On December 15, 2009, the "Summit Conference on 2009 China Environmental Protection Industry Development", hosted by the Ministry of Environmental Protection and co-sponsored by Bank of China, was held in Beijing. Wu Xiaoqing, Vice Minister of Environmental Protection, and Xiao Gang, Chairman of Bank of China, attended the opening ceremony of the Summit. Xiao also delivers a keynote speech titled "Innovation in Financial Services to Support Environmental Protection Industry".
In his speech, Chairman Xiao indicates environmental protection as a common concern of the world. He says that in the process of rapid industrialization and urbanization with the arduous tasks of modernization and harmony between economy and environment, China needs to change the pattern of economic development by establishing an environment-friendly industrial structure, growth pattern and consumption model through strengthened ecological protection and energy resource conservation. (Please refer to the attachment for the full text of the speech)
At the Summit, experts and scholars of government institutions and famous universities such as the National Development and Reform Commission, the Ministry of Commerce, the Ministry of Environmental Protection and Tsinghua University, together with financial experts invited by Bank of China as well as relevant authorities of major domestic environmental protection enterprises share an in-depth analysis and discussion on environmental protection policies, market forecasts, investment and financing in environmental protection projects, development of environmental protection industry, overseas development of environmental protection enterprises and other issues.
Furthermore, Bank of China and the Ministry of Environmental Protection signed the Memorandum of Cooperation on Support to Development of Environmental Protection Industry to strengthen strategic cooperation in promoting China's environmental protection industry and supporting relevant enterprises.
Attachment: Full text of the address given by Chairman Xiao Gang at the "Summit Conference on 2009 China Environmental Protection Industry Development".
Innovation in Financial Services to Support Environmental Protection Industry
Xiao Gang, Chairman of Bank of China
Environmental protection has become the focus of the world. Against the backdrop of a transforming international economic environment, climate change and energy resource security are drawing more and more attention. With new technologies of clean energy, energy conservation and emission reduction emerging, all countries are seeking for a balance between economic development and environmental protection to achieve a win-win result.
After the global economic crisis, every country began to look into the commanding points of industries which will drive the next round of economic growth. In the process of rapid industrialization and urbanization with the arduous task of modernization and harmony between economy and environment, China needs to change the pattern of economic development by establishing an environment-friendly industrial structure, growth pattern and consumption model through strengthened ecological protection and energy resource conservation. In a context when environmental protection industries such as clean energy, energy conservation and emission reduction are becoming strategic industries for all countries, China is making effort to accelerate the implementation of ten major energy-saving projects including the energy conservation in buildings, green lighting and electrical motor reformation, to cut substantial atmospheric pollutant discharge in thermal power generation, iron & steel and other industries and to develop new energy and renewable energy. With the accelerating development of low-carbon emission industrial systems, the environmental protection industry will become a new growth point. To meet this demand, commercial banks should promote service in the following aspects:
First, promotion of "green credit". Through restrictions on loans to outdated capacities and techniques in industries with high energy consumption, heavy pollution and excess capacity, and intensified support for the environmental protection industry, especially for energy conservation and emission reduction, commercial banks will gradually establish a long-term green credit mechanism. Currently, Bank of China adopts a one-vote veto on "environmental protection" index in credit approval to strengthen the credit management of industries with high energy consumption and heavy pollution. It has defined specific requirements on energy conservation and emission reduction to highlight the environmental safety factors in pre-loan, loan extension and post-loan management. It has also established a dynamic system to track, monitor and analyze mechanism and gives a name list of high energy-consumption and heavy-pollution enterprises. Bank of China has also issued a series of green credit products to support projects conducive to environmental protection and ecological environment improvement such as clean energy, sewage treatment, garbage disposal, power plant desulfurization and dust removal as well as river and lake renovation. In the first nine months of this year, Bank of China increased the credit line by tens of billions of yuan to sewage treatment and river and lake renovation projects. In the future, the bank will intensify support for profitable low-emission and low-pollution projects, environmental protection technological transformation projects, and research and development of environmental protection equipment, products and technologies.
Second, exploration of more diversified financial services. By taking full advantage of multi-industry platforms, Bank of China has set up a diversified financial service system to provide environmental protection enterprises with investment bank services including IPO on domestic and overseas stock markets, bonds issuance, merger and acquisition, restructuring, financial advisory, consultation and research. It utilizes domestic and foreign capital markets to offer investment management and asset management services to environmental protection enterprises. It also provides environmental protection projects with insurance coverage like property insurance, life insurance and overseas project insurance. Furthermore, it makes equity investment by pooling public financial resources through industrial investment funds, and offers personal financial services such as wealth management, mortgages and financial training to the management and other staff of environmental protection enterprises.
Third, development of innovative financial products. Commercial banks should push forward the study of carbon finance service based on Clean Development Mechanism (CDM), and introduce such services as CDM discounted cash flow, L/C guarantee to overseas buyers, forward exchange hedging, monitoring and control of international buyers' advance payment accounts, and support domestic enterprises in participating in international CDM trade.
Finally, cooperation with government authorities and relevant institutions. Commercial banks should follow up the trends of national environmental protection policies and industrial information so as to deepen the business cooperation with environmental protection administrative authorities, institutions and organizations, as well as with domestic and overseas carbon finance trading institutions.
I believe that under the leadership and driving force of the Ministry of Environmental Protection and with efforts of enterprises and the financial industry, China will make great achievement in environmental protection.
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