Singaporean lender DBS has approved a green loan amounting to 500 million yuan (US$70.1 million) for Envision Energy to develop a 100-megawatt wind farm in Puyang in northeastern China’s Henan province.

The loan is being issued under the People's Bank of China’s (PBoC) carbon emission reduction facility and represents the first successful transaction by a Southeast Asian bank under the programme.

DBS China also served as the sole green finance adviser for this loan to ensure that the terms comply with the China-EU Common Ground Taxonomy.

When completed, the project is expected to generate about 270 gigawatt-hours of renewable energy – enough to power 90,000 households and avoid 212,600 tonnes of carbon emissions annually.

The landmark PBoC programme enables participating banks to offer low-cost loans to fund sustainable development projects in China across key sectors including clean energy, energy saving, environmental protection, and carbon emission reduction technologies.

The programme helps to subsidize China’s energy transition efforts, with PBoC providing financial institutions with funds equal to 60% of a loan's principal at an annual interest rate of 1.75%.

At the end of June 2024, participating banks have extended over 547 billion yuan in loans. DBS is the only Singapore bank to be selected by PBoC for the programme.

Sustainability solutions

“With this carbon emission reduction support tool, the cost of capital for green projects is significantly reduced, making DBS a preferred partner for businesses seeking to invest in sustainable initiatives,” says Kelvin Wong, head of energy, renewables and infrastructure, institutional banking group, at DBS. “As the first bank in Southeast Asia to transact under this PBoC programme, we are breaking new ground for sustainable finance in the region.”

The latest transaction is part of a suite of solutions that DBS China has developed to support mainland enterprises in their sustainability journeys, alongside tools like panda bonds and green accounts receivable purchase (ARP) solutions.

In 2023, the bank was the joint lead underwriter for 16.5 billion yuan of panda bonds (renminbi debt issued in China by a foreign entity) in the China Interbank Bond Market, accounting for more than 10% of the record 140 billion yuan market that year.

DBS China also underwrote the first green financial bond issued by a foreign bank in China. Its green financing portfolio grew 62% year-on-year at the end of 2023.

Envision Energy is a Shanghai-headquartered multinational corporation that makes wind turbines, electric-vehicle batteries, and energy management software.