China Pumps $1 Billion For Green Finance Projects
In a fresh sign that China is committed in its environmental efforts, the country's financial institutions spent about $1 billion in the first half of 2019 in initiatives supporting green finance. The amount was spent in projects aimed at curbing the use of coal and steps to shift to use of cleaner forms of energy.
A significant portion of the amount was spent in fossil fuels which the majority of China's financial institutions saw as the most significant participation in the fight against climate change.
Green financing is to increase the flow of investments coming from the public, private, and not-for-profit sectors into sustainable initiatives, with a particular focus on managing environmental risks and social risks. The concept was born out of the UN Environment's initiative to work with different countries, financial regulators, and the finance sector to participate in achieving the Sustainable Development Goals.
The initiative is unfolding successfully as about $30.7 trillion of worldwide funds were already allocated in green investments, according to a report from the Global Sustainable Investment Alliance.
As for China, the $1 billion green investments were issued by 13 coal projects from power plants that use coal, coalbed methane or coal-to-chemical projects. The country aims to reduce its coal use further by 50 percent until 2030. China managed to cut its coal to 59 percent from 68.5 percent in 2012.
In 2018, China issued nearly $31 billion in green bonds, becoming the second-largest country to do so. The number one spot belonged to the United States. Nevertheless, it accounted for as much as 18 percent of the worldwide green bond issuances that year.
Meanwhile, more than 150 representatives from 40 global banks and major financial institutions gathered in Beijing for the First Plenary Meeting of the Green Investment Principles or GIP for the Belt and Road on August 18 in Beijing. The latter is a project aimed at promoting environmentally responsible investments under the Belt & Road Initiative.
The GIP was launched by China Green Finance Committee and the City of London on November 2018. Specifically, the GIP constitutes a set of principles dedicated to promoting sustainable investments in the Belt and Road region. It was also signed by international finance firms with the August 18 assembly being the first event of its kind for the GIP members.
A Secretariat with offices in Beijing and London was set up for GIP to ensure that all signatories are well-aligned and attend to their responsibilities in furthering the groups' green investment capacities. The group has also set up a green project database to ensure that there is clear communication between lenders and project managers.