China has decided to establish a special re-lending facility worth 200 billion yuan ($31.36 billion) to support the clean and efficient use of coal in addition to the previous financial lending tools carried out by the country on November 8 to help firms cut emissions, according to the State Council meeting on November 17.
The 200 billion yuan special re-loan will mainly be used for key projects and on the principle of marketization to support safe, efficient, green and smart coal mining and processing, green and clean utilization and coal-bed methane exploration and development.
China's national banks will independently issue concessional loans to projects within the scope of support that meet the standards, with the interest rate roughly the same as the market quoted rate for loans of the same maturity level. The People's Bank of China will provide reloan support equal to the principal of the loan, according to the meeting.
The pursue of clean energy use requires a large amount of capital for both research and facility retrofits, while the relending facility, as the latest move carried out by the country to deliver its carbon pledges, would help firms with capital support in their transition to the clean coal use. The loan is very likely to be given to large-scale companies, including major miners and coal-fired power plants.
China has been putting great efforts in cutting carbon emissions, but some aggressive measures the country had taken, including concentrated coal capacity elimination, had to some extent led to a short supply of coal and triggered surges in coal prices.
Rather than ditching coal, which is still the dominant fuel in China, the special relending facility for clean use of coal would provide more leeway in the transition to clean energy, while also better ensuring stable energy supply in a more orderly and balanced manner.
(Writing by Emma Yang Editing by Tammy Yang)
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