By Gracie Sun, Senior Advisor and Managing Director of Green Finance Center, Paulson Institute
Beijing has grand ambitions to be China’s first International Green Finance Center. To achieve this designation, it has embarked on an ambitious agenda to transform existing institutions, develop new ones, and upgrade its infrastructure for promoting green development. This agenda is being driven by dynamic Beijing Mayor Chen Jining, who was previously the Minister for Environmental Protection. Chen recognizes that green development is necessary for the health of citizens but also for the well-being of the economy.
In a recent move showing the significance of this agenda, Beijing is transforming its local carbon exchange to become China’s first green asset exchange. The intent of this exchange is to attract domestic and international capital to engage in trading of green assets such as green bonds, green asset-backed securities (ABS), green project financing, carbon, etc. There is currently internal debate and research on which green asset would be the most optimal for launch of the new exchange.
The Beijing Environmental Exchange, which currently runs the Beijing carbon exchange, has already started the preparation work by building a nationwide green project library. As of December 2019, there are already more than 1,200 green projects logged in the library, and the initiative has confirmed partnerships with more than 20 financial institutions covering banks, insurance companies, trust companies, securities, funds, industry associations, and third party assessment companies.
Beijing was one of the first cities to have a carbon trading exchange. These pilot projects—seven in total—have proved successful, but as China transitions to a national level exchange, it is a natural transition for the provincial level trading platforms to restructure.
In addition, Beijing has announced its intention to host the Beijing-London Green Technology Innovation and Investment Center, as one of the deliverables from the 2019 UK-China Economic and Financial Dialogue, and an international green finance and sustainable development research institute is expected to be launched soon.
Together, the city’s forthcoming green asset exchange, the Beijing-London Green Technology Innovation and Investment Center, and the international green finance and sustainable development research institute form a solid basis for the first international green finance center.