Did you know China has announced USD 15bn of green bonds in one go?

Last week China's central bank said it had approved the issue of CNY 100 billion (USD 15.2bn/EUR 13.9bn) in green bonds in the domestic market this year by China Industrial Bank (CIB) and the Shanghai Pudong Development Bank (SPDB).

Sean Kidney, CEO of the Climate Bonds Initiative (CBI), comments on the news and the mood at the UN Investor Summit on Climate Risk in a blog post, republished by SeeNews Renewables.

The sun is shining in NYC as Ban Ki Moon talks at UN Investor Summit on Climate Change. Did you know China that has announced $15bn of green bonds in one go.

I’m writing this inside the United Nations complex in New York, part of a large crowd of investors, finance people, and related NGOs like ours. All here for the UN Investor Summit on Climate Risk, well-organised by Ceres, a Climate Bonds Partner.

It’s a glorious sunny day outside, piles of melting snow everywhere; inside there’s a post-COP buzz about the acceleration of climate finance, including lots of talk of the USD 42 billion of green bonds last year.

Al Gore has just given a tub-thumping, inspiring speech about what needs to be done and how to do it. Earlier, UN Secretary-General Ban Ki Moon got a standing ovation (and he's not a charismatic speaker!) from the sold out crowd; and Christiana Figueres (who really is a charismatic speaker) got the same.

Bloomberg’s Michael Liebreich got a gasp when he said that in India rooftop solar is now at price parity with fossil fuel power (wow!) and that more investment went into clean energy globally last year into fossil fuel power investments. Will 2016 be remembered as the 'game over' moment for fossil fuels?

But of course we need a lot more than just energy investments. In the insurance investors session, Shaun Tarbuck, CEO of the International Cooperative Mutual Insurers Federation, has just been extolling the importance of building metro and high-speed rail in the USA, and how they would be ideal for green bond issuance. And then there's water investments, low-carbon buildings, even broadband to enable smart cities.

Back in the main Hall, Guo Peiyuan of China's Syntao reminded the conference that China's central bank announced last week they've approved two banks to issue CNY 100 billion of green bonds in the domestic market in 2016 - that's USD 15 billion on one approval! And we know there are two further approvals waiting in the queue.

Guess where green bond volume is going to come from this year.

Unlike much of the USA, China doesn’t need to be convinced about green infrastructure – it’s already built the world’s largest high-speed rail network, and is building more renewable power every year than anyone else on the planet. That will make for a lot of green bonds.

By the way, the two banks with approval to issue green bonds are the China Industrial Bank (CIB) and the Shanghai Pudong Development Bank (SPDB). Each bank received permission to issue up to CNY 50 billion (USD 7.5bn) of green bonds in the inter-bank bond market this year. Bond proceeds will be used to provide loans for green industry projects, as defined in the central bank's Green Bond Issuance Guidelines.

In fact, SPDB has already issued the first tranche - today - of CNY 20 billion (USD 3bn), coupon rate 2.95%, maturity 3 years. The bond was twice oversubscribed. That's right folks, hard evidence of domestic Chinese demand for green bonds, albeit from other banks. CIB is going to issue their first tranche of CNY 10 billion in the next couple of days.

As some of you may know we've been working in China for the past two years, with the People's Bank of China - the central bank - and with the Development Research Centre of the State Council, to promote the idea of green bonds as a policy tool. Thanks to champions such as PBOC’s Ma Jun, there’s now government support.

It's deeply satisfying to see the China market actually start.

But as Christiana Figueres reminded us this morning, we have a long way to go before it's anywhere near enough to see our vast environmental challenges addressed. We need an enormous green infrastructure investment program in not only China, but in the EU and the US, and in other countries around the world. And then green bonds to suit.

(CNY 10 = USD 1.520/EUR 1.395)

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