China expected to allow green bonds to fund clean coal projects in potential blow to climate change fight
- China consumes half of the world’s coal and generates 60 per cent of its electricity from coal
- The move would put the world’s largest emitter of greenhouse gases at odds with the European Union on green financing standards
China’s central bank is expected to take the controversial decision to include clean coal projects in the official catalogue of items that are allowed to be financed by green bonds, a technical but significant move that could put its environmental financing standards at odds with the European Union and even affect global efforts in fighting climate change.
The People’s Bank of China (PBOC), which oversees green bond issuance on the interbank market in China, is expected to officially allow coal projects which use enhanced technologies to cut air pollution but leave carbon emissions largely unaccounted for to be financed by green bonds, according to several people who have been briefed on the matter.
The designation is important because it will encourage investors to fund such projects as climate-warming coal fired power plants while claiming they are financing green development.
The PBOC has been seeking input from other government agencies, state-owned energy companies, financial institutions, green groups, and international organisations about the potential impact of the decision.
There has been very limited resistance to putting clean coal on the list of projecting that can receive green bond financing
“There has been very limited resistance to putting clean coal on the list of projects that can receive green bond financing,” according to a person who took part in the latest round of consultations last week hosted by the China Society for Financing and Banking, an organisation under the central bank.
