China tries to plug funding black hole in green energy scheme
- Regulator says it wants banks to offer loans to renewable energy developers to help make up for a government shortfall in subsidies to the sector
- The scheme was funded by an electricity surcharge that has not kept pace with growth in the industry, analyst says
But analysts said it was hard to know how successful the efforts would be because it would be up to the banks to decide whether to grant the loans to the companies.
The National Energy Administration said on Tuesday that it would encourage financial institutions to issue loans to companies that were eligible for the subsidies as part of a range of measures to cover the shortfall.
“Some renewable energy companies are pretty tight in funding at present because of the subsidy in arrears, and these subsidies … are guaranteed by the government,” NEA energy department chief Li Chuangjun said.
“So we have asked financial institutions to negotiate with the enterprises about loan extensions, renewals or adjustment of the repayment schedule to ensure businesses will not suffer from interruption of cash flow.”
03:26
Two sessions: How China's environmental policies are giving a boost to green industries
China introduced the subsidies in 2006 to encourage renewable energy developers and the sector has expanded rapidly in the decade and a half since.