxing with the financing balance of RMB 12.5 billion.

With the multifarious support of green finance, Jiaxing, once a city with the worst water quality across the province, after 4 years of water harnessing, witnessed the proportion of type V or V- water quality dropping to 6.9% in 2016 from 80.6% in 2012; the proportion of type IV or higher water quality increasing to 93.1%. The water environment was restored to the level of early 1990, representing the classic example of water harnessing in Zhejiang Province.

In the big picture of water harnessing in Zhejiang, IB plays a big role. By giving full play to the specialized advantages formed in its 11 years of experience in green finance, IB keeps innovating in products, leverages green loans, non-standard credit financing, green leasing, green bond, industrial fund and other diverse products to provide nearly RMB 30 billion of green fund for the water resource utilization and protection of Zhejiang, which covers sewage disposal, sewage network, sludge disposal, industrial water reservation, water area harnessing, water source protection, etc. For a long time, IB has been energizing Zhejiang in the way of green finance to protect its clear water and green mountain.

Water harnessing is not a war that can be won easily. There is no shortcut or permanent solution. We need to find a market-based mechanism that can last long. As the pilot projects of 10 national pollutant discharge permit exchange are pushed forward in Jiangsu, Zhejiang, Hubei and other provinces, IB is the first one to offer the pollutant discharge permit exchange solution and offers all-in-one solution covering the design of platform and trading mechanism, the system development of pollutant discharge permit exchange, the trading liquidation, settlement and fund management and supporting financing in pilot zones. IB leverages market means to encourage more and more enterprises to be engaged in water pollution harnessing. The trading of pollutant discharge permit allows them to change environmental advantages into profits. Energy saving and emission reduction become voluntary acts of enterprise rather than mandatory orders from the government.

Our long-lasting devotion will eventually pay back. As the national pays more attention to water harnessing, green finance is embracing its new market opportunities. According to reports, the year of 2017 is not only the year when the Water Pollutant Law was enacted, and also the year when the index of black water and foul water disposal was completed. The Action Plan for Water Pollution Prevention and Harnessing (commonly known as "Water Ten Articles") specifies that “directly controlled municipalities, provincial capital cities, cities with independent budgetary status must virtually eliminate all black and foul water by the end of 2017.” Some experts said that, driven by policies and market demands, the investment in comprehensive water pollution harnessing will witness a surge this year and next year where trillions of market value will be released.

 IB has already sensed this opportunity long before. Luo Shiyi, GM of Green Finance Dept, IB, said to the reporter that the market space and demand of water resource utilization and protection is tremendous, and is still the key sector that IB Green Finance Department will mainly support and develop during the Thirteenth Five Year Plan. Now the sand table of key green finance clients and project has been set in combination of regional market features to reinforce group linkage, allocate special resources, upgrade the green finance product and service portfolio, so as to provide clients with a more improved integrated solution of water resource utilization and protection.