On September 22, 2020, Chinese President Xi Jinping announced in his speech to the UN General Assembly that China’s carbon emission would peak before 2030 and the country would become carbon neutral in 2060.
- As the world’s second largest economy, China produces about 28% of the world’s emissions, with coal remaining its primary source of energy.
- The Guiding Opinions on Promoting Climate Change Financing (关于促进应对气候变化投融资的指导意见) (http://www.mee.gov.cn/xxgk2018/xxgk/xxgk03/202010/t20201026_804792.html ) (the “Guiding Opinions“), which was jointly published by China’s top environmental, economic and financial authorities on October 21, came as the first policy to kick off China’s step towards carbon neutrality.
- The Guiding Opinions define climate change financing as financing that helps achieve China’s nationally determined contributions goal (which includes the 2060 carbon neutrality goal) under the Paris Accord and the green and low carbon goal under China’s thirteenth five year plan, including both slowing climate change and adapting to climate change (“Climate Change Financing“).
- China seeks to establish a series of standards in relation to Climate Change Financing, including those for identifying climate projects, disclosing climate information and evaluating climate performance. Notably, the identification of climate projects shall be aligned with the existing Catalogue of Green Industries (绿色产业指导目录)(https://www.ndrc.gov.cn/fggz/hjyzy/stwmjs/201903/t20190305_1220625.html) and these standards are sought to be internationalized.
- The Guiding Opinions also encourage private and international financial institutions and private equity funds to participate in Climate Change Financing. Qualified institutions and individuals may be allowed to participate in carbon trading and institutions could develop carbon derivatives such as carbon futures.
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