Aerial photo taken on April 12, 2022 shows a wind farm in Binhai New Area, north China's Tianjin. (Xinhua/Sun Fanyue)
BEIJING, June 8 (Xinhua) -- China's National Association of Financial Market Institutional Investors (NAFMII) will pilot a new debt instrument to facilitate the low carbon and green transformation of certain traditional industries, reported Xinhua Finance on Monday.
NAFMII announced on June 6 that proceeds of the bond product called transformation bond can only be used in low carbon transformation sector so as to support environmental improvement and efforts to cope with the climate change.
Eight traditional industries, including electricity, building material, iron and steel, non-ferrous metals, petrochemical, chemical, paper making and civil aviation sectors, were referred as the first batch of priorities for related enterprises to transform towards the low carbon and green development path.
Apart from the specified industries, projects and economic activities of two categories will be supported.
The first category covers those that have already entered the green bonds-backed projects catalogue but fail to meet related technical standards.
The second category includes projects or economic activities which stay in line with China's carbon peaking and carbon neutrality goals and function in pollutant and carbon emission reduction and improving energy utilization efficiency. For instance, projects qualified for the second category include but are not limited to clean production and efficient use of coal, clean utilization of natural gas, equivalent replacement of production capacity in the eight aforementioned traditional industries, green equipment and technology application, and others with low carbon transformation benefits.
As a supplement to green finance, issuers of the transformation bonds are also required to meet requirements on information disclosure on low carbon transformation, third party appraisal and verification, and proceeds management.
To avoid mismatched terms of the debt financing vehicle and proceeds use periods, NAFMII encourages companies of varied types to issue mid- and long-term low carbon transformation bonds to better propel their low carbon transformation.
NAFMII, founded on September 3, 2007, under the approval of the State Council of China, aims to propel the development of China's OTC financial market, which is composed of interbank bond market, inter-bank lending market, foreign exchange market, commercial paper market and gold market. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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