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enterprises make good use of future carbon assets, but can also assess 2.2
the value of the carbon assets of the project through bank professionals,
help enterprises improve operation and management efficiency of the
CDM project, and increase missions reductions. However, there are
some uncertainties about carbon assets and value of future carbon
assets is difficult to assess. Therefore, banks run high risks in carrying
out this service, and it is rare to see services purely with future carbon
assets as mortgage to gain credit.
Box 2.9: Carbon Assets Pledge Guarantee Credit Service
The first credit service purely with carbon assets as pledge guarantee (free from other
guarantee conditions) was provided by the Industrial Bank in April 2011 for Xingyuan
Hydroelectric Ltd in Minhou County, Fuzhou City. The 20 MW small hydropower project
run by the company was registered in the United Nations as a CDM project in June
2010; it is expected that the annual emission reductions stands at 43,600 tonnes. The
company signed an emission reduction purchase agreement with the Sweden Carbon
Assets Management Co., Ltd. and is expected to receive an income from carbon sale
annually. To make good use of future carbon assets, have access to funds for optimizing
operation, and management of the small hydropower project to increase future emission
reductions, the company applied to the Industrial Bank for carbon assets pledge and
used income from carbon revenues as the collateral.
International Carbon Factoring Service
The service means that banks sign a contract with seller enterprises;
the seller enterprises transfer receivables resulting from transaction
carried out in the form of credit sale to the banks, and the banks
provide comprehensive financial services for the seller enterprises—
including financing, receivables management, receivables collection,
and credit risk guarantees (Figure 2.8). The core of factoring service
lies in the transfer of receivables. For those CDM project development
enterprises with issued CERs, the CERs income rights in their hands
can be seen as receivables. If banks or other financial institutions
could provide for CDM project development enterprises, a factoring
financing with recourse, and the CDM project development enterprises
sell CERs earning rights to the banks, then they can receive payment of
the receivables in advance (see Box 2.10 for an example).
Local governments could make use of the credit markets and
innovative credit instruments such as financing channels for the
development of a low carbon economy in a number of ways. First of
all, local governments can consider providing government guarantees
for low carbon projects in order to reduce project risks and increase the
capacity for securing loans. Second, local governments could cooperate
Chapter 2  Innovative Financing for Low Carbon Development 117
the value of the carbon assets of the project through bank professionals,
help enterprises improve operation and management efficiency of the
CDM project, and increase missions reductions. However, there are
some uncertainties about carbon assets and value of future carbon
assets is difficult to assess. Therefore, banks run high risks in carrying
out this service, and it is rare to see services purely with future carbon
assets as mortgage to gain credit.
Box 2.9: Carbon Assets Pledge Guarantee Credit Service
The first credit service purely with carbon assets as pledge guarantee (free from other
guarantee conditions) was provided by the Industrial Bank in April 2011 for Xingyuan
Hydroelectric Ltd in Minhou County, Fuzhou City. The 20 MW small hydropower project
run by the company was registered in the United Nations as a CDM project in June
2010; it is expected that the annual emission reductions stands at 43,600 tonnes. The
company signed an emission reduction purchase agreement with the Sweden Carbon
Assets Management Co., Ltd. and is expected to receive an income from carbon sale
annually. To make good use of future carbon assets, have access to funds for optimizing
operation, and management of the small hydropower project to increase future emission
reductions, the company applied to the Industrial Bank for carbon assets pledge and
used income from carbon revenues as the collateral.
International Carbon Factoring Service
The service means that banks sign a contract with seller enterprises;
the seller enterprises transfer receivables resulting from transaction
carried out in the form of credit sale to the banks, and the banks
provide comprehensive financial services for the seller enterprises—
including financing, receivables management, receivables collection,
and credit risk guarantees (Figure 2.8). The core of factoring service
lies in the transfer of receivables. For those CDM project development
enterprises with issued CERs, the CERs income rights in their hands
can be seen as receivables. If banks or other financial institutions
could provide for CDM project development enterprises, a factoring
financing with recourse, and the CDM project development enterprises
sell CERs earning rights to the banks, then they can receive payment of
the receivables in advance (see Box 2.10 for an example).
Local governments could make use of the credit markets and
innovative credit instruments such as financing channels for the
development of a low carbon economy in a number of ways. First of
all, local governments can consider providing government guarantees
for low carbon projects in order to reduce project risks and increase the
capacity for securing loans. Second, local governments could cooperate
Chapter 2  Innovative Financing for Low Carbon Development 117
