Case Study On The Green Bond Issued By China Huaneng Group Under The Background Of Carbon Peaking And Carbon Neutrality

Energy revolution in China has been accelerated since the goals of carbon peaking and carbon neutrality,also called "dual carbon" target,was proposed in September,2020.Clean energy-based Power Supply System will be built by rising green project investment as power plants’ are required to ensure energy supply and safety.The number and scale of Green Bond issuance in domestic market have increased rapidly owing to the improvement of China’s green financial system and policies in the past two years.From 2021 to 2022,China Huaneng Group and its subsidiaries issued more Green Bond in an increasing speed.This financing arrangement can be used as reference for those thermal power producers who are looking for energy structure reformation.Based on the development of China’s Green Bond market,this thesis will adopt case study to analyse the issuance of Green Bond of Huaneng Group and its subsidiaries.It has been found that Huaneng Group issued Green Bonds for the following reasons:Green Bonds issuance is a better debt financing choice to meet funding needs to construct cleaner generators based on its development strategy and financial status.Issuing Green Bond can support clean energy projects,which plays an important role in the process of green transformation.Besides,the issuance of Green Bond helps Huaneng Group sustain a great image,which has a great significance for the group.It is proved that Green Bond issuance brings economic,environmental and social benefits.Firstly,interest margin of Green Bond directly saves financial expenses and the average cost of capital ratio of interest bearing liabilities declines more quickly after the issuance of Green Bond.Secondly,projects funded by Green Bond once operates can improve the power structure and environmental performance,accelerating the process of green transformation.Thirdly,Green Bond contributes to social responsibility performance and sends positive signals to investors,peer enterprises and the government.In addition,suggestions for case enterprise and Green Bond regulators have been made:funding structure could be optimized if Huaneng Group take more advantage of Transformation Bond,Sustainability-linked Bond,and REITs.The interests of investors could be better protected if the rating method and mechanism are upgraded.