PBOC head: CO2 goals need proper incentives

China is taking solid steps to promote green and low-carbon development as it embarks on a path toward achieving its dual carbon goals, officials said on Wednesday.

"Reaching a peak in carbon dioxide emissions and achieving carbon neutrality needs 'carrots and sticks'," Yi Gang, governor of the People's Bank of China, the country's central bank, said at the ongoing Boao Forum for Asia Annual Conference 2023.

While high carbon prices and carbon taxes will serve as the sticks, the central bank's supportive tools, such as providing commercial banks with re-lending loans with low-interest rates, are carrots in the incentive mechanism, Yi said.

He said the PBOC has introduced two types of tools to promote carbon reductions including support for technologies in fields like clean energies, energy conservation, environmental protection and carbon reductions as well as support for the clean use of coal.

Since the introduction of the two tools in 2021, the central bank has lent more than 300 billion yuan ($44 billion) via re-lending tools, which has helped banks extend 600 billion yuan in loans to related green projects. And that has helped cut carbon emissions by about 100 million metric tons last year.

Currently, China's outstanding green loans stand at over 22 trillion yuan, accounting for about 10 percent of China's total loan balance. And the country's green bonds have reached more than 2.5 trillion yuan, Yi said.

Xuan Changneng, deputy governor of the PBOC, highlighted the importance of developing financial tools for the green and low-carbon transformation of high-emitting industries, saying it will bring forward and promote the implementation of relevant standards.

More efforts will also be made to improve the arrangement of carbon accounting and the disclosure of environmental information, and enrich the offering of financial tools for promoting the low-carbon transformation of high-emitting sectors, Xuan said.