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CIB: carbon assets for mortgage loan

By Hu Meidong and Yang Jie (China Daily Fujian Bureau)
Updated: 2011-04-15 17:24
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FUZHOU - Do you believe it? Use carbon assets for mortgage loan? CIB (China Industrial Bank) opens the first business of this kind in Fujian. In April, CIB signed the contract with Xingyuan Hydroelectric Power Co., Ltd in Fujian Minhou County.

In June 2010, Xingyuan obtained registration from CDM (Clean Development Mechanism) council of the United Nations.

CDM council of the UN plays an important role to developed countries and developing countries for their joint efforts on climate changes, but its lengthy application process and complicated rules make the enterprise only get its carbon incomes after the completion of the whole project and the company has to prove its high efficiency on carbon production.

In order to initiate the project, Xingyuan needs to apply for mortgage loan from the bank. As China's first "Equator bank", CIB always attaches great importance to low-carbon projects and try its best to support them for fulfillment.

Using carbon assets for mortgage loan is a recent focus of CIB. The plan applies to the projects that have obtained registration from the CDM council of the UN, CIB will provide a short-term liquidity loan according to the enterprise' future carbon incomes.

CIB official said the bank embraces six advantages of carrying out this kind of business. First, compensate defects of the mechanism of CDM council of the UN, helping enterprises get a loan in advance; second, take carbon assets only for mortgage loan , greatly relieving SMES financial pressure; third, CIB independently develop tools for carbon assets evaluation, reducing enterprises' investment risks; fourth, combine the process of CDM to set up a flexible line of credit and deadline of credit, relieving the enterprises' reimbursement pressure; fifth, provide technology and finance support, professionally estimating every deal and giving reasonable suggestions to its customers; in the end, reinforce itself capacity building, making a good preparation for constructing a sound domestic carbon financial market.