PBOC Provides Cheaper Financing to Banks Lending to Green Businesses
(Bloomberg) – China’s central bank will offer cheap finance to banks that lend to companies working towards the national goal of reducing carbon emissions.
The People’s Bank of China will lend money to financial institutions to help them provide loans to companies working on China’s energy transition, according to a statement released Monday evening. The central bank will lend 60% of the required funds at an interest rate of 1.75%, and the banks can then use the money to grant loans at a higher rate around the prime rate level of the loan.
The funding will support companies in the clean, energy efficient and environmentally friendly energy sectors, as well as those with carbon reduction technologies. This includes wind and solar power, high efficiency energy storage and clean energy transmission, and is particularly intended to support start-up companies where there is high potential for reducing emissions with appropriate funding.
While the funds may be offered at the discretion of the banks, the central bank will require public disclosure of loan use and quantification of emissions reduced through the financing.
China’s central bank has sought to help President Xi Jinping’s pledge to make China carbon neutral by 2060 after peaking in emissions in 2030. The tool also comes as part of a will fine-tune policies in the face of slowing economic growth, while the recent electricity crisis has highlighted the important role that fossil fuels still play in China’s economy.
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