China’s New Green Bond Category to Include CCUS: Industry Call for Additionality Disclosure

China’s New Green Bond Category to Include CCUS: Industry Call for Additionality Disclosure for Climate Investors

Today, People’s Bank of China (PBOC) jointly with National Development and Reform Commission (NDRC) and China’s Banking Regulatory Commission (CBRC) issue a draft document of China’s Green Bond Category (2020) for Public Consultation. The latest category makes the remarkable progress in eliminating the clean usage of coal and adding carbon capture, utilisation and storage (CCUS) as an eligible area. The move will enable China’s Green Bond Standard consistent with common international practice related to avoiding coal in green bond.

Chinese energy firms express warm welcome to the change of China’s Green Bond Category. “Eliminate clean coal from the green bond category will provide industry a clear signal for reducing carbon emissions, while including CCUS is an excellent recognition of the technology’s climate mitigation potential’ The operation director Mr HU Liming from Reduce Carbon Limited (RC) a subsidiary of China Resources Power, one of 6 largest power company in China.

Hu also concerns the green bond label does not provide any tangible benefit and suggests such label should combine more concrete policy incentives to enable large-scale CCUS deployment in China. The technical advisor of RC, Mr Liu Muxin indicates the limitation of current green bond issuance is the world is not disclosing additionality and it would cause a waste of public fund if a project who was already commercially feasible in absence of the green label. Hu and Liu suggested industry or government to develop a niche climate bond category (or whatever name called) to tackle above issues, building on China’s green bond standard.

“The green bond category would definitely encourage industry’s confidence in investing in CCUS and in renewable technology. However, it would have forged a much more compelling story, if the new green bond category in China and in the world could assess and disclose additional climate or green benefits”, suggested Yang Hui, the deputy director of environment department at China Energy Engineering Group Guangdong Electricity Power Design Institute. “The energy industry would be keen to learn about what will be the impact on project finance is a bond is classified as green bond.”