Bonds Jun 02

Green bonds get a top-level shake-up

A realisation that industrial policy and bonds for environmentally friendly activities must be revised has led to a new four-level classification system to meet international standards

Green bonds get top-level shake-up
Solar panels are seen on uncultivated land on a hill in Huangsha village near Ganzhou city in eastern China's Jiangxi province in August 2019. Local officials organised this to help rural households with little regular income and few resources. The construction of a 3-kilowatt photovoltaic power station brings an average annual generating capacity of 3,300 kilowatt-hours over its 25 years of service and annual revenue of more than 65,000 yuan per family. The villages are also developing quickly with the availability of a new energy source. Photo: Zhu haipeng / Imaginechina via AFP

(ATF) 'Green bonds' refers to raised funds that are dedicated to support compliance with environmentally friendly industry or 'green' economic projects. They are bonds that are issued in accordance with legal procedures and agreed repayments. But there has been a realisation that industrial policy and the development of 'green bonds' must be revised so they meet changing technical standards.

This has led to the issuing of a 2020 version of the "Green Bond Catalogue", which has increased the number of categories for green bonds from three to four.

In order to maintain the advancing nature of the "Green Bond Catalogue" and meet international standards, and to enhance China's international voice in the field of green bond standards, the four-level classification has deletes categories of "clean utilisation of fossil fuel energy".

The updated guidelines also take into account support for a green industry chain of integrity and bars some scientific feasibilities in the "Green Industrial Guidance Catalogue (2019 version)", including projects involved in the relevant trade and consumer financing.

The first-level classification includes six categories: energy conservation and environmental protection industry, clean production industry, clean energy industry, ecological environment industry, infrastructure green upgrade, and green services.

The secondary and tertiary classifications continue to use the basic ideas of the "Green Bond Support Project Catalogue (2015 Edition)", and add the "Green Industry Guidance Catalogue (2019 Edition)" related to green agriculture, sustainable construction, water conservation and unconventional projects. The third is the classification level of water resource utilisation, which has expanded the scope of supporting projects in the fields of agriculture and ecological protection.

The new four-level classification is consistent with the the previous three-level classification of the "Green Industry Guidance Catalogue (2019 Edition)" and basically covers related green industries and projects in the "Green Industry Guidance Catalogue (2019 Edition)".

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