What are the practical results of the green finance reform and innovation experiment in the past five years?

Source: People's Bank of China, State Administration of Financial Supervision and Administration

The staff of the State Grid Quzhou Power Supply Company checks the carbon account system.

Photo by Wu Wentao

The Guangdong Branch of the Industrial and Commercial Bank of China (ICBC) Guangdong Branch supported the construction of the Yuedian Weaving Farm Agricultural Photovoltaic Comprehensive Development Project, with an annual power generation capacity of more than 380 million kWh and a saving of 117,000 tons of standard coal.

Courtesy of Guangdong Yuedian Yangxi New Energy Co., Ltd

The development of green finance is an important driving force for achieving green development. In August 2016, the "Guiding Opinions on Building a Green Financial System" was released, and China became the first country in the world to be promoted by the government and issue policies to explicitly support the construction of a "green financial system". In June 2017, the executive meeting of the State Council decided to select some places in the five provinces (regions) of Zhejiang, Jiangxi, Guangdong, Guizhou and Xinjiang to build green finance reform and innovation pilot zones with their own focus and characteristics. Chongqing, Gansu Lanzhou New Area and other areas were subsequently approved to build green finance reform and innovation pilot zones.

At present, the first batch of green finance reform and innovation pilot zones have completed a five-year trial period, what practical results have been achieved in the green finance reform and innovation experiment? The reporter recently conducted an interview in Quzhou City, Zhejiang Province.

Financial resources provide strong support for the comprehensive green transformation of economic and social development, and guide the concept of green development to become more popular

Crushing, screening, high-temperature pressing, cooling, packaging...... In the factory of Jiangshan Hualong Energy Development Co., Ltd. in Jiangshan City, Quzhou, a production line of "turning waste into treasure" is working automatically, and more than 10 tons of wood chips are made into biomass pellet fuel per hour.

"Biomass pellets are easy to store and transport, and have good combustion performance, high calorific value, and significantly reduce carbon emissions and sulfur emissions. For the factory, burning biomass pellets for heating is conducive to environmental protection and emission reduction, and the cost of transforming the boiler is relatively low, which is very popular with surrounding enterprises. Yang Hui, the head of the company, said.

There are more than 100 door-to-door enterprises in Jiangshan City, and the city's door industry (whole house customization) industry output value was 9.02 billion yuan last year. In order to promote the green development of the wooden door industry, in recent years, the local government has focused on solving the problem of waste disposal such as sawdust, and the development of biomass pellet manufacturing industry is an important move. Yang Hui is very optimistic about the market's prospects, and two years ago, he planned to increase his investment and apply for a green loan from a local bank.

"The industry to which the company belongs is in line with the environmental protection orientation, and the business situation is also good. I heard that the bank's carbon account loan can be raised and the interest rate can be lowered according to the environmental protection situation of the enterprise, but the wish was disappointed. Yang Hui said.

"According to the information of the company's carbon account, the evaluation result of the carbon emission intensity per unit of industrial added value of the enterprise is 'red', indicating that the energy consumption of the enterprise in the same industry is relatively high. According to the requirements of relevant loan products, loan increases and interest rates are not eligible. The staff of Jiangshan Rural Commercial Bank explained at the time.

The experience of applying for a loan has deepened Yang Hui's understanding of green and low-carbon development: "It is not enough for the product itself to be 'green', and the production process must be more environmentally friendly. In the process of expanding investment and optimizing production lines, energy conservation and emission reduction are the key directions. "In 2022, the company introduced a number of production equipment with higher energy efficiency and increased sewage treatment capacity. At the end of the year, the evaluation result of carbon emission intensity per unit of industrial added value of enterprises was increased from "red" to "light green", which became a "stepping stone" for low-interest loans. Yang Hui's company's raw material procurement scope has been expanded to include agricultural waste, driving green production and increasing income for surrounding farmers.

"In the past, it was a hassle to deal with rape stalks and camellia husks. Now part of it is used to return to the field, and part of it is sold as fuel raw materials, which can increase the income by about 200,000 yuan a year. Xiao Yuanqin, a large grain grower in Daqiao Town, Jiangshan City, said.

"Night-time production, multi-use valley electricity, strengthen monitoring, reduce pollution...... Now, enterprises are paying more and more attention to 'low-carbon' and consciously taking the path of green development. Yang Hui said that with the support of green financial services, a number of local enterprises of the same type have accelerated their development to form a characteristic industrial cluster of circular economy for the utilization of sawdust industrial solid waste, driving the common green development of upstream and downstream, and achieving a win-win situation of economic, environmental and social benefits.

In Quzhou, green finance continues to accelerate the pace of innovation, helping more and more enterprises in the industry to achieve transformation and upgrading.

Local banks actively support the informatization, intelligent and green upgrading of traditional manufacturing industries, and continuously improve credit support for energy conservation and environmental protection transformation, new energy projects, waste recycling and other fields. Zhejiang Tianpeng Animal Husbandry Co., Ltd. obtained the first loan for the "Agricultural Carbon Neutrality" project in Quzhou City in the form of live mortgage of livestock, which was used to build a "building ranch". The company uses an intelligent breeding model to convert livestock urine and manure into organic fertilizer and electricity to achieve energy conservation and emission reduction.

"Supporting the green transformation of traditional industries is the focus of Quzhou's green finance reform and innovation. Financial resources not only provide strong support for the comprehensive green transformation of economic and social development, but also effectively play a guiding role in helping the concept of green development to become more deeply rooted in the hearts of the people. Lan Chunfeng, director of the Quzhou Supervision Branch of the State Administration of Financial Supervision and Administration, said.

Build a comprehensive service platform for green finance, build and strengthen financial service infrastructure, solve the pain points and difficulties in the development of green finance, and improve the quality and efficiency of green financial services

In recent years, the concept of carbon accounts has become increasingly known. What does the carbon account look like? The reporter got a clear answer in the Quzhou Energy Big Data Center.

"Carbon account is a data governance tool and an important infrastructure for green finance, which can intelligently monitor, dynamically calculate and scientifically evaluate the carbon behavior of various social entities, and provide data support for the government's precise carbon governance, enterprise energy conservation and carbon reduction, and individual green and low-carbon life. For example, by collecting data on all types of energy such as cold, heat, electricity, coal, and gas, the carbon account can timely and accurately reflect the carbon emissions and energy conservation and emission reduction effects of the business entity. Zhou Kai, deputy director of the technical department of State Grid (Quzhou) Integrated Energy Service Co., Ltd., said that at present, Quzhou's carbon account system has covered more than 4,000 legal entities and more than 2 million individual entities in industry, agriculture, energy, transportation, construction and other fields.

Zhou Kai introduced that in the process of promoting energy conservation and carbon reduction of enterprises, there are pain points such as inconsistent accounting standards, inaccurate carbon emission data, and unscientific assessment and evaluation. To this end, the carbon account system collects enterprise energy consumption data in real time and comprehensively, and applies the government data sharing platform to integrate data resources of multiple departments to establish a basic data warehouse of carbon account covering energy consumption data, economic data, and other carbon-related data. On this basis, the innovative enterprise carbon emission intensity labeling evaluation method, from the three dimensions of industry advancement, regional contribution, and main effort, the carbon emission data and product output, industrial added value, tax and other economic data are organically integrated and multi-dimensional analysis, and the enterprise is given a four-color carbon emission intensity grade, so as to realize the accurate portrait of enterprise carbon evaluation, and generate a carbon credit report.

How can carbon accounts promote the development and innovation of green finance? Banks can obtain corporate carbon credit reports and provide differentiated credit policies according to different carbon emission levels after the authorization of enterprises; insurance institutions rely on carbon account labeling to carry out innovation from the three dimensions of system, product and service to provide accurate services for business entities. According to the data, as of the end of 2023, the balance of carbon account loans in Quzhou was 76.284 billion yuan.

"For banks, how to efficiently and accurately identify the objects of green financial services is a difficult point. After the establishment of the carbon account, the energy conservation and emission reduction behavior of the business entity can be well documented, which provides an important quantitative reference for the bank, and at the same time effectively reduces the cost of the bank to understand the real operation status of the enterprise, and improves the quality and efficiency of financial services. The relevant person in charge of a local bank said.

The use of carbon accounts continues to expand. Quzhou City has innovatively launched the bank's "personal carbon account", which provides customers with differentiated preferential policies in terms of credit line, loan interest rate, handling process, etc., and guides people to practice a green lifestyle through incentives by mining big data such as green payment, green travel, and green life in the bank account system, converting personal carbon emission reductions into personal carbon account credits, and providing customers with differentiated preferential policies in terms of credit line, loan interest rate, and handling process according to the points, and guiding people to practice a green lifestyle through incentives.

"Go out to ride a shared bicycle in the city, and pay the water and electricity bills online...... A green lifestyle can accumulate carbon credits and redeem them for daily necessities at bank outlets. At a carbon credit gift exchange point at a bank outlet, Xiao Yang returned with a full load.

From the perspective of the green finance reform and innovation pilot zones, building various green finance comprehensive service platforms and building and strengthening financial service infrastructure, including carbon accounts, have become an important starting point for solving the pain points and difficulties in the development of green finance and improving the quality and efficiency of green financial services.

Lanzhou New Area in Gansu Province has launched the "Green Finance Pass" comprehensive service platform to provide integrated services for the identification and rating of green projects, the release of financing needs and the docking of banks and enterprises, the construction of green and low-carbon new infrastructure represented by green data centers in Gui'an New Area of Guizhou Province to create a gathering place for financial infrastructure, and the establishment of professional collegial panels for green economic disputes in Guangzhou and other places in Guangdong Province to optimize legal services in the field of green finance...... In addition, a number of provinces where green finance reform and innovation pilot zones are located have set up a comprehensive green finance project library, a special project library for green investment and financing, and a special fund for pollution prevention and control to help solve the problem of information asymmetry between the government, financial institutions, and enterprises.

"Empowering financial services with advanced technologies such as big data and artificial intelligence to achieve green information sharing and co-construction, efficient bank-enterprise docking, and precise policy matching is conducive to consolidating the foundation for the development of green finance. Dong Ximiao, chief researcher of Zhaolian, said.

Improve the organizational system of green finance, promote the construction of green franchise institutions, provide differentiated and diversified services more accurately and effectively, and better improve the supply level of green finance

Visiting the green finance reform and innovation pilot zone, the reporter observed that improving the green finance organization system and promoting the construction of green franchise institutions is an important part of promoting the high-quality development of green finance in various places.

How can green franchise institutions better provide green financial services? The process of launching an "industrial photovoltaic loan" product reflects the value of "specialization".

In recent years, photovoltaic panels have been built on the roofs of many factories in Zhejiang Province. This can not only provide clean electricity for enterprises and effectively reduce electricity costs, but also play a role in heat insulation and reduce cooling energy consumption in summer.

In the process of daily visits to enterprises, the staff of the franchise branch learned that in the past, most of the rooftop photovoltaic projects were invested and constructed by professional photovoltaic enterprises for paid use by the factory. With the application and promotion of such projects, some enterprises with large electricity consumption have seen the environmental and economic benefits, and have plans to build their own photovoltaic projects. However, many business owners do not know about photovoltaic projects, and they do not know how to start with a large amount of capital investment in the early stage. Chen Xianghong, head of the green franchise branch of Jiangshan Rural Commercial Bank Economic Development Zone, said that after the franchise branch found the market demand and pain points, it immediately explored the launch of customized services.

Chen Xianghong said that after consulting and demonstrating with photovoltaic practitioners and experts, and after many discussions, the bank believes that it is feasible to support enterprises to build their own photovoltaic power plants.

"On the one hand, banks can strengthen the docking of resources to help enterprises make up for the technical shortcomings of self-built photovoltaic power plants; on the other hand, from the perspective of risk control, enterprises that are willing to build their own photovoltaic projects often have good qualifications and strong strength, and if the photovoltaic power generation projects of enterprises are completed and put into operation, the cost of electricity will be greatly reduced, and the electricity cost saved is another form of 'income', and the source of repayment is guaranteed. Chen Xianghong said that the "industrial photovoltaic loan" came into being, helping many enterprises to realize the plan of self-built photovoltaic power plants.

Building a franchised talent team and providing enterprises with precise green financial services is where the value of green franchise institutions lies. In addition, from the perspective of green franchise institutions in many places, the head office of banks often gives certain policy preferences to green loans of franchised branches, such as establishing exclusive approval channels and giving interest rate subsidies, etc., to further stimulate the enthusiasm of green franchise institutions to serve green development.

"In order to further promote the high-quality development of green franchise institutions, Quzhou regularly evaluates and monitors green institutions, and implements standardized and dynamic management of green characteristic branches. Lan Chunfeng said that as of the end of last year, the proportion of green credit of green institutions in the city was 53.3%, which was 20.67 percentage points higher than the proportion of green credit in the city.

Looking at the whole country, many places are actively exploring the establishment of green finance divisions or franchised institutions. Chongqing has formulated leading policies and systems such as guidelines for the construction of green financial organization systems, clearly defined the business standards and performance orientation of green franchise institutions, promoted Chongqing Rural Commercial Bank and Bank of Chongqing to build "Equator Bank", built internal management systems and business processes in line with Equator Principles with international standards, and continued to increase the provision of green credit.

"Building franchised institutions and enriching the types of institutions is conducive to providing differentiated and diversified services more accurately and effectively, and better improving the supply level of green finance. Zeng Gang, director of the Shanghai Finance and Development Laboratory, said.

The green finance reform and innovation experiment uses green finance reform to drive the supply-side structural reform of the financial sector and continuously optimize the allocation of financial resources. According to the data, from 2018 to 2021, the average annual growth rate of green credit in the pilot zone was 21.03%, which was 5.59 percentage points higher than the average growth rate of all loans in the pilot zone, and the construction of the pilot zone achieved the expected results.

How to further promote the innovative development of green finance and provide high-quality financial services for economic and social development?

Experts believe that from the perspective of industry practice, green finance and inclusive finance have shown a certain degree of intersectionality, and there is great potential to promote integrated development, and the synergistic effect of the two supporting and complementing each other should be further exerted in the future. Guangzhou supports pig breeding with green finance, realizes the implementation of the "insurance + futures + banking" project, stabilizes the supply of live pig market, and builds a line of defense against price fluctuations; Ganjiang New Area in Jiangxi Province has launched citrus "weather + price" insurance to provide support for the comprehensive income of fruit farmers...... A series of inclusive and green financial services have effectively supported rural households to increase production and income, and helped promote the comprehensive revitalization of rural areas.

In addition, Lan Chunfeng believes that in terms of serving new industries and technologies, it is possible to explore the establishment and improvement of a collaborative mechanism between green finance and science and technology finance to promote the docking of investment and financing in the field of green technology research and development. At the same time, experts suggest that we can promote the coordinated development of different types of green financial products such as credit, bonds, insurance, and funds, further enrich supply, and promote the formation of a good momentum of all-round green finance reform and innovation.