On March 27, 2024, Zhang Xiaoyan, Chair Professor and Associate Dean of PBCSF, Tsinghua University, was invited to participate in the forum “Policy Dialogue on the People’s Republic of China's Emissions Trading System (ETS) and The Way Forward”. The forum is jointly organized by the Asian Development Bank, Asian Infrastructure Investment Bank and the University of Hong Kong. At the forum, Zhang Xiaoyan delivered a speech on “Zero-carbon Finance and Emissions Trading Systems”.

Zhang Xiaoyan said in her speech that tackling climate change has become a top priority. Continuing emissions of greenhouse gases are exacerbating the rise in global temperatures. However, current climate finance falls far short of what is needed to achieve climate goals, and climate finance must increase at. least fivefold each year to meet this challenge. China has adopted dual carbon goals of “2030 carbon peaking” and “2060 carbon neutrality” to address climate change. At present, China's total emissions account for 27% of the world's total emissions. In this context, Zero-carbon Financial and Emissions Trading Systems are key tools to achieve this goal.

Zhang Xiaoyan shared her research on the carbon emission reduction effect of green bonds. Based on the data of A-share listed companies from 2014 to 2022 and the carbon emission indicators provided by Trucost, the paper analyzes the impact of green bond issuance on corporate carbon emissions and finds that after the issuance of green bonds, the company’s carbon emissions and carbon emission intensity decrease. In another of her studies on carbon risk in bond market, she discusses the relationship between carbon emissions and corporate bond cross-sectional returns. The results show that the higher the carbon emission intensity, the higher the expected bond return. In addition, she also conducted research on carbon risk in stock market. The study found that the higher the carbon emission intensity, the higher the expected stock return, and the carbon emission premium became more significant after the announcement of the dual-carbon goals.

Zhang Xiaoyan said that China’s carbon emissions trading system continues to develop and has significant impact. Since 2013, seven pilot carbon markets have been launched. On July 16, 2021, China’s national carbon emission trading system officially started. In 2023, the statistical and accounting system for carbon emissions improved. Besides, she also gave examples of relevant papers currently on the impact of China's carbon emissions trading system on provincial carbon emissions, corporate carbon emissions, and corporate green innovation.

At the end of the speech, Zhang Xiaoyan summarized three lessons for developing countries:

First, a zero-carbon finance system promotes carbon emission reduction. Developing countries can create a conducive environment for the growth of a zero-carbon finance market that aligns with their national priorities and contributes to global efforts to mitigate climate change.

Second, establish an ETS system takes time and needs constant efforts. Establishing an ETS system is a long-term process, including determining coverage, setting total limits, allocating emission rights, and connecting with international ETS. Therefore, the establishment of ETS systems in developing countries requires continuous monitoring, evaluation and adjustment to ensure their effectiveness.

Third, Learn from International Experience. China has referred to international best practices in designing its ETS, drawing on experiences from other countries. Developing countries can benefit from studying the experiences of China and other countries with ETS systems, learning from their successes and challenges to inform the design and implementation of their own systems.