I. green development in the context of double carbon
Policy background: double carbon has become a global consensus and goal. In September 2020, China clearly put forward the goals of “carbon peak” in 2030 and “carbon neutralization” in 2060.
Carbon rights trading: ① mechanism: carbon trading helps reduce emissions through internalization of external costs. Carbon right refers to the greenhouse gas emission limit owned by production units. Key emission units need to pay carbon right every year, and the ways to obtain carbon right include government quota and certified emission reduction (CCER). ② Current situation: China’s carbon rights market has accelerated since 2020. At present, the participants in the national carbon rights trading market are mainly 2162 enterprises from the power generation industry, and the local pilot market covers nearly 3000 enterprises in more than 20 industries such as power, steel and cement. At present, the national carbon emission trading market only supports government quotas. ③ Outlook: referring to the EU carbon trading system, China’s carbon trading right trading market will expand the industries and types of greenhouse gases in the future, and the carbon right price is expected to rise.
II. Scope and space of green investment
Definition scope: referring to the catalogue of green industry guidance in 2019 and the catalogue of green bond support projects in 2021, green industry mainly includes 211 subdivided industries in six directions – energy conservation and environmental protection industry, cleaner production industry, clean energy industry, ecological environment industry, green upgrading of infrastructure and green services.
Profit characteristics: the green industry has high initial investment and relatively weak profitability, and the investment payback period is longer than that of traditional industries. The average ROA of enterprises issuing green credit bonds in 2020A is 1.44%, which is lower than the average 4.50% of A-share listed companies. In the green industry, the investment payback period of infrastructure projects (such as ecological environment and green infrastructure) is significantly longer than that of other sub industries due to their stronger public welfare attribute. Looking forward to the future, carbon rights trading is expected to become a new source of profits for green industries. Mainly through the creation and sale of CCER to earn income. In 2020, China’s carbon emissions will reach 9.9 billion tons. Assuming that 5% will be met by CCER, it is estimated that the profit space created by corresponding carbon rights trading will reach 193.7 billion yuan, accounting for 18.9% of the pre tax profit of green credit bond issuing enterprises.
III. Development and space of green finance
Development status: green finance mainly includes green credit, green bonds, ESG funds and other fields. By the end of 2021, the balances of green credit and green bonds were 15.9 trillion yuan and 1.7 trillion yuan respectively. Among them, green credit is mainly corporate loans, investment in infrastructure and energy, large and medium-sized banks and Eastern and western regions; The issuers of green bonds are mainly local governments, financial institutions and public utilities.
Potential space: ① billion market. According to the calculation of the Green Finance Commission, a total of 487 trillion investment demand can be generated in the field of green finance from 2021 to 2050 (constant price in 2018). Assuming a 10-year investment cycle and the same green financial structure as social finance, it corresponds to a 305.8 trillion green financial balance increment. The 30-year CAGR of the two major projects of green credit and green bonds is 9% and 14%. ② Good comprehensive income. The comprehensive income of green credit is better than that of traditional corporate credit. Looking forward to the future, if policy support is implemented, the comprehensive income advantage is expected to be further improved. The roe calculated by green credit is 8.22%, which is 7.4pc higher than that of traditional corporate credit. The attributable asset quality is excellent and the impairment pressure is small. If the risk weighting coefficient drops to 75%, the calculated roe of green credit reaches 10.97%, which is 10.1pc higher than that of traditional public credit.
IV. opportunities and transformation of commercial banks
Strategic attention: banks are gradually strengthening the layout of green finance. ① In terms of organizational structure, establish green sub branches, green research institutes and pilot green finance business departments; ② In terms of incentive mechanism, give preferential pricing to green credit and increase the assessment of the proportion of green loans; ③ In terms of development strategy, state-owned banks vigorously develop green business, and joint-stock banks zhongxingye and Huaxia are listed as strategic priorities.
Product system: at present, few banks have formed a complete green financial product system. Compared with the official websites of various banks, only Industrial Bank Co.Ltd(601166) launched a complete green financial service system and Bank Of Jiangsu Co.Ltd(600919) launched green financing products with industry-specific and specific service modes.
Green Credit: state-owned stock banks have more power, and urban rural commercial banks have a smaller scale. In terms of credit proportion, by the end of 2021h1, Nanjing, ICBC, Agricultural Bank of China and industrial green credit accounted for a relatively high proportion.
Risk tip: macroeconomic stall and sharp outbreak of adverse.
