Great Prospects for Sino-Israeli “Carbon Neutrality” Cooperation
November 18, 2021
About the author:
Liu Yihua, Fellow of Taihe Institute
On November 10th, 2021, the Jewish Agency for Israel and Taihe Institute co-hosted a seminar on “New Paths for China-Israel ‘Carbon Neutrality’ Cooperation.” Mr. Liu Yihua attended the seminar and delivered an enlightening speech. The main points of the speech are summarized as below.
1. Key Areas of Cooperation
To jointly build safe and stable global green energy industry and supply chains, and promote sustainable socio-economic development globally, China and Israel can carry out practical cooperation in key areas such as green energy technological innovation and equipment upgrading, trade (import and export), cross-border investment, international cooperation, construction of interconnected infrastructure, promotion and adoption of green standards, and biodiversity protection.
1.1 Support the Innovation of Green Energy Technologies and the Green Transformation and Upgrading of the Industry Chain
China and Israel may conduct in-depth analysis of their technological resources, based on their respective national conditions, for developing renewable energy power generation (using photovoltaic power, wind power, nuclear power, hydrogen energy, etc.), efficient electric power transmission, energy storage, hydrogen energy, energy Internet, clean utilization of traditional fossil energy, carbon dioxide capture, utilization, and storage as well as intelligent industry chain, and green technologies, in order to chart the direction and roadmap for technological development. On the premise of legal compliance and controllable risk, both countries should give priority to the R&D and application of technologies with the prospect of large-scale commercial application, and increase investment in the green energy equipment industry to promote the green transformation and upgrading of the industry chain, improve the energy production and utilization efficiency, and facilitate the integration of green energy technologies and digital technologies.
1.2 Support International Cooperation on Green Energy
China and Israel should jointly promote international cooperation on green energy. First, financial institutions in both countries should strengthen cooperation and case sharing in green financial services, such as credit, trade financing, financial market, equity investment and consulting, and commercial insurance, to provide companies with diversified and international investment and financing services. Second, energy companies in both countries should enhance cooperation between the upstream and the downstream portions of the industry chain, on technologies such as low-carbon and zero-carbon power generation, efficient electric power transmission and storage, and green hydrogen energy, share excellent technical solutions and experience, and help build a global green energy industry and supply chain system. Third, research institutes and universities in both countries should strengthen domestic and international academic exchanges and cooperation, pool the efforts of various parties, carry out prospective researches on green energy development, offer advice for government departments, energy companies, and financial institutions. Both countries should enhance policy communication and coordination, drive various parties to act on the principles of extensive consultation, joint contribution, and shared benefits, and promote global cooperation on and high-quality development of green energy.
1.3 Support Green Energy Trade and Investment
China and Israel should enhance international trade and investment in key areas, such as development and utilization of green energy (photovoltaic power, wind power, nuclear energy, and biomass energy), cross-border electricity trading, green energy equipment import/export and industry chain development, and safe energy supply worldwide, to build a clean, low-carbon, and efficient global energy production and supply system and meet relevant countries’ green energy demands in industrialization, urbanization, informatization, and low-carbon transformation. Both countries should support companies’ efforts to carry out environmental assessment and due diligence for their investment projects in accordance with international practices to identify potential investment risks; implement green procurement to optimize the provision and purchase of eco-friendly products and services; promote green design, adopt advanced green manufacturing technologies, improve the recycling and reusing efficiency of raw materials and resources as a way to reduce carbon emissions, and promote the circular use of materials to facilitate environmental protection throughout the life cycle of green energy products.
1.4 Build Interconnected Green Energy Infrastructure
China and Israel should conduct in-depth analysis to understand the world’s demands for green infrastructure, keep track of the industrial policy adjustments of countries of the Belt and Road Initiative, and support companies in promoting the interconnection of clean, smart, efficient, and safe green energy systems, including ports, railways, highways, natural gas pipelines, ultra-high voltage power grids, electricity transformation facilities, and energy storage facilities.
1.5 Support the Promotion and Adoption of Green Standards
With full respect for each other’s cooperative intentions and choice of energy transformation paths, China and Israel should align their standards and systems in areas such as green energy, green manufacturing, green trade, and green finance, advance in-depth cooperation between companies of both countries, and facilitate investment and trade between the two countries through the alignment of standards.
1.6 Support Biodiversity Protection
China and Israel should jointly promote global coordinated energy and biodiversity governance. They should support a substantial increase in the scale, speed, and electrification rate of clean energy development, promote ecological restoration and protection of endangered creatures, and build a biodiversity monitoring system. Financial institutions should strengthen biodiversity protection in investment and financing activities to avoid any acts that may damage biodiversity. Both countries should also step up their biodiversity risk governance and the research and construction of a system for risk prevention and control to channel more funds to eco-friendly projects.
2. Main Measures
2.1 Strengthen Policy Communication and Effectively Deepen and Expand Bilateral Cooperation
First, relevant institutions in both countries must implement the relevant policies and requirements issued by their respective government departments, and provide green energy-related research reports and business guidelines to help regulate the overseas investment, construction, and financial services of companies and financial institutions.
Second, relevant institutions in both countries should constantly deepen policy communication and coordination with relevant departments of their respective governments, actively participate in the formulation of development strategies, plans, policies, and standards, and offer advice on relevant issues.
Third, both countries should draw on their experience from successful domestic and overseas projects and channel resources, identify relevant countries’ needs for low-carbon energy transformation, tap into the potential of green energy cooperation, establish a library of green energy projects, encourage countries of the Belt and Road Initiative to further improve policy stability, and intensify policy support to form a joint force for the world’s green sustainable development.
2.2 Strengthen Sci-Tech Innovation and Effectively Promote the Deep Integration of Low-Carbon and Digital Transformation in the Energy Field
First, China and Israel should support companies’ efforts to strengthen the R&D and utilization of digital technologies (such as AI cloud platforms), digitize the production, transportation, trading, consumption, and carbon emission monitoring of traditional energy, improve companies’ efficiency in decision-making, management, production, and operations, and promote the green and low-carbon transformation of traditional fossil energy.
Second, both countries should support companies’ efforts to enhance the R&D and utilization of technologies for renewable energy power generation, smart grids, smart microgrids, and smart energy storage, and promote the construction of a new type of digital electric power system with renewable energy as the mainstay.
Third, both countries should support companies’ efforts to strengthen the R&D and utilization of hydrogen energy technologies, produce hydrogen using green electricity, reduce green hydrogen costs, and increase green hydrogen penetration in carbon-intensive industries (such as industry and transportation).
2.3 Strengthen Financial Service Cooperation to Meet the Investment and Financing Needs of Investors of Both Countries
First, further expand financing channels. Financial institutions in both countries can strengthen their cooperation with international multilateral financial institutions (such as the New Development Bank, the Asian Infrastructure Investment Bank, the World Bank, etc.) and long-term investment institutions (such as those managing sovereign funds, pension funds, and large insurances), and explore the potential of hybrid financing, non-recourse financing, and structure financing to provide long-term and stable funds and reduce the comprehensive financing cost for companies.
Second, develop more innovative financial products. Financial institutions in both countries can make full use of underlying green financial instruments (such as green credit, green bonds, green trust, green funds, and green insurance), innovate financing products based on the characteristics of green energy projects, develop investment insurance products that offer variety in terms of risk coverage, term, premium, and insured value, and comprehensively improve the service capacity of financial instruments.
Third, further improve digital service capabilities. Financial institutions in both countries should jointly build and leverage e-service platforms to provide companies with “intelligent” financial services (such as personalized strategic and tactical consulting) based on their needs and improve their capabilities to acquire project information and build and operate projects.
Fourth, further improve risk control capabilities. On the one hand, financial institutions in both countries should jointly strengthen their capability to identify, provide early warning, and dispose of conventional risks (such as political, legal, economic, and social risks) of green energy projects, and keep consolidating their foundation for risk control. On the other hand, they should fully understand and prudently manage climate risks of green energy projects, integrate climate risks into their country-specific risk management system and investment and financing decision-making process, carry out climate risk analyses and stress tests based on their actual conditions, and improve their capabilities to analyze and manage climate risks.
2.4 Strengthen Researches on “Carbon Peaking and Neutrality” and Jointly Establish a Climate Risk Governance and Risk Control System
First, financial institutions in both countries should jointly research and develop a measurement index system for “carbon peaking and neutrality,” optimize the climate change risk model, push banks to improve their “carbon risk control” implementation system, and make contingency plans in advance.
Second, financial institutions in both countries should jointly urge relevant financial institutions to carry out carbon emission and climate risk stress tests, establish a climate risk governance and policy framework, build up a mature whole-process climate risk management system, and include climate risks into comprehensive risk control.
Third, financial institutions in both countries should jointly promote the construction of a carbon emission information system. They should strengthen the collection, sorting, and labeling of relevant countries’ carbon emission data, and help build a system for the calculating, monitoring, analyzing, and reporting of carbon emission data.
Fourth, financial institutions in both countries should jointly promote the disclosure of carbon emissions information. They should keep tracking the progress of their international counterparts, enhance the comparative study of disclosure framework and content, explore the establishment of systems and procedures for disclosing climate and environmental information, urge relevant financial institutions to gradually implement the “carbon disclosure” policy and improve the accuracy and informativeness of the disclosed information in terms of governance, strategy, risk management, indicators, and objectives, and push financial institutions in other countries to sign the Green Investment Principles for the Belt and Road.
2.5 Strengthen Professional Training and Constantly Improve Capacity Building and Technical Assistance
China and Israel should focus on green energy projects and technological cooperation, regularly hold capacity-building activities such as talent training, strengthen talent reserve in green energy and other fields, advance mutual learning among countries, and promote the alignment of international standards.
ON TIMES WE FOCUS.
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