Idea Exchange – Karen Ho

The People’s Bank of China plans to remove “clean fossil fuels” from the list of The Green Bond-supported Project Catalogue, according to the draft published by the Chinese regulators last week.

Unifying the policy within the country’s various regulators is a “hugely significant step that will be welcomed by international investors,” said Sean Kidney, chief executive officer of Climate Bonds Initiative. The removal of fossil fuels brings China into closer alignment with international practices, he said.

The inclusion of “clean coal” in 2015 list had put China at odds with global standards. Chinese green bond issuances that met international standards raised US$31.3 billion in 2019. Yet also in 2019, Chinese green bond issuances that did not meet such standards raised US$24.2 billion.

This new revision is likely welcomed by the international investors. The consultation process on the Green Project Catalogue is open to public comments until 12 June, with the final announcement of the Green Project Catalogue set to be made later in 2020.

What would be removed from the previous catalog:

  • Large ultra-supercritical or supercritical coal-fired power plants, which were previously included as energy-saving projects.
  • Projects that process coal to remove impurities.
  • Ventures that produce fuels and fuel additives including gasoline and diesel with higher environmental standards.

What will be added to the new catalog:

  • More clean energy projects, including hydrogen, geothermal, tidal power, biomass, energy storage, and carbon capture and sequestration.
  • A new category of “green services” which includes trading carbon emission credits and renewable energy certificates, as well as demand-side management in the power market and designing green industrial projects.
  • Infrastructure supporting new energy vehicles including distributed charging points and hydrogen charging stations.