Central Bank: Promote green and low-carbon economic development through reasonable carbon price

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On December 10th, the fourth Bund Financial Summit opened in Shanghai. Wang Xin, Director of the Research Bureau of the People's Bank of China, attended the meeting in the Beijing branch hall and delivered a report speech entitled "Strengthening the Incentives and Constraints of Financial Support for Green Low-carbon Transition and Related Financial Risk Prevention". The report focuses on the incentive and restraint mechanism of green finance from five aspects:

First, standards for green and transformational finance, carbon accounting and environmental information disclosure. The report points out that the environmental information disclosure standards of financial institutions should be continuously improved, the content and coverage of the environmental information disclosure of financial institutions should be further expanded, gradually transitioning from voluntary disclosure to mandatory disclosure, and constantly strengthening the constraints on financial institutions.

Second, we should promote green and low-carbon economic development through a reasonable carbon price. China has established a unified carbon emission trading market, which is now operating in a stable and orderly manner, with prices rising steadily, Wang said. The construction of Chinese carbon market should be further promoted in the future.

Third, green finance evaluation of financial institutions. "At present, the coverage and content of green finance evaluation are still relatively narrow, and the application scenarios are not enough. We need to further carry out comprehensive evaluation of green finance to better play the important role of evaluation." "Wang Xin said.

Fourth, fiscal and financial policies should encourage and coordinate with each other. Wang Xin said in the report that the guidance and incentives of fiscal policy can be through the government's public investment, government subsidies and government procurement incentives to support green and low-carbon development. He believes that the central bank's structural monetary policy support is necessary, and its space and strength are closely related to the carbon price. "If the carbon price is low, more central bank and other policy incentives may be needed; On the other hand, if the carbon price is reasonable and can better play the role of guiding resource allocation, there will be less need for policy incentives from the central bank. So it is very important to use market incentives."

Fifth, prevention of climate-related financial risks. He pointed out that climate change has an impact on important macroeconomic variables, and therefore on some sectors, which will be transmitted to financial institutions and create financial risks, which will have an impact on the soundness of financial institutions and the soundness of the financial system as a whole. Wang Xin: Reviewing the recent development of green finance and the overall green and low-carbon transformation of the economy, especially in the international context, climate change is facing severe challenges, but China's green and low-carbon transformation is a very important and rare opportunity for high-quality economic development. Next, the topic report focuses on the incentive and restraint mechanism of green finance from several aspects.

First, green finance and transformational finance standards, carbon accounting and environmental information disclosure, which are the most fundamental aspects. The second is to promote green and low-carbon economic development through reasonable carbon price. Reasonable and market-based carbon price is a very important incentive and constraint mechanism. Third, green finance evaluation of financial institutions. Fourth, fiscal and financial policies should encourage and coordinate with each other.

Finally, the prevention of climate-related financial risks is discussed.

Standards for Green and transformational finance, carbon Accounting and Environmental Information Disclosure Standards for green and transformational finance. Since 2016, China has initially established a green finance system and continuously improved it, among which the standard system of green finance has been comprehensively promoted. In terms of the standards of transitional finance, the international community has reached a preliminary consensus on the objectives, support scope, guarantee mechanism and other contents of transitional finance, but there are still some differences on the concept of transitional finance and the service objects to support. The recent G20 Summit in Bali adopted the G20 Transformational Financial Framework, which emphasizes the importance of transformational activities and investment. At present, the People's Bank of China is organizing the formulation of financial standards for transformation in the four major fields of steel, coal power, building materials and agriculture, and will further expand the areas of financial standards for transformation according to actual needs. Green finance and transformational finance complement each other and can be effectively linked. The experience of green finance standards can be applied to the transformational financial standards. Now that the work is well underway, we will solicit public opinions on these transformational financial standards in due course. Carbon accounting is also a very important aspect. Corporate carbon accounting and financial institutions carbon accounting are both evolving. On carbon accounting, there are many important practices in many places in China. For example, create carbon accounts, carbon ledger, optimize carbon accounting data management and application. For the financial sector, it is very important to promote financial institutions to carry out carbon accounting in an orderly manner. The topic makes a detailed comparison of the differences and similarities between the Technical Guidelines for Carbon Accounting for Financial Institutions (Trial) led by the People's Bank of China and the Global Standards for Greenhouse Gas Accounting and Disclosure in the Financial Sector issued by PCAF, a self-regulatory organization for financial institutions. The carbon accounting of our country still faces some problems and challenges, it must be further improved standardization and standardization level. It is necessary to further strengthen the capacity building of carbon data collection and management, guiding the development of consulting services, giving full play to digital technology support, and strengthening financial support. In terms of environmental information disclosure, generally speaking, it is necessary to continuously improve the standards of environmental information disclosure of financial institutions, further expand the content and coverage of environmental information disclosure of financial institutions, gradually transition from voluntary disclosure to mandatory disclosure, and constantly strengthen the constraints on financial institutions. Faced with the difficulties and challenges of financial institutions' environmental information disclosure, we will conduct further research, such as determining enterprise evaluation indicators, giving play to the role of science and technology, and further improve them.

2. Promoting Green and Low-carbon Economic Development through Reasonable carbon Price Carbon pricing mechanism mainly includes carbon emission trading market and carbon tax. There are many practices in the world, such as carbon tax alone or carbon trading, or carbon tax and carbon trading developed in tandem. Our country has established a unified carbon emission trading market, which is now operating steadily and orderly, with the trading price rising steadily. The construction of Chinese carbon market should be further promoted in the future. At the same time, there are also many studies on the feasibility of introducing carbon tax in China. Is international experience applicable to China? The carbon emission market and carbon tax are oriented to different sectors and enterprises, so can they complement each other? Further improve the rationality of carbon pricing, and better play the role of carbon price guiding resource allocation, these need to be studied in depth.

Green financial evaluation of financial institutions Now it is not very common for international organizations and the financial management departments of other countries to carry out green financial evaluation. The green financial evaluation of our country is in the forefront of the world. At present, the coverage and content of green finance evaluation are still relatively narrow, and the application scenarios are not enough. Comprehensive evaluation of green finance should be further carried out to better play its important role. We have explored and evaluated how to conduct comprehensive financial evaluation, and we need to further deepen it.

Iv. It is very important to coordinate and coordinate the incentives of fiscal and financial policies. As for the guidance and incentive of fiscal policies, the government can support green and low-carbon development through public investment, government subsidies and government procurement incentives. With regard to financial policy incentives, we mainly focus on the perspective of the central bank and other financial regulatory authorities. In general, we focus on how to support financial policies and guide market players to support green and low-carbon development. Relevant financial policy tools, including central bank structural monetary policy tools, macroprudential policy tools, etc., have been studied in depth in the subject. We believe that the central bank's structural monetary policy support is necessary, and its space and strength are closely related to the carbon price. If the carbon price is low, more central bank and other policy incentives may be needed; On the other hand, if the carbon price is reasonable and can better play the role of guiding resource allocation, there will be less need for policy incentives from the central bank. Therefore, it is very important to play the role of market incentives. We also discussed the coordination of fiscal and financial policies to promote green and low-carbon development. The coordination of these two policies is very important to improve their effectiveness. Green government bonds are an important combination of fiscal and financial policies. In the world, green government bonds have developed rapidly. Some countries have established relatively perfect green government bond issuing mechanisms.

V. Prevention of Climate-related Financial risks In recent years, there has been an increasing discussion on climate-related financial risks at home and abroad, and there is a growing tendency to believe that climate-related financial risks are one of the important sources of systemic financial risks. Several central banks and financial regulators around the world have conducted or plan to conduct climate risk stress tests. The People's Bank of China has organized more than 20 large commercial banks to conduct climate risk stress tests, and some regions and industries are also conducting climate risk stress tests for their own regions and wider sectors. One of the innovations of this research is to explore the stress test of climate risk at the whole macroeconomic level. That is, the impact of climate change on important macroeconomic variables will have an important impact on some industries, which will be transmitted to financial institutions and generate financial risks, which will have an impact on the robustness of financial institutions and the robustness of the entire financial system. In the thesis, we put forward the general frame of the macroscopic situation pressure testing.