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Tuesday, September 26, 2017, 23:25
China's green investments at 'unprecedentedly high levels'
By Evelyn Yu
Tuesday, September 26, 2017, 23:25 By Evelyn Yu

This picture taken on April 14, 2012 in Paris shows the entrance of a BNP Paribas bank. (LOIC VENANCE / AFP)

HONG KONG – China’s push for a greener economy has opened up great investment opportunities, says global investment bank BNP Paribas.   

The country’s green investments at both the domestic and international levels are unprecedentedly high in terms of scale and pace and surpass those of the rest of the world, the Paris-based bank says. 

The rapid growth of China in the past 40 years has come at a very high cost to the natural environment. It’s very clear that China is tackling this problem in a very aggressive manner 

Robert Barker, Managing Director, Sustainable Finance and Investment, Global Markets, BNP Paribas

“The rapid growth of China in the past 40 years has come at a very high cost to the natural environment. It’s very clear that China is tackling this problem in a very aggressive manner,” said Robert Barker, managing director of sustainable finance and investment global markets at BNP Paribas.

According to the International Energy Agency, the Chinese mainland accounted for 74 percent of global investments in renewable transport and heat, 38 percent in nuclear and 27 percent in energy efficiency projects last year.

READ MORE: China boosts green efforts around world


To meet many of the country’s environmental goals, such as raising the share of non-fossil energy to 20 percent, and reducing carbon intensity per GDP to more than 60 percent below the 2015 level by 2030, great domestic investments are in the pipeline to decommission old capacities and replace them with new capacities. 

Many of China’s global efforts, including the New Development Bank, the Asia Infrastructure Investment Bank and the Belt and Road Initiative, also focus on sustainable investment. 

Shanghai-based New Development Bank, established by the BRICS countries – Brazil, Russia, India, China and South Africa – in 2015, issued the first yuan-denominated green bond in the Chinese mainland’s interbank bond market in 2016. The three-year 3-billion yuan bond, designed to fund eligible projects in areas like renewable energy, pollution prevention and sustainable water management, drew an order book amounting to 9 billion at the time.

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NDB President KV Kamath said earlier this year the bank is poised to issue another green bond in the second half of 2017. 

The Chinese mainland has become the world’s biggest green bond market. According to the China Green Bond Market Mid-Year Report for 2017, the country’s green bond issuance totaled US$11.52 billion, accounting for 20.3 percent of global green bonds as of June this year, with 26 issuers having launched 38 bonds in the market.

While the Chinese economy has been driven by traditional growth engines such as banks and industrial and manufacturing businesses, the services and policy-supported sectors are the new investment hot spots, said Yoram Layani, managing director of institutional solutions sales at BNP Paribas.

The investment bank is betting on leading firms in related sectors such as battery and electric-vehicle manufacturer BYD, technology provider Goldwind, environment services provider Everbright and China Energy Conservation and Environmental Protection Group Corporation. 

The stock price of Hong Kong-listed BYD – China’s biggest electric-vehicle maker – soared 12.5 per cent to HK$68.8 last Wednesday. The advance continued this week, with the price hitting a new high of HK$71.7 on Monday.

The boom is fueled mainly by the country’s introduction of a dual-credit scheme for domestic car makers in terms of gasoline cars’ fuel consumption and new energy car production. The new policy, which will be launched soon, stipulates that those who fail to meet the goals will have to buy credits from other automakers or be fined, making BYD the foreseeable direct beneficiary. 

BNP Paribas said it has seen growing interest from its clients in green investments. 

For the past three years, the bank has invested 3 billion euros (US$3.54 billion) in green equity and 1 billion euros in green bonds, providing sustainable investment solutions for its clients worldwide.

The bank has also pledged to double its financing of the renewable energy sector – from 7 billion euros in 2015 to 15 billion euros by 2020.

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