For the first time ever, a senior Chinese leader announced to the National People’s Congress that environmental violators and those who fail to report such violations will be “severely punished.” Premier Li Keqiang reported that China had succeeded in meeting or exceeding the previous previously set goals. The draft of the 13th Five-Year Plan builds on that success, requiring greater reductions in the emissions. The headline news for many has been the announcement of a total energy consumption cap of 5 billion tons. This is what Chinese experts term a “coal equivalent” which a standardized measurement used to add all energy sources together. For the first time it states that overall energy use, not just coal use, will be limited going forward. At the same time, there is also a heavy emphasis on the need to improve water and soil quality.
Looking to the next five years, Chinese targets again seem easily manageable, and also put the nation in a good position to meet its commitments under the Paris Agreement. China plans to reduce energy intensity by 15 percent. Demonstrating that non-fossil energy sources are becoming a more important part of the Chinese economy, the carbon intensity target of 18 percent is now a full three percentage points higher than the energy intensity target. This is a significant increase in the importance of non-fossil fuel from previous five-year plan targets, in which there was only a one-percentage-point difference in the two targets.
Hong Kong has lagged behind almost all other major financial centers in promoting the green bond market. China will have to issue a lot of green bonds to finance environment-friendly projects in the days ahead. In order to facilitate the development of green finance, the government will set official standards for the definition of green financial products and projects. One of the main goals is to enhance global investors’ confidence in their market. The Hong Kong stock exchange will review its listing requirements and introduce more flexibility so as to encourage more promising green start-ups. City government must work closely with the financial sector to nurture more local talent specializing in the various aspects of expertise in green finance.