What are the highlights of the first carbon neutral bond issuance
Our reporter Yao Jin
Recently, the first batch of carbon neutral bonds registered by six companies including China Southern Power Grid, Three Gorges Group, Huaneng International, State Power Investment Corporation, Sichuan Airport Group, and Yalong River Hydropower were successfully issued.
According to the evaluation and certification report, the green projects supported by the six carbon neutral bonds are expected to reduce carbon dioxide emissions by 41,646,900 tons per year, save 22,567,900 tons of standard coal, and reduce sulfur dioxide emissions by 20,900 tons.
Why launch carbon neutral bonds?
Compared with general green bonds, how are carbon neutral bonds different?
What impact will it have on relevant market entities?
The Economic Daily reporter interviewed industry experts and scholars.
Help achieve carbon neutral goals
As a sub-category of green debt financing instruments, carbon neutral bonds mainly refer to debt financing instruments that raise funds for green projects with carbon emission reduction benefits.
The China Interbank Market Dealers Association launched the first batch of carbon-neutral bonds, which is the first to be labeled "carbon-neutral" green bonds globally.
“China’s carbon dioxide emissions are striving to reach the peak before 2030, and strive to achieve carbon neutrality by 2060, which demonstrates the firm determination to actively respond to climate change and take the path of green and low-carbon development. Under the vision of carbon neutrality, innovative support for climate response Changing financial products are an important development direction for green finance and sustainable finance in the future.” Ma Jun, director of the Green Finance Professional Committee of the Chinese Finance Society, believes that the first batch of carbon neutral bonds launched by the NAFM is important for the innovation of China’s carbon neutral financial products. Important reference meaning.
Ma Jun said that the launch of carbon neutral bonds reflects the determination of the Association of Dealers, issuing companies and lead underwriters to fully implement the call for carbon neutrality and start from their own efforts to promote low-carbon and zero-carbon development.
From the perspective of the first batch of projects and preliminary mechanism design, as an important part of green bonds, carbon neutral bonds have more focus on the use of funds, more accurate project selection, and more transparent information disclosure, which will help to promote more financial resource allocation to low-carbon fields .
"The launch of carbon neutral bonds will help investors identify the areas that contribute the most to the carbon neutral goal and meet investment needs." A related report by Industrial Economic Research Consulting Co., Ltd. believes that the goal of carbon neutrality must be achieved and the economic structure , Energy structure, industrial structure, etc. are all facing in-depth transformation, which means huge capital demand, and green bonds have the characteristics of long maturity and certain price advantages, and the market demand will increase in the future.
The relevant person in charge of the Dealers Association stated that the introduction of carbon neutral bonds will help achieve carbon peaks and carbon neutral goals, and guide the industrial structure, energy structure, lifestyle, etc. to a green and low-carbon transition through capital allocation.
Carbon neutral bonds will also help promote the integration of international and domestic green finance standards, attract overseas socially responsible investors, and realize the development of the green bond market to promote the opening of the financial market.
High-standard issuance enhances investment attractiveness
The publicly disclosed issuance documents show that the first batch of carbon neutral bonds are medium and long-term bonds of 2 years or more, with an issuance amount of 6.4 billion yuan, and the projects are in the field of low-carbon emission reduction.
Compared with general green bonds, how are carbon neutral bonds different?
According to the relevant person in charge of the Traders Association, carbon neutral bonds mainly have the following three characteristics.
First, the raised funds will be used exclusively in the field of low-carbon emission reduction, and the carbon neutral bond will be given a special label.
Carbon neutral bond fundraising projects must comply with the "Catalogue of Green Bond Supported Projects" and focus on carbon emission reduction. They mainly include: photovoltaic, wind power and hydropower and other clean energy projects, electrified rail transit and other clean transportation projects, and green Low-carbon renovation projects such as buildings.
Second, in accordance with the principle of "computable, verifiable, and verifiable", carbon neutral bond issuers need to hire independent third-party professional institutions to issue relevant assessment and certification reports.
In addition to the regular content of the green project, the report also needs to disclose the project's carbon emissions, carbon footprint and other environmental benefits, and focus on the quantitative measurement of environmental benefits such as carbon dioxide emission reduction.
Third, in order to strengthen the information disclosure management of the duration, relevant issuing companies need to disclose the use of raised funds, the progress of green and low-carbon projects, and quantitative carbon emission reduction and other environmental benefits every six months, strengthen the management of the duration of information disclosure, and improve the transparency of the use of funds .
"It is necessary for investors to clearly understand that the funds raised by companies through carbon neutral bonds are indeed used in green projects related to carbon emission reduction, and for investors to understand the expected effects of these funds in a timely manner." Analyst of the Financial Market Department of Everbright Bank Zhou Maohua believes that the high standards of carbon neutral bond issuance management, high transparency of information disclosure and related policy support will help increase the attractiveness of bond investment and reduce the financing costs of green projects.
Taking the three bonds that Bank of China participated in this time as an example, Hu Kun, general manager of the Investment Banking and Asset Management Department of Bank of China, said that in the current “tight balance” environment of market capital, the coupon rate is better than the issuer's expectations.
Bonds are sought after by investors such as insurance, banks, wealth management, funds, securities companies, etc. The introduction of overseas investment institutions to participate in bidding and successful placements fully demonstrates the attractiveness of the concept of "carbon neutrality" to investment institutions.
Set a new benchmark for green development
What impact will the first batch of carbon neutral bond issuance have on relevant market entities?
Zhou Maohua believes that for financial institutions, the domestic green bond market will enrich the investor portfolio, and as the domestic green bond market continues to increase in depth and breadth, it will attract extensive participation from global investors.
“For enterprises, the innovative development of carbon neutral bonds promotes the development of the green bond market, broadens the financing channels for corporate green projects, and reduces corporate financing costs, forms positive incentives for enterprises, and promotes the sustainable development of green projects.” Zhou Maohua said, As far as the government is concerned, the relevant policy support funds have played a "four-two-for-two allocation" effect, which can guide more social idle funds to participate in green projects.
Xue Fang, a researcher at the Credit Legislation and Credit Evaluation Research Center of Capital Normal University, believes that the issuance of the first batch of six carbon neutral bonds in the country will have a guiding and exemplary effect on investment and financing institutions, credit and trustees, and green financial product allocation.
Ma Jun said that the boundaries of carbon neutral projects should be further clarified, green financial standards should be improved, international cooperation should be strengthened, and China-EU sustainable financial standards should be unified.
At the same time, it is necessary to strengthen information disclosure requirements, especially information related to the carbon emissions of investment projects and the carbon footprint of financial institutions.
On the basis of the first batch of carbon neutral bonds, we will accelerate the innovation of financial products related to carbon footprint reduction in other areas, and support the real economy to achieve carbon peak and carbon neutral goals.
Our reporter Yao Jin