Central bank to offer discount loans in support of decarbonisation

As climate negotiators work in Glasgow to move forward the global emissions reduction agenda, China rolled out a powerful domestic policy to support its decarbonisation efforts. 
The People’s Bank of China – China’s central bank – announced a new facility for commercial banks to expand their financial support of China’s low-carbon sectors. The re-lending facility allows commercial banks to receive Bank of China loans at discounted rates (1.75%) after issuing loans to designated low-carbon sectors including wind, solar, pumped hydro and hydrogen. To be eligible, commercial banks must keep interest rates offered to low-carbon sectors at a benchmark lending rate.
The terms of the re-lending facility are considered very attractive for commercial banks. On the receiving end, low-carbon industry players are expected to see loan rates drop by 1.5-2%, sufficient to change the financial viability of certain projects.
As a safeguard against frivolous lending, the Bank of China sets up rules for commercial banks to demonstrate the carbon-reduction effects of projects when applying for re-lending. They are also required by the central bank to calculate the total annual carbon reduction of each loan issued under the new facility, and to disclose such data to the public on a quarterly basis.