HUAINAN, CHINA - JUNE 12: Chinese workers prepare panels that will be part of a large floating solar farm project under construction by the Sungrow Power Supply Company on a lake caused by a collapsed and flooded coal mine on June 12, 2017 in Huainan, Anhui province, China. The floating solar field, billed as the largest in the world, is built on a part of the collapsed Panji No.1 coal mine that flooded over a decade ago due to over-mining, a common occurence in deep-well mining in China's coal heartland. When finished, the solar farm will be made up of more than 166,000 solar panels which convert sunlight to energy, and the site could potentially produce enough energy to power a city in Anhui province, regarded as one of the country's coal centers. Local officials say they are planning more projects like it, marking a significant shift in an area where long-term intensive coal mining has led to large areas of subsidence and environmental degradation. However, the energy transition has its challenges, primarily competitive pressure from the deeply-established coal industry that has at times led to delays in connecting solar projects to the state grid. Chinaâs government says it will spend over US $360 billion on clean energy projects by 2020 to help shift the country away from a dependence on fossil fuels, and earlier this year, Beijing canceled plans to build more than 100 coal-fired plants in a bid to ease overcapacity and limit carbon emissions. Already, China is the leading producer of solar energy, but it also remains the planetâs top emitter of greenhouse gases and accounts for about half of the worldâs total coal consumption. (Photo by Kevin Frayer/Getty Images)
, Photographer: Kevin Frayer/Getty Images AsiaPac
(Bloomberg) -- China’s central bank will offer cheap funding to banks which lend to firms that are working toward the nation’s goal of reducing carbon emissions.
The People’s Bank of China will lend financial institutions money to help them provide loans to firms working on China’s energy transition, according to a statement Monday evening. The central bank will lend 60% of the required funds at an interest rate of 1.75%, and banks can then use the money to provide loans at a higher rate around the level of the loan prime rate.
The financing will support companies in clean energy, energy-saving and environment-friendly sectors, as well as those with carbon emission reduction technology. That includes wind and solar power, high efficiency power storage and clean energy transmission, and is especially meant to back earlier-stage firms where there is high potential to cut emissions with the right funding.
Though the funds can be offered at banks’ own discretion, the central bank will require public disclosure of the use of the loans and quantification of the emissions reduced with the funding.
The Chinese central bank has been looking to contribute to President Xi Jinping’s pledge to make China carbon neutral by 2060 after reaching peak emissions in 2030. The tool also comes amid a drive to fine-tune policies in the face of slowing economic growth, while the recent power crunch has underlined the large role fossil fuels still play in China’s economy.
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