In 2021, China’s “30.60” commitment has opened a very challenging road of green transformation. The government, financial institutions and enterprises need to jointly promote the realization of carbon neutrality. Future technological progress will also accelerate the realization of this goal. Transformation means not only challenges, but also many investment opportunities.
On January 11, during the 15th Asian Financial Forum (hereinafter referred to as “aff”), China first finance and economics held a thematic sub forum with the theme of “carbon neutralization era and green finance leading the future of the industry”, which gathered representatives from financial institutions, think tanks and business circles to discuss the realization path and response of double carbon goals in the carbon neutralization era. Guests include: Sun Mingchun, chief economist of Haitong international, Wang Yang, founding partner of Chunhua capital, Zhang Junjie, chief economist of gf60, Sui Li, Secretary of the board of directors and chairman of GAC capital, and Zang Huiqing, Secretary of the board and vice president of Cathay Biotech Inc(688065) . The sub forum was chaired by Yang Yudong, chief editor of first finance and economics.
there is a long way to go to achieve the dual carbon goal
Carbon neutralization is a tough battle, and the government, financial institutions and enterprises still have a long way to go.
Zhang Junjie said that China is still far from the goal of carbon neutralization. “Before China’s per capita income of US $1000, China’s emissions were higher than 90% of the countries in the world; when China’s per capita income was between us $1000 and US $10000, our emissions were higher than 50%; at present, China is about to enter a high-income economy with us $12000, and all we can do is to reach the world’s average emission level, which is not particularly optimistic. In this process, it is important It is a balance, that is, to reduce carbon dioxide emissions while maintaining sustained economic growth. “
He mentioned that the path of carbon neutralization is very clear, “First, try to improve the efficiency of the end energy consuming industry. The irreducible carbon emissions can be electrified or re electrified, so the pressure is transferred to the power sector. Finally, the power sector can realize clean energy power generation, which can make the whole economic system low-carbon. There are still some problems that can not be solved by electrification, so carbon capture and other carbon removal methods can be used. Last year, the international The energy agency’s assessment shows that 50% of carbon neutralization technologies have not yet emerged. In addition to technology, even if the current parity Internet access has partially solved the cost problem, it is also necessary to solve the instability of wind and light power generation. “
Sun Mingchun believes that at present, it is necessary to find out the overall total carbon emission data, and then make micro arrangements or purchase carbon credits according to the situation of various regions and industries. At present, there is no total carbon emission data in the country.
Facing many challenges, we need policy support and market-oriented power. Zhang Junjie believes that carbon neutralization has a long way to go. “If we look at the process of replacing the steam engine with the motor in the second industrial revolution, the motor appeared in 1869 and reached the same market share of the steam engine in 1919. In other words, the low-carbon process we are doing now is only the first step in the long-term historical process, and we can\’t solve long-term problems with short-term thinking.”
enterprises actively seek low-carbon transformation
Enterprises are the most critical subject of society. The transformation willingness of enterprises determines whether China’s carbon neutralization goal can be achieved.
Under the top-level design of the dual carbon target, the automobile industry, as a pillar industry of the national economy, accounts for a large proportion of the dual carbon target. As a traditional automobile enterprise, GAC challenges to achieve carbon neutralization in the whole product life cycle in 2045. Sui Li said that in August 2021, Guangzhou Automobile Group Co.Ltd(601238) restructured the business and assets of new energy vehicles, promoted the reform of gac-e\’an mixed ownership, increased its capital and shares, introduced strategic investors, and planned to list gac-e\’an at an appropriate time. In addition to internal reform, GAC capital, as industrial capital, invests in the upstream and downstream of the automobile industry chain and the “new four modernizations”. In terms of new energy, invest in battery technology, charging network and vehicle networking; In terms of intelligent driving, the layout includes the whole industrial chain of automatic driving algorithm company, AI chip, sensor, high-precision map, network information security and so on.
The Cathay Biotech Inc(688065) which is located in the tuyere of renewable materials is the beneficiary of the low-carbon era. Zang Huiqing said, “After oil exploitation, 60% – 70% are used as fuel, and the remaining 30% – 40% are used for material manufacturing. If carbon reduction is understood from the perspective of materials, one is to reduce use, and the other is to find alternative materials. Cathay Biotech Inc(688065) Using recyclable crops as raw materials, rather than small molecules cracked by oil, to produce biomaterials is equivalent to using the existing carbon dioxide in nature to be reused for production. “
“A more perfect solution is to use renewable materials, no longer relying on non renewable fossils as carbon sources, but renewable plants as carbon sources. Even if plant-based renewable materials are finally degraded or incinerated, they will not increase carbon emissions.” Zang Huiqing said that using Kaisai new material (bio mechanical nylon 56) as clothing, one ton of products can reduce carbon emissions by 3 ~ 4 tons.
finance helps low carbon development
In 2021, as the “3060” dual carbon strategic goal is determined, the top-level design will be implemented. At the regulatory level, the Central Bank of China launched a series of policies, including issuing two green financial standards; Incorporate green financing and environmental disclosure into bank performance assessment; Launch carbon emission reduction support tools and special refinancing tools for clean and efficient utilization of coal, etc.
In addition to the efforts of the government and enterprises, financial intermediaries will also play an important role in promoting. Green credit, green bonds and carbon trading market will help enterprises with low-carbon transformation.
Sun Mingchun stressed that “transitional finance” is very important. Financial institutions and most ESG investors usually adopt the method of “voting with their feet”, that is, selling high-carbon emission assets to stay away from such risks. To a certain extent, this has put pressure on such invested enterprises to transform from high emission and high pollution production technology and business model to a more low-carbon and environmental protection technology model as soon as possible. However, the risk is that these invested enterprises may not be able to obtain enough capital or cheap enough capital to finance and invest in their low-carbon transformation, which will only aggravate the financial difficulties of these enterprises or accelerate their bankruptcy. If so, these enterprises will be forced to stop production, stop work, cut wages and lay off workers, resulting in a large number of unemployment and social problems.
“Transformation finance” not only supports those subjects who benefit from the transformation, but also provides financing for those enterprises in difficulties in the transformation, helps them out of difficulties and promotes sustainable development.
Since last year, under the “green baton”, China’s green financial development has driven into a faster lane. In July, the national unified carbon emission trading market was officially launched. Once launched, it has become the largest carbon emission trading market in the world.
At the initial stage of start-up, carbon emission quota allocation was “mainly free allocation”, and currently it is only included in one industry of power generation. Zhang Junjie believes that more industries need to be included in the future, and the voluntary carbon market should be a supplement to the carbon compliance market, which can cover the remaining 80% of carbon emissions not covered by the current compliance market.
Zang Huiqing also said that for Cathay Biotech Inc(688065) such low-carbon enterprises, if they can benefit from the carbon trading market, it will be an incentive for enterprises. For example, Tesla turned losses into profits by selling carbon credits alone in 2020.
As of December 31 last year, the first performance period of the national carbon trading market had ended. In December, the average daily trading volume reached 947000 tons and the total trading volume reached 21.78 million tons. The closing price on the last trading day in December was 54.22 yuan / ton.
However, at present, compared with European and American countries, China’s carbon price is low and carbon trading activity is still insufficient. Zhang Junjie said that at present, the over issuance of carbon quotas is relatively serious, resulting in low carbon prices and inactive transactions. To strengthen carbon emission control, we should first solve the problem of too loose baseline setting, so that emission control enterprises can really feel the pressure of carbon emission regulation. Secondly, the national carbon market adopts the method of intensity control, and in the process of carbon market evolution, it needs to transition to the mechanism aiming at total amount control. Finally, the carbon emission monitoring, accounting, reporting and verification system needs to be strengthened.
capital chasing “Changpo track”
In the process of achieving the double carbon goal, enterprises take the initiative to seek change and seek green and low-carbon development, which also leads the relevant investment and financing behavior. Private sector investment will be an important driving force for the development of green enterprises and breakthroughs in low-carbon technologies. Wang Yang believes that a certain premium needs to be given to capital to guide investment funds. At present, the industrial demand is basically proportional to the return on investment.
Previously, some invested enterprises promised to achieve carbon neutralization in the supply chain by 2028. Wang Yang believes that capital plays an important role in the process of carbon removal and zero carbon in the whole industrial chain. For example, in October 2021, Chunhua capital invested more than US $600 million in two enterprises of vision technology group, a green technology company, which is the highest amount of investment in the field of carbon neutralization investment. This long-term strategic financing fund will be mainly used for the company’s globalization, scientific and technological research and development, as well as the development of its wind power, energy storage, battery and other businesses.
Wang Yang said that the “carbon neutralization track” is a “long slope track” to help the invested enterprises develop rapidly and achieve sustainable growth. Capital will play different roles in all links of enterprise growth and produce different investment returns.
Realizing carbon peak and carbon neutralization is not an option, but a necessary option. In this process, it needs the joint efforts of government departments, enterprises, financial departments and capital, or it will be an effective realization path.
(source: First Finance)
