China aiming for $46bn green bonds market in 2016

Various important organizations, including the state council, the national development and reform commission (NDRC), and China’s association of interbank market dealers, released guidelines to direct financial institutes on how to issue green bonds. “Based on China’s national conditions, China intends to develop the rules using the government’s financial department (not private sectors),” said Jun, who confirmed that the procedure should be completed over the next few months.

After legal instruments to obtain green bonds became available, China Industrial Bank and Shanghai Pudong Development Bank applied separately for the issuance of USD7.7bn worth of green bonds in January, USD4.6bn of which have already been issued. Qingdao Bank were granted with USD1.238bn green bonds in February, with applications from other banks said to be queuing for approval.

To develop the green bonds market, more third party certifiers are required to join the scheme. There is currently only one organization, the Research Center of Climate and Energy Financing (RCCEF) at China’s Central University of Finance and Economics that can provide the certification service for green bonds evaluation, which is far below what is required.

Meanwhile, Jun along with some other Chinese financial experts hope that the green bonds might obtain the same duty-free benefits that treasury bonds enjoy, which would greatly encourage the issuance of the bonds. This however, is considered to be a tough task, as the potential benefits are currently under consideration within the relevant governmental departments.

It is essential for the success of the green bonds market that it receives backing from high levels of the government, which it looks as if it may be obtaining. On a summit forum, governor of PBoC Zhou Xiaochuan said clearly that the People’s Bank of China (PBoC) will work closely with other governmental departments to support the development of China’s green financing market.