China approves $31bn clean energy lending facility

19 Nov 21

The Chinese government is set to allocate up to $31.3bn to support the clean use of coal, the nation’s largest energy source.

Under a new lending facility, the People's Bank of China will provide financing to commercial banks, which will lent to eligible projects at a reduced rate, according to State Council premier Li Keqiang.

Speaking following council approval on Wednesday, he said the facility will provide targeted support for safe, efficient, green and smart coal mining, alongside promoting the development and usage of coalbed methane, natural gasses found in coal.

Li Keqiang said: “There is huge potential for the clean use of coal. At present, the energy intensity of coal is still relatively high.

“We must accelerate the commercialisation of the mature technologies we have, seek steady upgrades based on practices in our country, and continue to deepen international cooperation.”

Coal, a large contributor to carbon emissions, accounted for 56.8% of China's primary energy consumption in 2020, down from around 68% a decade earlier.

The State Council said the loans would be in addition to a lending tool rolled out by the central bank this month, to support reduction in carbon emissions.

Alongside the lending facilities, the State Council said it will explore tax incentives, and funding support from government special bonds, to increase finance to projects promoting cleaner coal use.

Li Keqiang said: “Financial, fiscal and tax support can make a big difference.

“We need to fully consider the combined use of multiple financial, fiscal and tax policies to help lower costs and promote efficiency.”

The Chinese government has been ramping up coal production in the last couple of months, off the back of soaring energy prices, to provide heating over the winter.

Chinese coal production hit a six-year high last month, according to data released by the country’s National Bureau of Statistics.

In September, an independent researcher said that Chinese government revenue and spending could match for the first time since 1985.

In the first seven months of this year, China received £1.54trn in budget revenue, against £1.55trn in spending, according to visiting research professor at the East Asian Institute, National University of Singapore, Christine Wong.

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