The 6th Handle Climate Change Film Festival (HCCFF) was held in Longgang District, Shenzhen on October 16, under the theme of “Opening the Door to the Green Future by Decarbonization Reform”. In the parallel forum of “How to Play the Role of Carbon Market and Carbon Finance in the Context of Dual Carbon Goals”, Mr. Yip participated in a round table dialogue and shared means of green finance and carbon finance to help the energy transformation and the technical support needed in the formation of the market.
Guests who attended the parallel forum included important guests such as the director of the Energy Research Institute (ERI) of the National Development and Reform Commission (NDRC), the deputy director of the Ecological Civilization Research Center of Tsinghua University, the deputy general manager of the Shanghai Environment and Energy Exchange (SEEE), and the director of the China Office of the Children’s Investment Fund Foundation (UK) (CIFF).
Mr. Yip said that achieving the goal of Carbon Peaking and Carbon Neutrality must start with the energy structure transformation. To realize the energy structure transformation from fossil fuel (i.e. coal and oil) to clean energy, it needs the intervention and coordination of policies, legislation, technological upgrading, and financial means.
As a green finance practitioner, Mr. Yip shared three financial tools to help drive the whole society, including the government, enterprises and citizens, to participate in pollution reduction and carbon reduction, and to achieve the dual-carbon goal.
- Green Bonds Introduce Social Capital.
Use some government social security funds, local government special industry funds, commercial bank funds to issue bonds to invest in eligible green projects. In addition to enjoying relevant preferential policies, it also helps companies to adopt technology, product and service innovations, and promote more new materials, new technologies, new products and services into the market.
- Diversified New Green Financial Products to Expand Investment Options
Diversified green financial products have emerged due to the large number of investment projects in green bonds, the lack of rigorous operation process, and relatively ineffective in pollution and carbon reduction. Besides green bonds, more equity investment and new financial products are also encouraged to target carbon market in order to promote energy transformation.
- Carbon Futures Market Increases Green Asset Liquidity
In the development stage of green finance, a larger number of investors and innovative capital need to be introduced. In order to further encourage social capital to enter the market, solving the liquidity problem of green assets is necessary. The standardization and facilitation of carbon asset transactions, transparency, and the design and promotion of new carbon financial products are all needed. From the perspective of international experience, carbon futures trading has played a huge role in the risk and reward profile, such as standardizing transactions, introducing more investment opportunities, helping investors to grasp long-term prices, and hedging price risks. The construction and long-term development of the domestic carbon futures market are of great significance to the achievement of the dual-carbon goal and the transformation of the energy industry.
Green Finance and Carbon Finance Also Needs Technology Innovations
Additionally, it is necessary to further improve the carbon trading market and enrich carbon financial products so that green finance and carbon finance can better serve and achieve the dual-carbon goal. The current green financial market is still mostly based on the green bond market, and the financial attributes and liquidity of the carbon trading market are still low.
At present, green capital flows to energy product suppliers in large quantities, and a series of low-energy, clean energy products have been developed, but the market can barely drive consumers to buy these new products. From the perspective of market development, there are no strong and effective incentives and supporting policies at the consumption side. In the subdivision of green finance and carbon finance that help promote clean energy, the market needs more innovations in materials, technologies and business models.
Treelion is a great example of technology and business model innovation. Treelion is using fintech to do green finance. Treelion has a green finance infrastructure based on blockchain technology, which can realize the certification, circulation and transaction of green products and ecosystem through a standardized and digitalized business model.
The platform is based on big data, AI, blockchain and other distributed technologies. While reducing costs and risks, it realizes the standardization of the value of green assets and improves the financial attributes and value of green assets, which bring liquidity to green assets that are currently difficult to trade (e.g. ecological resources, renewable energy, carbon sinks, etc.) and direct more social capital into the green economy.
Treelion collaborates with domestic and overseas government agencies, regulatory agencies, scientific research institutions, international organizations, CSR companies, etc., and hopes to eventually build a broad and inclusive green financial ecosystem.
In terms of carbon finance, Treelion uses technical means to establish blockchain-based business and consumer carbon ledgers for various entities, and uses blockchain technology to help effectively carry out credible carbon footprint tracking, and to complete anti-theft, customer identity verification, anti-money laundering, privacy and confidentiality, transaction methods, transaction speed, etc.. Meanwhile, Treelion’s technology allows online verification by regulatory agencies, tax agencies, and certification agencies, simplifies the approval process, accelerates transaction speed, so as to allow investors in the green financial market to use the latest blockchain technology, maximize trust, conduct asset confirmation, and reduce costs and improve efficiency in management and transactions.