[2024-Nov-29] WG3 Seminar on Voluntary Carbon Markets and Green Finance
On November 29, 2024, the GIP Green Finance Product Innovation Working Group (Working Group 3) hosted a seminar titled “Green Financial Innovation under the Voluntary Carbon Market” The event aimed to align with the resolution on international carbon market development adopted at COP29 and support GIP member institutions in keeping pace with emerging market trends. The seminar featured keynote presentations from experts at Industrial Bank, Standard Chartered Bank, and Xiamen University, and brought together project developers, buyers, and professional service providers for in-depth roundtable discussions.
In his opening remarks, Mr. Cheng Lin, Head of the GIP Secretariat Beijing Office, highlighted the pivotal role of carbon markets in channeling capital toward green sectors in the context of the global transition to sustainability. As carbon market mechanisms continue to evolve, he noted, financial institutions are expected to play a greater role in carbon finance, further accelerating the green transition.
YIN Chunzhe, Senior Researcher at the Institute for Carbon Neutrality and Finance of Industrial Bank, gave an overview of China’s voluntary emission reduction market, covering the development of the CCER mechanism, its policy framework, management approach, trading dynamics, and price trends. He expressed long-term confidence in the voluntary carbon market, stating that the expansion of methodologies, improvements in institutional design, and strengthened data management will offer more avenues for participation by enterprises and financial institutions.
CHEN Luzhen, Professor at College of Environment and Ecology of Xiamen University, introduced the methodologies and practical applications for carbon sink accounting in blue carbon ecosystems. She emphasized the ecological and climate value of mangroves, salt marshes, and seagrass beds, and presented real-world cases of blue carbon trading in China, including mangrove restoration and salt marsh carbon sink projects. Professor Chen also shared recent progress in methodology development, noting that afforestation-based carbon sinks have already been incorporated into the CCER framework. She underscored the importance of integrating ecological protection with community-based sustainable development in the creation of high-quality blue carbon projects.
Lucy Palairet, Director of Carbon Markets Development at Standard Chartered Bank, shared insights into global trends in the voluntary carbon market and related financial innovations. She noted that although the voluntary market is smaller in scale than compliance markets due to its project-based nature, its growth is increasingly shaped by regulatory developments. International policies and frameworks such as CBAM and CORSIA are accelerating the expansion of voluntary markets across regions. She also highlighted the role of organizations like ICVCM in improving transparency and credibility in voluntary carbon credit systems. Lucy further shared how Standard Chartered helped British Airways secure financing by linking carbon removal and avoidance credits to key performance indicators (KPIs), marking an example of product innovation in carbon finance.
BIE Zhi, Product Manager at the Green Finance Department of Industrial Bank, discussed how China financial institutions—particularly Industrial Bank—are engaging in CCER-related activities. She described a range of approaches, including using national carbon allowances or regional carbon sinks as collateral, and developing interest rate-linked financial products tied to the progress of CCER project development. She also noted that non-bank institutions, such as trust and insurance companies, are offering insurance products to mitigate risks associated with CCER utilization. Additionally, she shared how financial institutions are leveraging CCER to reduce their own carbon footprints.
Panel Discussion
The panel discussion brought together experts from Deloitte, Huadian Power International, PetroChina, Shell, China International Capital Corporation (CICC), and the World Economic Forum. Representatives from Huadian, PetroChina, and Shell shared their progress and challenges in navigating the carbon market.
Liu Canqi, Director of the Technical and Environmental Protection Division at Huadian Power International, pointed out that rising carbon allowance prices and the renewal of the CCER mechanism may have significant financial implications for power companies. Zhang Yu, Carbon Trading Business Manager at PetroChina’s International Business Division, noted uncertainties regarding how the renewal of CCER trading will impact the broader market. He Yi, Head of Carbon Trade at Shell China, shared the company’s experience in using voluntary carbon markets to meet emission reduction targets, reporting that Shell achieved approximately 20 million tons of carbon neutrality in 2023.
Huang Dafei, Executive General Manager of the Fixed Income Department at CICC, shared insights from the perspective of a carbon-asset service provider. She highlighted three key roles financial institutions play in the carbon market: price discovery, resource allocation, and risk management. She also emphasized CICC’s strategic approach to participating in both domestic and international carbon markets.
Sha Song, Specialist of Sustainability and China Partnership at the World Economic Forum, emphasized the relevance of global experience in shaping China’s carbon market. She highlighted a newly released report by the Forum, which points to best practices in setting high-quality standards, implementing internal carbon pricing, and leveraging technological solutions as valuable references for advancing China’s carbon market.