China home to world's biggest green bond market

With its green bonds issued in the first half of the year reaching 75 billion yuan, or 33 percent of the world's total issued in this period, China has quickly become the world's largest green bond market, a central bank economist said here Friday.

The country's demand for green bonds is estimated to be 20 times as much as the current financing, said Ma Jun, chief economist of the research bureau of China's central bank, at a green finance forum on how to use financial instruments to boost development of low-energy and low-pollution industries and tackle climate change.

China has taken a series of measures after promising to hit peak CO2 emissions by around 2030 and slash CO2 emissions per unit of GDP by 60-65 percent from the 2005 level at the Paris Conference on climate change last November.

The two milestone documents, the Green Project Catalog issued by the Green Finance Committee of the China Society of Finance and Banking and the Guideline on Green Bond Issuance by the National Development and Reform Commission in December, have given a solid boost to the country's green bond market.

"In more than half a year, China not only leads in market share, but also in the analytic technique for environmental risks," said Ma.

This March, Industrial and Commercial Bank of China launched a new methodology to help banks understand how stricter environmental protection standards change customers' liability as well as banks' reputations in the eyes of shareholders and depositors.

"The methodology has won a lot of praise from overseas bankers and will influence the global green bond practice as the Chinese market is growing so rapidly," said Ma.

He also noted that China has put green finance high on the agenda for its G20 presidency and created a study group. It will also make recommendations on green finance at the upcoming G20 meeting in Hangzhou this September.

In order for green bonds to play a bigger role in climate change solutions and economic upgrading, the economist said that discount guaranteed loans should be used as an incentive to expand market share, and standards for green bonds must be clarified.

A third-party credit rating agency is inevitable to reduce financing costs of the green bond market, while listed companies must be required to disclose their environmental information, he said. Endi