China Green Bond Market Newsletter H1 2021
中国绿色债券市场简报 2021 上半年度
January-June 2021/2021 年 1 月- 6 月

Market overview
At a glance

Green bond market boomed in H1 2021
China’s green bond market was active in the first six months of2021. It showed a speedy recovery from the impact of COVID. TheUSD37.6bn worth of total green bonds from China represent a58.1% surge year-on-year. Fifty eight percent USD22bn of H1
volume from Chinese green bonds is in line with international green
bond definitions. Another 24% was excluded in accordance with CBIGreen Bond Database Methodology. The rest 17.6% was in thepending list mainly due to insufficient information.

Total H1 Chinese issuance: USD37.6bn/CNY201.3bn
Onshore issuance: USD29.0bn/CNY187.9bn
Offshore issuance: USD8.6bn/CNY55.54bn
Issuance that meets international definitions:
USD22.0bn/CNY115.5bn

USD Billions

Largest issuer: China Development Bank at USD3.1bn
20

Certified Climate Bonds: Jinneng Group, GD PowerDevelopment, China Development Bank

15Largest issuing sector: Low Carbon Building

10efficiency improvement target for green building projects and 3) theinsufficient overall transparency for private placements.

50Q1

Q2Q32020

Q4Q1Q22021

Pending
China issuance aligned with international definition
China issuance not aligned with international definition
USD22bn Chinese green bonds meet CBI green definition
The total amount of China green bonds that are aligned withClimate Bonds Initiative’s green definitions reached USD 22bn in H1- more than doubled the USD9.54bn achieved from the same
period last year. China Development Bank’s USD3bn/CNY20bn
Certified Climate Bond, as one of the largest single deal in March,
contributed to the momentum.
Four Certified Climate Bond from China’s domestic market
They account for 9.1% (USD3.43bn) of total H1 issuance. This is ahuge increase from 0.69% (USD148.9m) and the 0.92% (USD127m)
achieved in H1 2019 and H1 2020 respectively.
Jinneng Group issued their first USD78m (CNY500m) Certified
Climate Bond in June. China Development bank issued a USD3bn(CNY20bn) Certified Climate bond in March both carrying
verification reports from Lianhe Equator. GD Power
Development Co., Ltd. issued two Certified Climate Bonds, totalling
USD284m (CNY1.84bn). The use of proceeds is allocated solely
towards wind projects. All of them continue to use the ClimateBonds Standard Version 3 for Certification in China.

For example, the green ABS issued by Shanghai Automotive Group
Financing Co. is kept on the pending list due to the limited
information on underlying assets. Further analysis is needed for Bankof Liuzhou as funds raised by its green bond might be linked to aCNG/LNG private vehicle project.
Proceeds for general corporate use remained the primary reason forexclusion
By amount issued, 69% of the overall excluded bonds in H1 failed tomeet the best practice as they had proceeds allocated to general
corporate purposes, not necessarily linked to green assets, projects oractivities. For example, Fuzhou Linchuan Urban Construction andDevelopment Investment Co., Ltd. allocated 50% of bond proceeds tofinance water treatment facilities, while using the rest to supplement
general corporate working capital.
9% was excluded for projects that are not in line with Climate Bond
Initiative’s green definitions. This is due to the discrepancies between
China’s local and international green definitions. For example,‘pollution control facilities without CCS’ are eligible in China’s local
context but is not considered as green by international investors. The
remaining 22% fail to provide sufficient information.

There are 33 deals on the Pending list, and they account for 17.6%(USD6.6bn) of H1 issuance. The main reasons leading to a pending
decision include but not limited to 1) the lack of disclosure on
power density for hydro projects, 2) the lack of disclosure on energy
China Green Bond Market Newsletter H1 2021 Climate Bonds Initiative

Green bonds on Pending list
In some cases, use of proceeds details are not available atissuance. Thus, we cannot make an immediate judgement on
the green credentials of the bond, the bond is marked as
Pending and further research is needed. The investigation
process is carried out by the end of the next quarter. If nofurther information is made available or the information
obtained does not show alignment with taxonomy, the bond isadded to the excluded bond list.

1Most Chinese green bonds were issued domesticallyIn H1 2021, 77% of all Chinese issuance was issued domestically.
Among which, 78% were placed on the China Interbank BondMarket, followed by listing on Shanghai Stock Exchange withUSD5.45bn, or 19%. The remaining 3% were listed on the Shenzhen
Stock Exchange.
Hong Kong Exchange had the largest proportion of the China’s
offshore green bond by volume, with a total of USD5.18bn (14%),
where Industrial Bank of China’s USD600m/CNY4.1bn deal waslisted in June.

China Interbank
Bond Market 78%Offshore
23%

5Shanghai StockExchange 19%Non-Financial corporates were active issuers
403020100H1H22019

Development Bank
Government-backed entity
Non-Financial Corporate

H1H22020

General Working
Capital

69%Insufficient
information

Development bank accounts for 8% with USD3.1bn issuance volume,
marking the highest proportion historically on a semi-annual basis.
This was driven by the China Development Bank’s
USD3.1bn/CNY20bn Certified Climate Bond issuance in March.

Low Carbon Building became the dominant theme
By Climate Bonds definition, Low Carbon Building has replaced Low
Carbon Transport to become the largest climate sector since 2019,representing 39% of total issued volume in H1 followed by Renewable
Energy (30%) and Low Carbon Transport (27%).

Shenzhen Stock
Exchange 3%Onshore
77%

Non-aligned

22% 9%

H12021

Financial Corporate
Local Government

Non-Financial corporates replaced Financial Corporate to become
the largest issuer type with 60% (USD22.5bn) of the overall issuancein H1. This is mainly due to the benchmarked-sized issuance in Julyby State Grid Corporation of China, China Energy Investment
Corporation and China Three Gorges Group (CNY9.5bn, CNY5bn and
CNY7bn respectively).

Low Carbon Building: Twenty-three green bonds allocated proceeds
towards low carbon building. Five listed offshore, with three at Paris
Stock Exchange, two at HKEX and Frankfurt. All of the eligible bonds
financing low carbon building had a stringent performance indicator.
For example, Knowledge City (Guangzhou) Investment financebuilding with 3-star Green Building Certificate and Nanjing City
Construction finance building with 65% energy efficiency
improvement.
Energy: China Development Bank, with an issuance volume ofUSD3bn allocated to wind and solar, ranked the largest issuer in thisclimate sector. Also, State Grid Corporation and Three Gorges
Corporation are among the top issuers by volume in China’s domestic
market, using green bond proceeds to finance renewable energy
transmission line and hydro projects.
Water: Bank of Nanjing had the biggest issuance volume of USD600m
dedicated to water resilience and land remediation. Other projects inwater sector include water supply, water treatment facilities,
rainwater management, wastewater treatment, water adaptation etc.
It’s worth noticing that Henan Water Investment Group issued agreen bond to finance water treatment PPP project, the only type ofwater PPP project in H1 2021 based on public disclosure.
1%Government-backed entities is the 2nd largest issuer type totalled
USD5.1bn, accounting for 18% of the H1 total. They tend to issue alarge-sized bonds. For example, Capital Airports Holding Co. Issued
a CNY3bn green bond for water treatment PPP. Guizhou Water
Investment Group issued a CNY2bn green bond for wind projects.
Although all 40 issuers are local government financing vehicles(LGFVs), proceeds allocation varies depending on their respective
focused business areas.
Issuance from Financial corporate is the 3rd largest issuer type with
13% of the total issued amount. This is a significant drop from 43%
in H1 2020. Twenty issuers have brought a total of USD6.8bn worthof green bonds, with 55.9% (USD3.8bn) that is not aligned with CBIgreen definition - mainly due to the combined heat power plants
use fossil fuel as energy source.

3%

30%

27%

EnergyBuilding
TransportWaterWaste

39%

Top 3 regions: Beijing, Guangdong and Jiangsu
The volume of domestic green bond issuance varies from region toregion, as a general trend - East China has noticeably more issuancethan West China. Also, different provinces present different financing
focus. For example, in Xinjiang Autonomous Region, most of theprojects are financing renewable energy due to the abundance ofsolar and wind resources. In places like Yunna Province, proceeds

China Green Bond Market Newsletter H1 2021 Climate Bonds Initiative2

allocation is towards renewable energy, low carbon building andlow carbon transport, which is in accordance with the local
infrastructure development plans

Lianhe Equator and CCX reviewed 24% of H1 issuance byvolume3%

33% of all issuances carries an external review
Lianhe Equator was the largest external reviewer in H1 with 14%
market share. CCX ranked the 2nd with USD3.7bn worth of green
bonds caring its SPO. Sustainalytics, Golden Credit and CICERO had
also made their way into the top 5 external reviewers. 67% of green
bonds did not carry any form of external review. Most of thesewere NDRC-regulated green bonds.

No Assurance

2%1%
1%

Lianhe Equator

10%

CCX
Sustainalytics

14%67%

Golden Credit
Shanghai Brilliance
CICERO

Green bond proceeds allocation of the top 20 aligned issuers
100%
80%
60%
40%
20%
0%

EnergyBuilding

Transport

Water

Waste

Land

Policy update
The Green Bond Endorsed Projects Catalogue (2021 Edition)
The updated 2021 Edition of the catalogue marks China's
significant progress in unifying domestic green finance standards
and is China's latest and clearest definition of green. In the future,
the identification of the "green" attributes of bonds will be basedon the new version of the catalogue, regardless of its type orissuance market. The new catalogue will take effect on July 1.
The 2021 version of the catalogue follows a four-level structure.
The first three levels are consistent with the Green Industry
Catalogue released by the National Development and ReformCommission. The fourth level includes more detailed descriptionsof specific economic activities. Compared with the Green Bond
Endorsed Projects Catalogue (2015 Edition), the scope has changed
a lot. The new version of the catalogue clarifies more specifictechnical standards and environmental standards than theconsultation draft issued in 2020 and incorporates the “Do No
Significant Harm” principle, bringing it closer to the EUclassification scheme and global principles.
Several Fiscal Measures from Autonomous Region to Accelerate theDevelopment of Nine Key Industries (provisional)
The Measures apply to Ningxia Hui Autonomous Region and encourage
all types of financial institutions to increase green loans in key industries.
China Green Bond Market Newsletter H1 2021 Climate Bonds Initiative

Implementation Opinions of The People’s Government of Hebei
Province on the Establishment of a Sound Green, Low-carbon andCyclical Economic System
The Opinions propose vigorous development of green finance, carryingout green loan performance evaluation of legal entities in the province,and improving incentive and restraint mechanisms of green finance. TheOpinions support insurance institutions to establish a sound green
insurance business and claims service system; encourage eligible
enterprises and institutions to issue green bonds; and encourage eligible
enterprises in green industries to go public and raise funds, and refinancethrough instruments such as additional issuance, corporate bonds andinterbank debt financing tools.
Implementation Plan on the National Eco-civilization Pilot Zone
(Hainan), issued by the Central Committee of the Communist Party of
China and the State Council
The Opinions propose vigorous development of green finance, carryingout green loan performance evaluation of legal entities in the province,and improving incentive and restraint mechanisms of green finance. TheOpinions support insurance institutions to establish a sound green
insurance business and claims service system; encourage eligible
enterprises and institutions to issue green bonds; and encourage eligibleenterprises in green industries to go public and raise funds, and3

refinance through instruments such as additional issuance, corporate
bonds and interbank debt financing tools.
Financial institutions are rewarded for increasing green lending, with apayment of 0.003% of the increased green loans from the autonomous
region’s finance bureau, and preferential policies in Treasury Cash
Deposits. The Measures also support key listed enterprises to issue
bonds, with the finance bureau subsidizing 2% of the bond. The financebureau awards CNY10 million to enterprises making IPOs. The Measures
also propose supporting these key industries to purchase equipment
through financial leasing, and leaseback plant or machinery, and thefinance bureau’s subsidies to a single enterprise will not exceed CNY3
million per year.

This newsletter is produced by Climate Bonds Initiative in partnership with China Central Depositing and Clearing Co. (CCDC). Funding for this publication
was provided under a grant from the UK Government under its Partnering for Accelerated Climate Transitions Programme (PACT) and HSBC as a supportingorganisation.
* Figures used in this report refer to both onshore and offshore green bonds issued by entities domiciled in mainland China, and green panda bonds unlessotherwise stated. Internationally aligned green bonds are those aligned with both local and international definitions of green.

The report is also available in Chinese

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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 Newsletter H1 2021 Climate Bonds Initiative4