Deputy Director General Chen Huan addressing the “2011 International Clean Development Financing Forum”
2016-05-08
On 19th July, 2011, Chen Huan, deputy director-general of China CDM Fund Management Center, attended the “2011 International Clean Development Financing Forum –Award Ceremony for 10 Green Innovation Enterprises”, jointly organized by the management center, International Finance magazine, and the international environment resources regulatory agency under UNIDO. DDG Chen delivered the keynote speech “Building Innovate Financing Mechanism, Support Low-carbon Transition”, and presented awards to enterprises.
Building Innovate Financing Mechanism Support Low-carbon Transition
---speech by deputy director-general Chen Huan
Distinguished guests:
Good Morning
The 2011 International Clean Development Financing Forum is convened today. As one of the sponsors, China CDM Fund Management Center would like to congratulate the opening of the meeting, and express sincere gratitude to everybody’s support and participation.
With the rising global temperature and frequent extreme weather, climate change has received a lot of attention and become a hot topic of high-level international politic and economic meetings. Moreover, cooperation among countries on addressing climate change has been expanding. To respond climate change and develop in a green and low carbon way has become the common goal for all countries.
Since the reform and opening up 30 years ago, China has gained great achievements in economic development, with national strength and people’s livelihood improved substantially. However, resource shortage and other environment problems are getting serious. Such extensive development model is not sustainable. To change economic model and people’s lifestyle has become the strategic choice to achieve sustainable development and harmonious society.
Chinese government has taken actions to fight climate change, which has yielded some positive results. China issued the China's National Climate Change Programme in 2007, and formulated and amended Energy Conservation Law, Renewable Energy Law, Recycling Economy Law, Clean Production Promotion Law, Forest Law, Grassland Law, and Civil Building Energy Conservation Regulations, etc. Moreover, the Chinese government has constantly improved fiscal and taxation policies that encouraged energy efficiency and renewable energy, and put more investment on addressing climate change.
Chinese government committed that by 2020 CO2 emission per unit of GDP would be 40-45% below the level of 2005. This was a binding target in the national economic and social development plan. The 12th Five-year Plan also stipulated that in the future five years energy consumption per unit of GDP would decrease by 16%, CO2 emission per unit of GDP down by 17%. Meanwhile, the plan made climate change action a major way to transform economic growth model, and proposed resource-efficient and environmental-friendly consumption and production pattern.
Targets concerning energy consumption per unit of GDP and CO2 emission were assigned to local areas and industries, which would exert great impact upon development of national economy and enterprises. To achieve energy conservation and emission reduction, systemic and institutional innovation must proceed rapidly. Compared with developed countries, China’s low carbon development is lagging behind, particularly on how to utilize market mechanism to provide more capital to low carbon development. So we need to draw lessons from international experiences and innovate capital mechanism to promote low-carbon transition.
Finance is a major policy tool for macro-economic control and economic restructuring, and it will play an important role in addressing climate change. Since 11th Five-year Plan, China has been promoting energy conservation and emission reduction, new energy and renewable energy, and low carbon production and consumption model through more investment and subsidies, and by adjusting taxation and government procurement and incentive measures. The 12th Five-year Plan provided unprecedented binding targets and goals on climate change, to guide fiscal support on low carbon development.
China CDM Fund was established in 2007. It was the first national-level fund to support the cause of addressing climate change through innovative financing. It would make positive contributions to the fulfillment of energy conservation and emission reduction goals stipulated in the 12th Five-year Plan.
The concept of CDM Fund was from Kyoto Protocol. As one of the three flexible mechanisms and the only market-based mechanism, CDM could enable developed countries to cooperate with developing countries. Developed countries could meet part of their responsibilities under Kyoto Protocol by purchasing CERs of CDM projects. Meanwhile, developing countries could obtain technology and capital to promote sustainable development, and make contributions to the final achievement of goals under the climate convention.
Since the Kyoto Protocol took effect in February 2005, CDM international cooperation has been growing fast. It has proven that CDM not only provided technology and capital to developing countries, but also brought the concept to the public. While learning international experiences, enterprises of developing countries also recognized the commercial value of carbon emission reduction activities. At the same time, developing countries cultivated a lot of consultancies and learned international emission reduction standards through participating in global carbon market, which also provides knowledge base for MRV practices and will support domestic carbon market development.
As one of the contracting parties, China was very active in CDM project market. China prioritized renewable energy, energy efficiency improvement and methane recycling for CDM projects. The existing CDM projects involved wind power, small hydropower, biomass power, waste incineration, landfill gas, farm biogas reuse and coal-bed methane recycling, etc.
According to statistics from CDM review board, by the end of June 30th 2011, 1439 projects in China have been registered successfully, accounting for 45% of total projects. The estimated annual emission reductions of these projects will reach 310 MtCO2e, accounting for 63% of total emissions.
At present, international discussions on whether to extend the second commitment period of Kyoto Protocol has come to a deadlock, increasing the uncertainties of global CDM cooperation. However, the green, low carbon and clean development model has become a consensus in international society. Cooperation on energy, resources and environment has been flourishing. In many countries, how to utilize resources and energy in a sustainable way has become a strategic issue. Governments have kept increasing investment in this field, which made the prospect of low carbon development broader.
China has accumulated experiences, fostered talents and markets due to past cooperation on CDM. The green financing and carbon financing were improved constantly. The 12th Five-year Plan considered work on climate change as a major way to transform economic growth model, which provided support for the investment in CDM. Though the international cooperation on CDM projects after 2012 was full of uncertainties, domestic market still faces abundant opportunities. So CDM was undoubtedly a sunrise industry.
In response to the new situation in the field of climate change, CDM Fund will bring into full play its role as a platform of capital, action and information.
CDM Fund is innovative in the following 3 aspects:
First, CDM international cooperation could magnify its contributions from project level to country level in a sustainable way and thus better support domestic climate cause. CDM Fund invested not only in CDM projects, but also other areas like energy efficiency improvement, renewable energy, service industry. The Fund focuses on emission reduction in emerging industries and application of technological and market-based ways to reduce emissions.
Second, as seed capital, CDM Fund could mobilize market capital to support national response to climate change. The Fund will explore to innovate cooperation between domestic and international financial institutions, and raise more capital through guarantee, co-financing, etc.
Third, Looking forward, CDM Fund will support enterprises improve ability in participating in carbon finance besides capital input. Energy conservation and emission reduction projects must have carbon budge, which is an innovation. The purpose of carbon budget is: first, to have an objective assessment of the effect of energy conservation and emission reduction; second, to build enterprises' low carbon awareness and help them better utilize carbon asset; third, to lay the foundation for enterprises' participation in domestic carbon transaction and financing.
CDM Fund also served as a platform for financing. First, as a capital input platform, the Fund supported domestic actions on climate change of all levels. Second, as a capital cooperation platform, the Fund raised capital from many channels, such as government, international assistance, social and market capital. Third, as action cooperation platform, the Fund cooperates with various players to tackle climate change and also raise the whole society's participation. Forth, the Fund collected information on climate change in a wider range, and promoted sharing and communication.
At present, CDM Fund has started its investment business, to help raise more money for domestic energy conservation and emission reduction. Compared with the huge demand in our country, the Fund could only offer limited capital. However, the CDM Fund endeavors to cooperate with financial institutions to leverage more market and social capital. Through these efforts, the Fund will promote market mechanism, industrial development and public awareness, to further contribute to addressing climate change in China.
Thank you very much!
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