中国绿色债券市场季报 2018 第三季度
JULY-SEPTEMBER 2018/2018 年 7 月至 9 月

Market overview

Billions

China vs. global green bond issuance

At a glance60

Total Q3 Chinese issuance:
USD 8.5bn / RMB58.9bn
Onshore issuance:
USD 6bn/ RMB41.6bn
Offshore issuance:
USD 2.5bn/ RMB17.3bn

40
20
0
Q1

Q2

Q3

Q4

Q1

Q2

2017

Q3

Issuance that meets international definitions:
USD4.2bn/RMB29.1bn

2018

China issuance not aligned with international definition

Certified Climate Bonds:
China Construction Bank

China issuance aligned with international definition
Global issuance aligned with international definitions (except. China)

Chinese issuance in the first three quarters has
surpassed last year’s Q1-Q3 volume

Largest issuer:
China Construction Bank

In spite of the fact that Q3 issuance of USD8.5bn translates to a 9%
drop from the USD9.4bn in Q3 2017, the total amount of green bondissued in the first three quarters of 2018 has reached USD21.5bn,
surpassing the USD20.9bn issued in the same period last year. So far,
China’s green bond market has been primarily driven by the
momentum in the beginning of this year.

Largest issuing sector:
Renewable Energy

49% (or USD4.2bn) of Q3 volumes from Chinese issuers is aligned withinternational green bond definitions, while the rest has been excludedin accordance with CBI Green Bond Database Methodology. Proceeds
allocation to working capital and assets/projects that are not alignedwith CBI Taxonomy remain the primary reasons for exclusion.
Lack ofdisclosure
3%

Generalworking
capital28%

Differences between
Definitions
69%

There was only one bond excluded for insufficient information in Q3 –a private placed bond issued by Shanxi Jinmei Huayu Coal ChemicalCo., Ltd. Expected use of proceeds is not available for this bond,and the issuer’s main business area suggests that the proceeds may
be allocated to clean coal.
In addition to the excluded bonds, there are three bonds on thepending list as further investigations are required on their hydroprojects to be financed.

Financial corporates dominate the issuer typeIssuance from financial corporates stood at USD4.3n, accounting for
51% of the Q3 total. 5 out of the 11 financial institutions are new
green bond issuers and most of them are small- and medium-sizedbanks serving local business. These include Fudian Bank, Bank ofJiujiang, Hebei Xingtai Rural Commercial Bank and Ping An Financial
Leasing. China Construction Bank, as one of the top five commercial
banks in China, has also joined the market with its debut offshore
green bond issued in September.
Local government financing vehicle (LGFV) issuers are picking up
momentum in Q3 with USD 827m issued in Q3: triple the amount inlast quarter. Beijing Infrastructure Investment, Qingdao Guoxin
Development, Chongqing Qianjiang Urban Investment, Urumqi City
Urban Investment Group are among the new LGFV issuers.

China Green Bond Market Mid-Year Report 2018 Climate Bonds Initiative

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Financial corporates dominated issuance

Diverse use of proceeds is a trend
The largest proportion of Q3 proceeds were allocated to Renewable
Energy, as defined by CBI. CGNPC International and CECEP WindPower Corp, both non-financial corporates, raised green bond funds
to be exclusively allocated to wind farms.

Financial corporate
Non-financial corporate

Low carbon transport remains in the top 3 climate themes. Financed
eligible assets in Q3 include metro and bus infrastructure. For
example, Urumqi City Urban Investment Group’s CNY1.5bn(USD220m) deal is expected to finance bus lane construction, bus
stations/terminals, a bus signalling system, BRT, and bus parking
facilities. Beijing Infrastructure Investment and Wuhan Metro, areusing green bonds to support metro construction in their regions.

Government-backed entity
Policy BankABS

0m

2,000 m4,000 mGreen ABS issuance in Q3
Two green ABS totalling USD91.6m were recorded in Q3 2018. Wuxi
Huaguang Boiler Co. is using the revenues from the heat and power
supply services of a subsidiary to finance waste to energy projects.
IssuerAsset / ABS collateralAmount(CNY)

Wuxi Huaguang Boiler Co.,
ltd.

Revenues from the heatand power supply
services

265m

Chongqing Kangda
Environmental Protection
Industrial Co.,Ltd

Wastewater treatment
receivables

360m

The proportion allocated to Water has been increasing since thebeginning of this year, from 7% in Q1 to 18% in Q3. Proceeds will be
used for a variety of project types, ranging from wastewater
treatment to stormwater collection and water distribution. With
increased extreme rainfall events, we see more urban pluvial
flooding and precipitation incidents. The proper design andmanagement of stormwater drainage systems and infrastructure
are encouraged to ensure that the infrastructure is climate-resilient.

Total Chinese green ABS issuance for the first three quarters reached
USD952m with 9 deals from 9 issuers. The largest deal is from China
Resources Leasing, which is backed by receivables from 76 leasing
deals and proceeds raised will be fully allocated to 27 solar farms and1 onshore wind farm. The most common sectors so far are renewableenergy and water infrastructure.

Offshore issuance accounts for 19% of Q3 issuance

Use of proceeds (CBI definition)
Land Use Industry Adaptation
1%
1%
3%
Waste
12%
Renewable
Energy
30%

Water
18%

Low Carbon
Transport
23%

Low Carbon
Building
12%

Three deals were listed on overseas stock exchanges in Q3,
accounting for 19% of the quarterly issuance. China Construction
Bank, CGNPC, and China Everbright Bank issued offshore green bondson Luxembourg Green Exchange, Euronext Ireland and Hong Kong
Stock Exchange respectively.
The three venues are among the global top 20 green bond trading
platforms in Q3, according to the Q3 global market report recently
released by Climate Bonds Initiative.
Shanghai Stock Exchange
24%

offshore
19%

Shenzhen Stock Exchange
2%

China Interbank Bond
Market55%

China Construction Bank Corporation has also issued USD1bn worth
sustainable bond on Hong Kong stock exchange, which is not includedin the analysis of this research.
China Green Bond Market Mid-Year Report 2018 Climate Bonds Initiative2

92% of aligned issuance carries an external review

Guangdong and Beijing led the growth

EY remains the largest external reviewer for Chinese issuance,
followed by Lianhe Equator, Deloitte and CECEP Consulting. China
Construction Bank’s USD500m deal was the only Certified Climate
Bond from a Chinese issuer in Q3.
10%

Guangdong
Beijing
Hubei
Guizhou
YunnanShandong
Hebei
Xinjiang
Jiangxi
Chongqing
Shanxi
Hunan
Shanghai
Zhejiang
Jiangsu

8%

14%

7%

7%
13%

3%

18%

1%
1%
1%

30%
EY
Deloitte
NO
China Bond Rating
Shanghai Brilliance

Lianhe EQ
CECEP
KPMG
Zhongcai Green Financing
CCX0m

1,000 m

2,000 mUse of proceeds by Q3 2018 aligned issuers
100%
80%
60%
40%
20%
0%

Renewable energy

Low carbon building

Low carbon transport

Water

Waste

Land use

Industry

Adaptation

News and events
CCDC's three green bond indices list on Luxembourg Stock Exchange
On 12 September, China Central Depository and Clearing (CCDC) and the
Luxembourg Stock Exchange held a signing ceremony for the listing of
CCDC’s Green Bond Index Series on the bourse. The three green bondindices include “ChinaBond - China Green Bond Index”, “ChinaBond China Green Bond Select Index” and “ChinaBond - China Climate-Aligned
Bond Index”. Since the launch of China’s first green bond index in 2016,
CCDC has compiled a series of green bond indices, one of which was colaunched with CBI and CECEP Environmental Consulting Group Ltd. todevelop the world’s first China climate-aligned bond index. The index
was rolled out in September 2016.

addition to HKGFA members, over 300 delegates from the government,
corporates, non-profit organisations and academia attended the event.
HKGFA aims to mobilise private sector resources and talents, assist the
government in formulating green finance policies, promoting green financebusinesses and product innovation in financial institutions. The association
is looking to provide greater access and opportunities for Hong Kong’s
financial institutions to participate in green financing transactions locally, in
Mainland China and in markets along the Belt & Road, thereby seeking toposition Hong Kong as a leading international green financial centre. So far,
HKGFA has 90 members, comprising Hong Kong financial institutions,environmental organizations, service providers and other key stakeholders.

Official launch of Hong Kong Green Finance Association
On 21 September, the Hong Kong Green Finance Association (HKGFA)
was officially launched. The kick-off ceremony and the 2018 Green
Finance Forum were held at the Hong Kong Stock Exchange. In

Green Finance Standards Working Group holds first meeting in Beijing
On 26 September, the PBoC announced that the first plenary meeting of
the National Financial Standardization Technical Committee Green FinanceStandards Working Group was held in Beijing. The meeting reviewed andapproved the “Green Finance Standards Working Group Charter”, which

China Green Bond Market Mid-Year Report 2018 Climate Bonds Initiative3

includes the basic framework of the green financial standards system
and 6 working groups. The meeting pointed out that the development ofgreen finance in China has achieved remarkable progress, yet it remains
urgent to build a unified and complete green finance standard system.
China GFC’s Ma Jun proposes to reduce the risk weight of green assets
On 29 September, Ma Jun, member of the Monetary Policy Committeeof the PBoC and Chairman of China Green Finance Committee,

mentioned at a conference in Beijing that a green finance network has
been established by PBoC and other centrals banks. So far, 18 central
banks and financial regulatory authorities have come on board. Regulatory
discussion highlights on whether the risk weight of green assets should be
reduced. Ma Jun believes that China is well positioned to take the lead in
reducing the risk weight of green assets, through which the funding cost ofgreen loans can be significantly brought down, and banks would be
incentivised to step up efforts in giving green loans.

Policy update
AMAC launches consultation on Green Investment Guidelines
On 12 July, the Asset Management Association of China (AMAC)
released the “Green Investment Guidelines (Trial)” for consultation, in
which it suggests that fund managers should provide financial services
to support environmental improvement, address climate change,
resource conservation and efficient resource use; and should, as amatter of principle, prioritise allocations to green industry andcorporates in the investment process. In addition to defining green
investment, the Guidelines detail the scope of application, objectives
and principles, basic methods, supervision and management.

That said, the SSE also stipulates that at least 70% of the funds raisedby green corporate bonds should be used primarily for businessdevelopment within the issuer’s green industry. For green assetbacked securities, the SSE requires that the underlying green industry
assets should account for no less than 70% of the total assets pool.
The change is important, as in mainland China, enterprise bonds(mainly issued by state-owned enterprises) and corporate bonds are
regulated by NDRC and the stock exchanges respectively.

According to international guidelines, practically all proceeds fromgreen bonds should be linked to green assets or projects. However,
PBOC to include Green Credit Performance evaluation results inaccording to the “Guidelines on Green Bond Issuance” issued bybanks’ MPA
National Development and Reform Commission (NDRC), bond issuers
On 27 July, the People's Bank of China (PBoC) issued the “Notice on
can use up to 50% of the bond proceeds to raise general working
Launching the Evaluation of Green Credit Performance of Depositcapital. So at present, some Chinese green bonds are considered nonType Financial Institutions in the Banking Industry”. According tocompliant with international definitions. CBI will monitor if the bond
PBoC’s requirements, the evaluation of green credit performance isissuers under SSE requirements are in line with the international
conducted quarterly. The quantitative indicators of green credit
performance evaluation include the proportions of green loan balance, definition in terms of use of proceeds.
green loan balance market share and green loan increment, thegrowth rate of green loan balance, and the green loan non-performing Hong Kong SFC unveils Strategic Framework for Green FinanceOn 21 September, the Hong Kong Securities and Futures Commission
rate. The results of the green credit performance evaluation are(SFC) announced the "Strategic Framework for Green Finance", which
included in the bank's macro-prudential assessment.
emphasises that the SFC would ensure that the green products sold inHong Kong are credible by providing disclosure guidelines in line with
SSE implements optimized supervision for bond financing, includinginternational standards, hence unlocking more diverse green
green bonds
investment opportunities.
In late July, the Shanghai Stock Exchange (SSE) issued guidelines for
optimised supervision of corporate bond financing and guidelines for
The SFC will also join forces with the Hong Kong Stock Exchange insupervision of continuous financing. To allow quality issuers to be
more easily financed through the corporate bond market, the SSE has exploring the ways to facilitate the listing and trading of green financial
products, including bonds, indices and derivatives. Other strategic
implemented a simplified review process. Eligible issuers may submit
one single set of documentation for different bond types such as green priorities include raising investors’ awareness on green finance andenhancing related capabilities. The SFC also stresses that it willbonds, poverty alleviation bonds and exchangeable bonds, and thenpromote Hong Kong as a leading centre for green finance bydeclare later the specific bond type, issuance approach, use ofparticipating actively in international initiatives.
proceeds for each issue at the issuance filing stage. As such, theuncertainty of the issuance window caused by challenges around use
CSRC issues a newly revised guidelines to clarify ESG informationof proceeds could be mitigated.
disclosure requirements
On 30 September, the China Securities Regulatory Commission (CSRC)
SSE discloses green corporate bonds and green asset-backed
issued the revised “Guidelines for Corporate Governance of Listed
securities regulatory requirements
Companies”. The focus of revision includes establishing the basic
In August, the SSE issued a Q&A explaining the regulatory
framework for environmental, social responsibility and corporate
requirements for green corporate bonds and green asset-backed
governance (ESG) information disclosure. The Guidelines also require
securities. The SSE allows issuers with more than 50% of operating
listed companies to actively put the green development concept into
revenue generated from green industry to issue green corporate
practice and integrate ecological and environmental protection
bonds without specifying the underlying green projects.
requirements into development strategies and corporate governance.

China Green Bond Market Mid-Year Report 2018 Climate Bonds Initiative4

Climate Bonds discussion: Utility tunnels and hydro projects
Are utility tunnels an eligible green project?
Utility tunnels, also known as common service tunnels, utilidors or
underground pipeline corridors, are passages built underground to houseutility lines such as electricity, water supply and sewer pipes, as well as
telecommunications such as fibre optics, TV and telephone cables.

indicates that the tunnels can help solve the problems of "road zippers"
and the heat-island effect in urban areas. It has also been suggested thatthe tunnels have less impact on air, vegetation, landscape, and soil use
in their life cycle.

The conventional method is to install pipelines and cables individually, eachin its own space. Although it usually has lower initial construction costs, theconventional method causes increasing environmental damage and social
disruption due to the frequent need to open corridors for repairs andmaintenance, especially in urban areas.

Classification in CBI Green Bond Database
We have seen several green bonds financing utility tunnel projects.
With the release of the updated Climate Bonds Taxonomy, CBI green
bond database is now aligned with PBoC catalogue on underground
pipeline corridors. The three types projects allowed by PBoC will fall into
the Buildings sector in the Taxonomy (see table below). Meanwhile,
disclosure of energy efficiency improvements and the energy sources forheating is encouraged.

As a long-term solution, a tunnel that carries multiple facilities could enableeasier subsequent repair and renewal with limited need for surface
excavation compared to the conventional infrastructure.

CBI has started reviewing previously excluded green bonds. A bond will
be included retrospectively if the utility tunnel was the only exclusion
reason. This reflects the evolution of scientific thinking and internalguidance on assets categories. However, a bond may not be reclassified
if there are other projects/assets not aligned with the Taxonomy.

In PBoC’s China Green Bond Endorsed Project Catalogue [2015], urban
underground pipeline corridors are included as an eligible project typeunder Energy Saving. In fact, China aims to build a world-class utility tunnel
network by 2020 to improve urban planning and achieve quality growth.
The State Council Office’s Guidance on Promoting the Construction ofIntegrated Urban Underground Pipeline Corridor (Document No. 2015 61)

Utility tunnels: the alignment between PBoC catalogue and Climate Bonds Taxonomy
PBoC Catalogue

Climate Bonds Taxonomy

Level-I Category

Energy Efficiency

Buildings

Level-II Category

1.4 Urban and Rural Infrastructure Construction with Energy
Saving Efficiency

Urban Development

Level-III Category

1.4.1 Facility Construction

Urban Planning

Specification/ defining criteria•

Urban underground pipeline corridor project;••

Construction and renovation projects which adjust theunderground pipeline layout, route and buried depth,
according to the situation of urban waterlogging and heatisland effect;

District heating for residential andcommercial applications fed primarily
by renewable energy•

Building, maintaining or upgrading
utility tunnels for cables or pipelines,
if there are significant resource andenergy efficiency improvements•

Construction and renovation projects which adjust the
district heating and water supply dispatching, or improve thepipeline standard of heat insulation andLooking into the green credentials of hydropower project
The decision whether to include or exclude a green bond related tohydropower in the CBI Green Bond Database is always a tricky one.

reservoir (tropical or non-tropical) and technology. Social aspects mainly
relate to the displacement of people.

Despite being a source of renewable energy, research shows that large
dam reservoirs in tropical regions could lead to a high level of methane
emissions, a greenhouse gas that is much more potent than carbon
dioxide. Emissions come from the accumulation of sediments rich inmethane-producing organic material. Run of river projects are usuallyless problematic, in this respect.

Classification in CBI Green Bond Database

However, another aspect we take into account are controversies aroundthe climate and social impact that large dam reservoirs (anywhere) cancreate. Impacts could be net positive or net negative, depending on
factors such as reservoir size, geographic location, vegetation at theAs part the CBI’s Standards development programme, we convened aTechnical Working Group, comprised of scientists and policy
organisations, to develop Hydropower Criteria. While such Criteria has

We previously based our green bond inclusion decision on whether ahydro project is run-of-river or dam in nature. We included run-of-riverprojects and small hydro facilities that require small or no reservoirs andexisting large hydro projects, while excluding new large hydro projects
with total capacity larger than 20MW.

China Green Bond Market Mid-Year Report 2018 Climate Bonds Initiative5

not been published yet, the latest version of the Climate Bonds
Taxonomy reflects the recommendations of TWG members.
Consequently, the following hydropower assets will be considered as
eligible: run-of-river, existing reservoirs and new reservoirs with highpower density (preferably 5W/sqm or higher) and low emissions ofelectricity generated (preferably up to 100gCO2e/kWh) unless the
project is controversial due to loss of habitat/biodiversity and/or due tothe displacement of people or with weak social /environmental impact
assessment (if public available).

We have started reviewing previously excluded large hydro bonds, andsome deals may consequently be included if there is sufficient
information to draw conclusions under the new criteria. If the project
names are given in the bond prospectus, investigations on controversies
will be carried out on a best efforts basis. Power density and emission
data will be gathered from the issuer’s disclosure and open sources.
However, a bond will remain excluded if there is insufficient information
for reclassification. New hydropower bonds will be screened using the
new criteria.

Hydro: the alignment between PBoC catalogue and Climate Bonds Taxonomy
PBoC Catalogue

Climate Bonds Taxonomy

Level-I Category

5 Clean Energy

EnergyLevel-II Category

5.6 Hydropower Generation

Electricity& Heat production

Level-III Category

5.6.1 Facility Construction and Operation

Hydropower

Specification/ defining
criteria

Specific to hydropower construction andoperation like reservoir dam, hydraulic tunnel,
powerhouse, generator unit and etc.

•

Generation facilities: run of river, impoundment, pumped
storageoProposed power density > 5W/m2 ; or emissions ofelectricity generated < 100gCO2 e/kWh AND Must
perform an assessment, based on recognised bestpractice guidelines, of environmental and social risks andincorporate measures to address risksoOnly for pumped storage: facility will not be charged
with carbon intensive energy or facility is contributing toa grid which has at least 20% share of intermittent
renewables•

Supply chain facilities•

Infrastructure

CBI in China: Q4 2018
•
•
•
•
•
•

Green Bond Environmental Information Disclosure Indicator System Seminar, Shanghai, Oct 31
The Global Green Finance Leadership Program, Beijing, Nov 6-7
Local Government Bond Issuance Conference, Beijing, Nov 8
Green Panda Bond Guide launch event, Shanghai, Nov 30
The Climate Bonds Taxonomy Workshop, Hong Kong, Dec 3
China SIF (Sustainable Investment Forum) Annual Conference, Shenzhen, Dec 4*Note on figures: Figures used in this report refer to both onshore and offshore green bonds issued by entities domiciled in mainland China, and green panda
bonds unless otherwise stated. Internationally aligned green bonds are those aligned with both local and international definitions of green. Green bonds
issued by Hong Kong and Taiwan domiciled entities are not included in the figures.
This report produced by Climate Bonds Initiative in partnership with China Central Depositing and Clearing Co. (CCDC)

October 2018

The report is also available in Chinese

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investment adviser. Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites
are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites. The Climate Bonds Initiative is notendorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within thiscommunication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. Certification under
the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness ofthe designated debt instrument, nor its compliance with national or international laws. A decision to invest in anything is solely yours. The Climate Bonds Initiative
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China Green Bond Market Mid-Year Report 2018 Climate Bonds Initiative

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