China says US$35bn worth of green bonds meet EU standards

July 20, 2023|Written by |People's Bank of China

China’s green finance guidelines issuer found that 193 previously issued green bonds are aligned with the joint China-EU common ground taxonomy (CGT), which it hopes will increase foreign investments in Chinese climate projects.

China’s Green Finance Committee, which is led by the People’s Bank of China, spent several months reviewing the bonds to determine if they were in line with the taxonomy. The green bonds raised 251.3bn yuan (US$35bn) between 2016 and 2023 and were issued by mostly state-backed public transport and clean-energy companies.

“The Green Finance Committee expert group’s effort is an important innovation to expand the use cases of the CGT,” the committee’s chairman Ma Jun said in a statement. “This initiative will also help enhance the openness of China’s green bond market to global investors.”

The CGT was developed by the International Platform for Sustainable Finance and chaired by the EU Commission and China’s central bank. The aim of the taxonomy is to lower transaction costs and facilitate cross-border capital flows while avoiding verification duplication and reducing market segmentation.

The CGT is used to classify projects that qualify for green bonds and help finance environmental projects in the EU and China. So far there are 72 types of projects that are acceptable by both countries.

China hopes that labeling the bonds as meeting the standards of both countries will expand the pool of international investors. China was the largest issuer of green bonds in 2022, raising a record US$155bn, according to Climate Bonds Initiative.

The US and China have recently revived climate talks in an effort to collaborate on combating climate change, as the northern hemisphere faces extreme heat warnings. Last week US Treasury secretary Janet Yellen urged China to increase green financing for developing countries but the two largest greenhouse emission countries have yet to come up with an agreement.

China received a grade of C on Green Central Banking’s scorecard, largely due to low scores in monetary policy and leading by example.

This page was last updated July 20, 2023

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