Green Finance & Development Center (GFDC)

Congratulations for this new report on #China's #greenfinance trends and opportunities 2023-2024 written by Dr. Jing Zhang, Ziying Song and Dr. Christoph NEDOPIL WANG published in another great cooperation with the Griffith Asia Institute. Key findings: - The PBOC extended the implementation of #carbon-reduction support tool to 2024, and included more foreign banks and local corporate banks. The clean #coal re-lending program, set to expire at the end of 2023, has a remaining quota of RMB 25.2 billion (USD 3.57 billion) from its total allocation of RMB 300 billion (USD 42.45 billion). Continuation and additional funding are uncertain, but the remaining allocation is likely to be used up. - Green #loan balance reached RMB 30.08 trillion (USD 4.256 billion) at Q4 2023, marking a 36.5 per cent year-on-year increase and constituting 12.7 per cent of the total loan balance. - Green #bond issuances decreased by 4.4 per cent in volume in 2023, accounting for 1.17 per cent of the overall bond market. - Green #insurance lacks comparable data due to institutional reforms and continuous policy adjustments. However, scattered information suggests that premiums totalled RMB 229.7 billion (USD 32.5 billion) at Q4 2023, and the outstanding investment in the green industry amounted to RMB 1.67 trillion (USD 236.3 billion) at Q2 2023. - China’s national #carbon market traded 212 million tons in 2023, with annual transaction value growing to RMB 14.44 billion (USD 2.04 billion) from RMB 2.81 billion (USD 397.62 million) in 2022. This growth is primarily due to the biennial compliance cycle, with 2022 being a non-compliance year, while daily transaction volume data does reveal a noticeable compliance-driven pattern. - #Transition finance experienced a 38.7 per cent decrease in volume, primarily due to unclear rules regarding fund utilisation. This lack of clarity has posed challenges for transition bonds, particularly in navigating market interest rates. Enjoy the full report here https://lnkd.in/gkEtkjU2

Our new study “China coal exit: Opportunities for China-led financing of early phase down of coal-fired power plants in Pakistan and Vietnam” evaluates the financial opportunities through early retirement of #coal-fired power plants (CFPPs) of six #China-sponsored plants in #Pakistan and #Vietnam. The study’s findings challenge the common assumption that young CFPPs in Asia are difficult to retire due to their age, suggesting that early retirement can actually increase the enterprise value of these plants, particularly when combined with renewable energy investments: Increase in Enterprise Value with Early Retirement: - all six plants in Vietnam and Pakistan show an increase in enterprise value when asset/portfolio refinancing is applied to facilitate early retirement. - early retirement could be financially beneficial for investors, contrary to the belief that it would be costly due to the young age of the plants. Tripling Enterprise Value with #Renewable Energy Investments: - Comining asset refinancing with investments in renewable energy can triple , the enterprise values of the CFPPs compared to the value under the original power purchasing agreement (PPA). - this offers a significant financial incentive for investors to consider early retirement of CFPPs and reinvestment in renewable energy. Financial Benefits for Investors: - investors could financially benefit from the early retirement of CFPPs. - This is particularly true for younger plants, which can retire earlier due to higher relative debt burdens and financing costs in the early years of operation. The study recommends that Chinese companies and financial institutions engaged in overseas CFPPs consider reducing their exposure by shifting to renewable energy investments. The research was conducted by the Griffith Asia Institute in collaboration with Climate Smart Ventures, and supported by the Coal Asset Transition Accelerator (CATA). Authors are Dr. Christoph NEDOPIL WANG, Lawrence Ang, Matthew Carpio, and Mengdi YUE. https://lnkd.in/dbvgM463

Fresh off the press in collaboration with the Griffith Asia Institute: the #China #beltandroadinitiative #BRI Investment Report 2023. Key insights include: - 10 years after the announcement of the Belt and Road Initiative (BRI), cumulative BRI engagement breached the USD 1 trillion mark (USD1.053 trillion), with about USD634 in 3construction contracts, and USD419 in non-financial investments - China’s #energy related engagement in 2023 were the #greenest in absolute and relative terms in any period since the BRI’s inception reaching USD7.9 billion; - China is increasingly investing in electricity #transmission (over USD7 billion); - In 2023, particularly the #technology (+1046%) and #metals and #mining (+158%) grew. - #African countries became the largest recipients of Chinese engagement, overtaking Middle Eastern countries; - In global comparison, Chinese overseas engagement grew, while global FDI into emerging economies in 2023 dropped significantly;   For #2024, we see further growth of Chinese BRI engagement with a strong focus on BRI country partnerships in #renewable energy, mining and related technologies; Potential future engagements can be expected in six project types: manufacturing in new technologies (e.g., batteries), renewable energy, trade-enabling infrastructure (including pipelines, roads), ICT (e.g., data centers), resource-backed deals (e.g., mining, oil, gas), high visibility or strategic projects (e.g., railway).