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Research: Proceed the Pilot Program of Climate Finance to Promote Full Aggregation of Various Elements and Resources

 TAN Xianchun, ZENG An, GU Baihe

(Center for Carbon Neutrality Strategy, CASISD)

Climate finance refers to investing and financing activities that channel and mobilize more funds to addressing climate change by supporting mitigation and adaptation actions, in order to achieve nationally determined contributions (NDCs) and low-carbon development goals. It is the most effective way to provide financial support for China's carbon dioxide peaking and carbon neutrality target (hereinafter referred to as the dual carbon goals). Thus, the Ministry of Ecology and Environment (MEE) together with other eight ministries and commissions, is making active efforts to promote the pilot program of climate finance.

Firstly, local implementation is fundamental and crucial to realizing the dual carbon goals.

At present, challenges at the local level for addressing climate change and promoting low-carbon development include relatively weak awareness, imperfect climate finance systems and mechanisms, unorganized policies, insufficient professionals and talent pools, and lack of effective mechanisms of supervision, restriction, assessment, and incentive.

In view of this, MEE issued, in conjunction with the National Development and Reform Commission (NDRC) and other seven ministries and commissions, the Circular on Launching the Pilot Program of Climate Finance and its annex Work Plan for the Pilot Program of Climate Finance on December 23, 2021, marking the official launch of the pilot program of climate finance at the local level.

Secondly, it is important to proceed the pilot program of climate finance more deeply, with the aim of promoting the full aggregation of various elements and resources.

Orderly promote carbon finance to give full play to the incentives and restraints of the carbon emissions trading system. In terms of carbon financial products, pilot areas are guided to get actively involved in the national carbon market, research and promote the development and alignment of carbon financial products, and further stimulate the vitality of carbon market transactions. In terms of carbon financial services, financial institutions in pilot areas are inspired to explore and develop carbon financial services, including carbon funds, carbon asset-backed loans and carbon insurance, in a safe and orderly manner under the premise of regulatory compliance and controllable risk, so as to effectively guard against financial risks and boost innovative development of carbon financial system.

Enhance carbon emissions accounting and information disclosure to consolidate the data base for climate finance. Pilot areas are instructed to tighten the supervision and management of corporate carbon emissions accounting, explore the development of corporate carbon accounting system, conduct corporate carbon audit on a regular basis, and strictly prevent corporate carbon data fraud. Guide pilots to establish a climate information disclosure system characterized by corporate public commitments, law-based information disclosure and extensive social supervision. Pilot areas are also encouraged to set up environmental information sharing platforms that facilitate carbon accounting and climate information disclosure by financial institutions in accordance with relevant national standards.

Stimulate innovation of models and tools and build a national database of climate finance projects. Pilots are encouraged to introduce innovative climate-friendly green financial products and services, promote climate-friendly corporate financing and refinancing, facilitate the engagement of small and micro enterprises and the public in addressing climate change, improve risk management system and conduct corporate climate-friendly evaluations. Reserve climate finance projects in project bank, and ensure the cultivation, publicity and industry-finance integration of included finance projects.

Deepened international cooperation and improve the quality and capacity of climate finance. Climate finance is a key issue for global cooperation to address climate change. Pilots are encouraged to strengthen international exchanges and cooperation by establishing industry promotion centers, introducing overseas funds and holding international conferences. In addition, various forms of expert dialogues, exchange seminars and other activities can be carried out, in order to strengthen mutual experience and seek more cooperation space on the one hand, and to share Chinese story and contribute Chinese wisdom for improving the quality and capacity of climate investment and financing on the other hand.