Study On The Motivation And Consequences Of Issuing Carbon Neutral Bonds By China Three Gorges Corporation

Over the past three decades,China has entered an era of rapid economic growth.Nowadays,society is paying more and more attention to issues of environmental protection and sustainable development,and China’s ecological civilization construction has entered an important stage of coordinated development of pollution reduction,carbon reduction,and comprehensive green transformation.The proposal of the "30·60"double-carbon target in the United Nations General Assembly has injected new impetus into China’s green,low-carbon transformation and climate governance.To achieve the goal of carbon neutrality,financial market support is essential.In recent years,China’s green finance system construction and market development have achieved preliminary results,and a relatively complete green finance policy system has been established,with various innovative green finance products and practices constantly emerging.In order to support major decision-making deployments such as carbon peak and carbon neutrality,the bond market is responding to the national low-carbon development goal requirements and guiding more funds to the field of climate change response.The launch of "carbon-neutral bonds" is closely related to the increasing market demand.As a subclass of green bonds,this type of bond is a debt financing tool established specifically for green projects involving carbon reduction effects under the current green bond policy framework,aiming to raise corresponding special funds.Compared with general green bonds,carbon-neutral bonds are more focused on energy conservation and emission reduction projects.As the issuer of China’s first non-financial enterprise carbon neutral bond,Three Gorges Group’s bond issuance behavior has innovative and timely research obj ects.This paper examines China Three Gorges Corporation’s first carbon-neutral bond,"21 Three Gorges GN001".Firstly,the concept of carbon-neutral bonds is introduced,followed by an overview of the current situation and existing issues surrounding carbon-neutral bond issuances in China.This paper then goes on to describe the background of Three Gorges Corporation’s first issuance,its basic terms,green project attributes,and evaluation certifications.Subsequently,this paper analyzes the factors driving Three Gorges Corporation’s bond issuance from both internal and external perspectives.On the one hand,it responds to national policy incentives and supports the green and low-carbon transformation of the power industry,while on the other hand,Three Gorges Corporation has a large demand for construction funds for its hydropower projects,and carbon-neutral bond financing has a lower cost,flexible term structure,and can satisfy the corporation’s funding needs.Finally,this paper summarizes the consequences of Three Gorges Corporation’s debut carbon-neutral bond from four aspects:financial impact,stock price,environment,and corporate reputation.This bond issuance can partly alleviate the corporation’s debt pressure,have a short-term positive impact on its stock price,achieve good carbon emissions reduction benefits,improve the surrounding ecological and economic environment,and enhance corporate reputation by shaping Three Gorges Corporation as a representative of a green,energy-saving enterprise.Based on the above analysis,this article proposes relevant suggestions for the issuance of carbon-neutral bonds from the perspectives of the government,issuers,and third-party evaluation and certification agencies.It is recommended that the government further strengthens the construction of a legal system for green finance,improves regulatory mechanisms,increases the awareness of green investment and financing for Chinese investors,and further opens up the domestic market for carbon-neutral bonds.Issuers are advised to improve the management and information disclosure of funds raised,and third-party agencies are advised to improve the standardization of certification and evaluation services and cultivate more professional talents.This article uses case studies to enrich the corporate cases of issuing carbon-neutral bonds,inspire suitable companies to issue carbon-neutral bonds for financing,and help achieve the dual carbon goals.