China CDM Fund Management Center Signed“Green and Innovative Investment Business”Cooperation Agreement with Fujian Provincial Department of Finance and Industrial Bank
Recently, China CDM Fund Management Center (hereinafter referred to as “the CDM Fund”) signed Green and Innovative Investment Business Cooperation Agreement of Fujian Province with Fujian Provincial Department of Finance and Industrial Bank CO., Ltd (hereinafter referred to as “Industrial Bank”) in Fuzhou.
The CDM Fund is a policy-oriented fund established upon national approval and operated in market fund approach, with principles of supporting national efforts in combating climate change and promoting the sustainable, low-carbon and green development of the economy and society. By the end of June 2019, the CDM Fund has accumulatively implemented 284 green and low-carbon concessional loan projects in 26 provinces, municipalities and districts of the country, with a total loan of RMB 17.283 billion, and leverage social capital of nearly RMB a hundred billion.
“Green and Innovative Investment Business” is an innovation made by the CDM Fund to implement national green development strategy and also an important initiative to practice the principles of the 19th National Congress of CPC under new circumstances. Following relevant institutions, the CDM Fund, together with Fujian Provincial Department of Finance and Industrial Bank built up the “Green and Innovative Investment Business” of Fujian Province based on consideration, researches and discussions in the past half a year.
Fujian Province is one of the earliest provinces to carry out clean development concessional loans. Since its launch in 2011, Fujian Province has totally utilized clean concessional loans of RMB 595 million and leverage social capital of about RMB 4.7 billion. When the projects are completed, it’s estimated that as many as 6,408,200 tCO2e can be reduced annually. Industrial Bank, as the first Equator Bank of China, has been practicing the development idea of “making profits with moral good” and is developing hand in hand with the green ecological development of Fujian Province in the past 13 years. By the end of July 2019, the balance of green financial loan of Fujian Province supported by Industrial Bank is RMB 3.1657 billion and the balance of class credit business is RMB 2.0536 billon. It’s estimated to save the consumption of standard coal for 5,256,700 tons.
Fujian's “Green and Innovative Investment Business” cooperation model aims to support industrial activities in Fujian Province that are conducive to the generation of climate change benefits, including but not limited to renewable energy and clean energy development and utilization; technologically advanced energy-saving and emission reduction product development and industrialized production; centralized heating, cogeneration and waste heat utilization; building energy-saving and energy efficiency improvement; energy-saving technological transformation projects to improve industrial energy efficiency; green transportation; energy conservation and farming-beneficial projects, forest carbon sink projects, and equipment manufacturing projects related to energy-saving and emission reduction.
“Green and Innovative Investment” projects mainly make investment as creditor’s rights. In principle, the investment period of a single project is no more than 3 years. As to projects for public good and have long return on investment, the period can be extended to 5 years. The CDM Fund takes charge of project review and provides qualified projects with policy concession loans at an interest rate lower than the benchmark of People’s Bank of China in the same period. 20% and 25% lower for non-public good projects and public good ones respectively. Industrial Bank implements projects, conducts due diligence, guarantees for the capital provided by the CDM Fund in the form of financing guarantee and can also provides supporting capital to projects. Fujian Provincial Department of Finance organizes and coordinates project declaration, make carbon emission reduction budgets and gives moderate subsidy to loans to ensure energy-saving and carbon emission reduction projects can enjoy preferential support at an interest rate lower than that of the market. Meanwhile, departments of finance at all levels of Fujian are also allowed to recommend qualified projects to Industrial Bank.
The implementation of Fujian “Green and Innovative Investment Business” cooperation indicates that the Management Center, Fujian Provincial Department of Finance and Industrial Bank will continue to strengthen cooperation with each other under the new situation and jointly construct an institutional mechanism conducive to the development of energy saving and emission reduction and green and low carbon industry in Fujian Province. Such cooperation can help lower the financing cost of enterprises, increase their confidence in financing and mitigate their difficulties in financing. It’s estimated that after the implementation of this agreement, social capital of RMB 2.5 billion can be motivated if carrying out projects with a total loan amount of RMB 1 billion per year.
General Secretary Xi Jinping emphasized in the report at the 19th CPC National Congress that "developing green finance, strengthening energy-saving and environmental protection industries, clean production industries and clean energy industries" and "continuously implementing the Action Plan for Prevention and Control of Air Pollution and winning the Blue Sky Protection Campaign". This points out the direction for the next step of developing the “Green and Innovative Investment Business” and also shows a rare opportunity to make vigorous development. We will conscientiously implement the spirit of the 19th CPC National Congress, take the initiative to strengthen project development, give full play to the demonstration and leading role of the CDM Fund, and make positive contributions to national green and low-carbon development and ecological civilization construction of Fujian Province and the acceleration of construction of the new Fujian in new era.
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