Guangdong creates a new model for emission quota mortgage financing

Since China Emission Exchange (Guangzhou) launched allowances mortgage financing business on December 17, 2015, the mortgaged allowances have reached 1.445 million tons and raised a total of 11.6 million yuan as of June 21, 2018.

Since China Emission Exchange (Guangzhou) launched allowances mortgage financing business on December 17, 2015, the mortgaged allowances have reached 1.445 million tons and raised a total of 11.6 million yuan as of June 21, 2018.

Due to the specialty of carbon quotas, enterprises that cap carbon emissions in Guangdong must submit specific quotas under their actual emissions to the Guangdong Development and Reform Commission, to fulfill their duties in June each year. Therefore, the allowance mortgage financing maturity generally does not exceed ten months.

To solve the financing problem in the cross-performance period, the high-tech zone branch of Guangdong Sihui Rural Commercial Bank, Sihui Junma Cement Co., Ltd. and the CEEX, decided to make a bold step.

In October 2017, Junma Cement loaned 6 million yuan from Sihui Rural Commercial Bank on a mortgage of 1.25 million tons of allowances for renewing its energy-saving and emission-reducing technology, with the maturity date to May 2018.

However, due to operational reasons, Junma Cement needed to extend the repayment period to January 2019. After studies and discussions, Sihui Rural Commercial Bank and Guangzhou CEEX decided to allow Junma Cement to use a deposit certificate to replace emission allowances as the mortgage during the performance period. As long as the allowances of 2018 are issued, the new quotas will replace the deposit certificate as the mortgage, thereby extending the mortgage period.

Source: China Emission Exchange (Guangzhou) website

Disclaimer: This is an article created by Michael Liang for Chinasdg.org. You can find the original article here: https://chinasdg.org/2020/06/05/guangdong-creates-a-new-model-for-emission-quota-mortgage-financing/.

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