Growing a green bonds market in China

The report argues that China's transition to a low-carbon economy requires significant funding, estimated at RMB2 trillion annually, which can be partially met by growing a green bonds market. It recommends establishing a 'Green Bond Market Development Committee' to create China-specific green definitions based on the CBRC's Green Credit Reporting Instruction and a government-approved supervisory entity for third-party verification. Policy recommendations include providing corporate tax credits for interest on green bonds, establishing partial credit guarantees for green municipal and PPP project bonds, and expanding R-QFII and QFII quotas specifically for green investments. The report emphasizes that green bonds should be earmarked for specific projects rather than entity-level credentials to maximize market scale and transparency.

• China's 'green development' requires an estimated annual investment of RMB2 trillion, significantly higher than the RMB1.1 trillion in green investment flows recorded in 2012.
• The report recommends the creation of a 'Green Bond Market Development Committee' to develop green standards for the bond market, using the China Banking Regulatory Commission's (CBRC) 2013 Green Credit Reporting Instruction as a foundation.
• A proposed verification system for green bonds should involve a government-approved supervisory entity overseeing independent third-party verifiers, a model inspired by China's local emissions trading schemes and National Energy Savings scheme.
• To incentivize green municipal and public-private partnership (PPP) project bonds, the report suggests establishing a central fund for partial credit guarantees or using monoline insurance.
• The report proposes providing corporate tax credits for interest earned on green enterprise bonds, corporate bonds, and medium-term notes to attract domestic institutional investors who currently face a 25% corporate tax on non-government bonds.
• To increase foreign investment in green bonds, the report recommends establishing specific green investment quotas through the expansion of the R-QFII and QFII programmes.
• The report argues that China-specific green definitions are necessary because its environmental challenges extend beyond climate change to include water scarcity and other types of pollution.
• The report suggests that the interbank and exchange markets should be linked with a common categorisation of green bonds to prevent the same green project from being used to issue multiple bonds across different markets.

APA

Kidney, S., Sonerud, B., & Oliver, P. (2015). Growing a green bonds market in China. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/growing-green-bonds-market-in-china-en.pdf

Chicago

Kidney, Sean, Beate Sonerud, and Padraig Oliver. Growing a green bonds market in China. International Institute for Sustainable Development, 2015. https://www.iisd.org/system/files/publications/growing-green-bonds-market-in-china-en.pdf.

Wikipedia

{{cite report |last1=Kidney |first1=Sean |last2=Sonerud |first2=Beate |last3=Oliver |first3=Padraig |title=Growing a green bonds market in China |publisher=International Institute for Sustainable Development |date=March 2015 |url=https://www.iisd.org/system/files/publications/growing-green-bonds-market-in-china-en.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kidney2015growing, author = {Kidney, Sean and Sonerud, Beate and Oliver, Padraig}, title = {{Growing a green bonds market in China}}, institution = {International Institute for Sustainable Development}, year = {2015}, month = mar, url = {https://www.iisd.org/system/files/publications/growing-green-bonds-market-in-china-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }