OREANDA-NEWS. April 12, 2013. In recent years, Agricultural Bank of China Limited (ABC) has been actively advocating and practicing the strategy of low-carbon finance. It integrates adjusting and optimizing the credit structure with promoting enterprises to conserve energy and prevent environmental and social risks. By intensifying the financial innovation, it has launched multiple innovative green financial products, which has effectively supported the development of green industries and green renovation of traditional industries in China.

Tapping into the “carbon finance” market

In order to help Chinese enterprises improve their ability to bargain in international carbon trading, ABC took the lead among domestic financial institutions to launch CDM advisory business. Since 2008, the number of CDM projects it has evaluated and served reached 22, covering 7 provinces and involving hydropower, wind power and biomass power. As a result, the annual emission has been reduced by 1.2 million tons, equivalent to the reduction by suspending all the taxis in Beijing off roads for one year. In 2012, the three CDM projects that ABC provided full-range services for were successfully registered at the United Nations, reducing the annual emission by 250,000 tons.

Accordingly, ABC became the only large-sized state-owned commercial bank in China that could provide domestic enterprises with specialized investment banking service in “carbon finance” and has successful cases. (Note: Carbon emissions trading is a marketable financing mechanism for energy saving and emission reduction and an environmental compensation mechanism used by the international community to cope with climate change and control greenhouse gas emission. All the financial products and services launched by international institutions for carbon emission trading are referred to as “carbon finance”.)

At the end of 2012, ABC launched advisory services for “emission reduction resale of registered CDM projects” based on the existing CDM advisory business. By making use of its advantageous platform, channels and information, ABC provides follow-up emission trading advisory service for domestic enterprises engaged in emission reduction initiatives under registered CDM projects to improve their bargaining ability. Ever since the service was launched, it has provided over 10 enterprises with preliminary information and advisory services and 4 enterprises with official advisory services, resulting in an annual emission reduction of 170,000 tons.

Expanding the emerging market of energy saving and emission reduction

In order to help enterprises address “difficulty in financing,” ABC innovates in credit and investment banking products to expand financing channels and improve financing ability of enterprises for energy conservation and emission reduction. At the end of 2012, it successfully launched the first “Energy Management Contracting (EMC) financing” business among domestic commercial banks by providing Shandong Iron & Steel Group Co., Ltd with advisory and financing service. With advanced energy-saving technologies introduced, the company could save RMB30 million in energy consumption costs and reduce its pollutant emission by 110,000 tons each year, effectively cutting the production cost and pollutant emission. The product is under pilot application in Beijing, Shanghai, Shandong and Hebei, and expected to be gradually spread nationwide within the year.

Accelerating green renovation of traditional industries

Guided by the Bank’s policy of green financial product innovation, ABC branches also launched innovative financial products such as pledge by intellectual property right and “emission right” and financing leasing. The objective is to improve the financing ability of local enterprises for energy conservation and emission reduction projects and accelerate the green renovation of traditional industries.

In 2012, ABC Zhejiang Branch cooperated with the local branch of the China Banking Regulatory Commission to support the local textile and printing and dyeing industries with upgrade and renovation. By offering innovative green credit products such as loans pledged by intellectual property right and “emission” right, it helped 15 printing and dyeing enterprises with green transformation, and the loan balance reached RMB311 million. These helped the traditional high-pollution enterprises address their financing difficulties in green transformation and upgrade.