On December 17, in the magazine “Finanza”,financial networkAt the annual conference “Caijing” 2023: Foresight and Strategy jointly hosted by Caijing, Caitong Think Tank and Caitonghui, Wang Xin, director of the Research Bureau of the People’s Bank of China, shared the impact of green and low-carbon transformation on economic growth.
Wang Xin, director of the Research Bureau of the People’s Bank of China
He believes that the short, medium and long-term impacts of the green and low-carbon transformation on the economy are diverse. In the short term, if the adjustment is too fast and too drastic, the increase in green investments may not be able to compensate for the reduction in the size of high-carbon investments, the level of consumption may suffer and the export of high-carbon products even in developing countries will be limited. In the medium to long term, an orderly transformation of the low-carbon economy can promote economic growth by promoting job growth and capital formation, accelerating technological progress and increasing productivity.
Wang Xin pointed out that my country is still in the process of industrialization and urbanization, its industrial structure is heavy, its energy structure is more dependent on fossil energy, and the time from carbon peak to carbon neutrality is relatively short, therefore it is facing daunting challenges to achieve the carbon neutrality target of peak carbon. In the short term, care must be taken to avoid drastic adjustments in the energy structure and industrial structure, which would have a major impact on economic growth.
At present, my country has one third of the world’s installed wind power generation capacity and one quarter of the world’s solar power generation capacity, and there is ample room for the development of green finance and transformative finance. Wang Xin believes that my country is fully capable of achieving economic growth and orderly green and low-carbon transformation at the same time. The key is to give full play to the fundamental role of the market mechanism and the role of supporting and relevant policy guidance The focus includes five aspects:
The first is to improve the carbon pricing mechanism as soon as possible and give full play to the role of reasonable carbon prices in effectively guiding resource allocation. Improve the national unified carbon emissions trading market, expand its coverage of industries and enterprises, introduce financial institutions to develop various financial products, and improve the effectiveness and science of carbon pricing.
The second is to focus on global high standards, establish and improve my country’s green finance and transition finance standards, strengthen carbon accounting and climate and environmental information disclosure of enterprises and financial institutions, strengthen the market constraints and regulatory assessments that various market entities need to carry out green and low-carbon transformation and prevent “greenwashing” and “pseudo-transformation”.
The third is to vigorously develop green financial products and services in response to large-scale investment in green and low-carbon transformation and the characteristics of increased uncertainties in the initial stage. Related products include green credit, green bonds, sustainability-related bonds, carbon neutral bonds, as well as stocks, funds, insurance, etc. Increase the support and guidance of fiscal and financial policies, especially the implementation of the requirements of the just concluded Central Economic Work Conference, and accelerate the research and development, promotion and application of cutting-edge technologies such as new energy/green and low-carbon, which favors the formation of a green and low-carbon financial-industry-technology cycle.
The fourth is to take timely steps to promote a just transition in view of the fact that some regions, industries and groups of people may be strongly affected by the low-carbon transition. Increase financial transfer payments, further improve and develop unemployment insurance, endowment insurance and medical insurance, adequately solve the problem of reemployment of the affected population, and maintain their physical and mental health.
The fifth is to prevent and respond promptly to financial risks related to climate change. Do a good job of climate risk sensitivity analysis and stress testing of financial institutions and regions, and study the adoption of macro-prudential tools to prevent risk accumulation in high-carbon industries. Financial institutions with higher vulnerabilities should replenish capital and dispose of impaired assets in a timely manner.
(edited by: Wen Jing)
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