Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
The Discussion About Development of Emission Rights Pledged Loan Business ZHANG Wei1, ZHANG Shijun2, ZHOU Luzhu3 1. University of Jinan, China, 250022 2. Shandong University, China, 250001 3. Shandong Jiaotong University, China, 250001 [email protected] Summary: Development of emission rights secured loans business has a certain need, which is conducive for the enterprises to expand their sources of funding, is conducive for the banking industry to develop financial innovation, is conducive for the Government to implement green credit policy and is conducive to develop emissions rights trading market. Development of emission rights secured loans business has a certain practical conditions .It not only has the strong market demand and the ripping basic conditions, but also has the policies and laws to support. Development of emission rights pledge loan business need to sign a bank government cooperation agreement, need the bank to investigate approve loans, need banks and borrowers to sign the contract, and need to manage post-loan. Of course, the development of emission rights pledge loan business exist a certain degree of risk, so it is necessary to strengthen the risk management. Keywords: emission rights, pledge loans, green credit The so-called emission rights quota refers to a variety of loans that are applied or given out regarding emission rights as collateral. Zhang Wei (2007) considered if the industrial enterprises want to survive, they must enjoy emission rights. The companies can use this as a pledge to apply for loans and the banks could then lend to the business. 1 The necessary to develop the emission rights pledged loan business 1.1 It is conducive for the enterprises to develop the funding sources of "energy-saving emission reduction" At present, China's energy-saving emission reduction funds mainly come from the governments’ demonstration projects and enterprises’ self-financing. From the enterprise perspective, the development of the enterprise itself has a great demand for capital. In the condition that the enterprises ‘financing gap is difficult to solve , the energy-saving emission reduction projects would not normally be arranged priory. So energy-saving emission reduction has the urgent need for other more effective sources of funding. Because of the uncertainty of energy-saving emission reduction projects’ benefits, commercial banks take risk and safety into account .It is often difficult to put in loans. The development of emission rights secured loans business can be combined with China's actual conditions .Through reasonably designing the financing method enabling enterprises to provide effective guarantees to banks and greatly reducing the banks’ high-risk by giving loans to energy-saving emission reduction projects, and improve the profitability and liquidity of loans, thereby mobilizing banks’ initiative to participate in energy-saving emission reduction. Development of emission rights quota can effectively increase the opportunities for companies of energy-saving emission reduction to obtain commercial loans, allowing a greater degree of energy-saving emission reduction to meet the corporate demand for funds and alleviate the current difficulties of issuing finance. 1.2 It is conducive for banking sector to develop financial innovations Financial innovation is an important force to promote the development of China's commercial banks. Changes in the modern banking system are gradually developed in the game of financial innovation and financial supervision. The core of financial innovation is the innovation of financial instruments and product, which is the core power of survival and development for commercial banks. In recent years, 586 some commercial banks closely integrate business needs, and actively explore new ways of bank loans. For example the innovation of intellectual property as security for loans model, the export tax refund as security for loans model. Emission rights quota is born out in this context. The development of emission rights quota regards financial markets as a starting point and foothold and directed by environmental market demand. It meets the needs of different groups in the circumvention of trading risk, lower transaction costs, etc, and makes many can benefit from it. Pledged Loan in the form of emission rights can not only expand the bank's business areas, enhance the service function of financial institutions and improve risk-averse and profitability of financial institutions; but also can take the initiative to adjust supply and demand factors in the green financial markets. It has a demonstration effect to improve innovation of China's financial instruments fatherly. 1.3 It is conducive to implement the Government's green credit policy Green credit policy is an environmental economic policy which integrates the environmental regulation and control, and strives to curb high energy consumption and high pollution industries to develop disorderly and expand blindly. First, banks grant emission rights quota, if the enterprise project was terminated due to pollution reasons, commercial banks could be transfer the emission rights of the company in the market to obtain part of the recovery of loans. Secondly, many small and medium enterprises are difficult to obtain loans from banks, and therefore they have to take private financing or self-financing mode. The implementation of emission rights quota makes a large number of SMEs in their business activities supported by bank loans, thus enhancing the influence and binding of the bank loans to SMEs. Giving loans support to the enterprises which control the pollution and giving sanctions to the company which always has a high pollution can adjust the environmental behavior of corporate. Third, because China is still in the middle and late industrialization, some polluting industries and enterprises develop very quickly in recent years. Only electric power, steel, nonferrous metals, building materials, petroleum processing, chemical industry, energy consumption and carbon emissions is seventy percent of the total industrial energy consumption and carbon emissions. But from a pure business perspective, these industries and enterprises remain the focus of commercial banks loans. But other industries and enterprises lack enough attractive to commercial banks funds. Through the implementation of emission rights quota in all sectors for commercial banks, low-risk and high profits will attract the banks’ capital flow to environmental protection projects. In addition, the standards of the emission rights pledged loan is relatively easy-to-specific and can be more easily work out the relevant supervisory measures and internal implementation details that have greatly increased the operability of the green credit policy. 1.4 It is conducive to develop the emissions trading market further 1.4.1 Increase market-oriented of emissions trading In the original emission rights trading, pollution trading enterprise is almost the only subject. The model of the emission rights quota establish the emissions trading intermediaries such as investors and banks , build a co-operation platform for enterprises, banks and investors to transfer f emission rights between each other. This mechanism allows banks and other investors can really benefit from emissions trading, with incentives of involving in pollution control actively in this area. Therefore, emission rights trading can make use of more market forces making the internalization of environmental damage cost is resolved automatically in the economic system. 1.4.2 Reducing the cost of emission rights trading of enterprises A mature and sound emission rights trading market need every parties to participate in transactions where the parties have sufficient market information and take part in frequent transactions in a stable price. To achieve this purpose the necessary transaction costs can not be ignored. The emission rights quota model can reduce enterprise costs of emissions trading to some extent. Companies that pledge emission rights can directly obtained the loan of sewage treatment from the bank, while the companies has demand for emission rights could have pollution rights after paying the transfer fee to banks and investors. As for market demand and supply and other basic information of emission rights, enterprises no longer need to spend a lot of energy to seek, Emission rights reserve Center can play a more open, fair environment for information transmission and trading hub role. Due to transaction procedures and 587 the transaction time being greatly reduced, the cost of such companies participating in emissions trading emissions trading will be reduced accordingly. 2. The actual conditions of developing emission rights secured loans business 2.1 The strong market demand First, because local industry is more developed, and has a larger base of pollutant emissions, in the restrictions of total pollutant control system, the newly-built enterprises, often because there is no adequate sewage indicators they can not be settled, thus affecting the local economy and social development; Therefore, it is necessary to establish a reasonable and lawful mechanism to make an inventory of the local environmental capacity resources, under the premise of making it not increase the total discharge of pollutants of the enterprise can be settled locally. Second, the purchase of emission rights to enterprises is not a small sum of expenditure. Taking Jiaxing City as an example, various pollutants price its SO2 emissions is 20000 / ton, heavy polluting industries of the COD is 80000 / ton , the general construction projects, COD is 60000 / ton, especially for with higher emissions speaking, it is a heavier burden. Third, the enterprises not only require large inputs to improve production technology and construct energy-saving emission reduction facilities, but also have a long construction period, and economic efficiency is not obvious. Then it may give some enterprises the relatively heavy financial burden,. And such concerns will affect environmental investment initiative of corporate. The two sides are likely to increase business spending, affect enterprises’ production, operation and development, particularly currently our country is facing pressure both on the environment and economy. In the background of RMB appreciation and the ravaging international financial crisis, emission rights quota can help enterprises to raise environmental funds and help companies to save energy and help to reduce emissions, without placing an extra financial pressure on enterprises, as well as affect the normal operations of enterprises. Today our country is facing the double pressure of environmental and economic fields. It may be a good approach. 2.2 The basic conditions are mature First a tool that meets requirements that markets play the role of regulating economy further. As the continuous improvement of China's market economy system, the means of regulating the economy and environment should more use market regulation spontaneously rather than administrative means, while emission rights trading is such a suitable and economic means. In recent at home and abroad there are many practical, international experience has shown that emission rights trading can simultaneously achieve significantly environmental, social and economic benefits, while the domestic trial has also made more obvious results. The emission rights pledged loan is an important means to improve the emissions trading that should be encouraged and developed. Second, China's current system allows. Some of the practice in other similar fields, such as forest, land use rights and intellectual property as security for loans, etc., that all provides useful exploration and guidance to explore emission rights quota form and processes. Third, the government, enterprises and people give their support. First, the experimental areas such as Jiaxing, Ningbo and other places get many supports from local government. They not too much focus on the short-term impact on the local environment Investment and the GDP by introducing emissions trading mechanisms, , while focus on society and economy future sustainable development of environmental, promulgate number of rules and approaches, achieve remarkable results. Secondly, in the existing environmental policy system and levels of national environmental awareness, this policy has got a wide range of recognition and support from the people and enterprises. Enterprises not just focus on the currently increasing expenditure, in order to assume more social responsibility; they make more active investment in environmental protection. Third, the emission rights quota, broaden the corporate’ sources of funds, thereby reducing the pressure on corporate investment in environmental protection. Fourth, the actual sewage disposal of various industries and enterprises permit. Currently the average cost of pollution abatement in the industry, region, ownership composition and size exists the significant differences between the nature of property rights which provides a realistic possibility for the 588 implementation of emissions trading system. In short, by the above analysis that the capacity of the environment is a natural resource, environmental capacity surplus is collectively owned by local residents, sewage right is the use rights and income rights of the spare environment capacity. The sewage is vested in the usufructuary of China's current "Civil Code" that can do pledge financing. That is in our current legal system and ownership system, the implementation of emission rights quota is feasible, reasonable, and at the same time does not violate the law. 2.3 Policies and laws to support 2.3.1 China's current law support legal status of emissions trading In order to ensure the smooth implementation of emission rights trading, it need to form a complete system of laws and regulations, specifically including the identification of environmental capacity resources, the total amount and quota allocation and such as the legal basis of emission rights trading. But the current portion of the existing laws and regulations could provide some legal basis. Total control as an environmental policy in China, in September 1996 at the State Department "" 95 "period the total discharge of major pollutants control plan" was formally proposed. The "Interim Regulations on the Huai River Basin Water Pollution Prevention" in section 9 to 14, 1996 revised "Water Pollution Prevention Law" and the 2000 revision of the "Air Pollution Prevention Law", respectively, provide legal basis for the total control of pollutants in water environment and the total amount control of atmospheric pollutants. It is equivalent with defining limitation and scarcity of environmental capacity resources indirectly on a legal basis, laying a solid foundation for emissions trading. The existing legal basis for the total amount allocation of quotas is a waste discharge permit system. China from the early 1990s began a pilot of pollutant discharge permit system. In 1992, it implemented the emission permit system. Amended in 2000, Article 15 of "Air Pollution Prevention Law" made detailed provisions about the total quota system of pollutants. Classification in accordance with environmental economic instruments, emissions trading is a kind of economic policy. China has corresponding provision about using economic policy to control environmental pollution. Amended in 2000, article 15 of "Air Pollution Prevention Law" provides new requirements about using economic policy to control the atmospheric pollution. Article 8 of the Act provides that: States take action to help air pollution control and comprehensive utilization activities, economic and technical policies and measures. This could include policies to encourage you to try emissions trading. Emission rights pledge loan is an important form of emissions trading. The permit and encouragement on the emissions trading is the permit and encouragement on the emission rights quota. 2.3.2 The emission rights can be used as the subject matter pledged for loans. In China, the provisions concerning the pledged subject matter are mainly "Guarantee Law" and "Property Law." 1995's "Guarantee Law" provides that: the other property that can be arrived according to the law can be pledged. This means that the laws and administrative regulations have not any provisions that the property can not be arrived(pledged) or can not be arrived(pledged) can not be arrived(pledged). The property listed in Section 34 that can be used to arrive (qualitative) custody of the property, and there is no emission rights, so based on "Guarantee Law" emission rights can not be pledged to act as subject matter. And implemented in 2007, "Property Law" Section 179 provides that: the property that laws and administrative regulations that do not prohibit to be arrived (qualitative), which greatly broadens the scope of collateral materials. "Property Law" changes the general prohibition to general allowance, while the emission right is not prohibited. And Article 178 of "Property Law" provides that if the provisions of "Guarantee Law" and "Property Law" is different with each other. It should applicable to "property law". So based on the latest released The "Property Law", emission rights can do pledge loan financing. 3. Risk management of development of emission rights secured loans business 589 3.1 Risk distribution of development of emission rights quota 3.1.1 It is not easy to assess the emission rights pledged. If we want to pledge the emission rights, we must first accurately measure the value of emission rights. Our country has not formed universally accepted method of measurement of intangible assets. The current accounting system does not fully and accurately reflect its value. Because intangible assessment system, supervision and management system is not perfect, the assessment authority has yet to be recognized. These shortcomings of Intermediary services make enterprises and banks can not determine the exact value of intangible assets, which has become the biggest, causes that they reluctant to accept t intangible assets as collateral. This is also the biggest obstacle to develop emission rights quota. 3.1.2 Intangibility of the emission rights pledged makes it difficult to be owned. Emission rights belong to intangible assets. It is difficult to transfer or deliver the subject. After transferring intangible assets, pledger of people could still continue to use it. The pledgee in fact is difficult to control the pledged subject. The creditor can not directly take possession of emission rights as taking possession of real or personal property. 3.1.3 large fluctuations in the value Sewage is vested in intangible assets. The value of intangible assets reflects future earnings, expresses the amount recoverable constrained and impacted by businesses geographical location, market, extrinsic environment of economy and legal. Intangible assets do not have the physical form and easily ignored. Different from other tangible assets, very few enterprises set up specialized agencies to conduct their operation and maintenance, and lack the necessary attention to increase the value of intangible assets. 3.1.4 Liquidity is difficult to predict. The key reasons that banks are unwilling to accept the pledge emission rights are that it is difficult to realize the right of sewage. Once the companies have difficulties in operating and repaying the debt, banks can not through the auction, lease, transfer and timely manner to recover the funds like dealing with tangible assets as security for loans. Currently, there is a lack of professional's emissions trading market, and transaction information is mostly closed, not open and transparent, which greatly affect liquidity of emission rights on a great degree. 3.2 Risk control strategies of developing emission rights quota 3.2.1Establish a sound evaluation system Emission rights are intangible assets, whose value is not easy to determine, therefore assessing the value of emission rights is the premise of pledging emission rights .The results of the assessment issued by bodies play a very important role to corporate and banks. Assessment agencies should stand in a fair position and issue realistic and unbiased evaluation report. Therefore, the assessment industry standards are essential to assessing body. Currently assessment of emission rights is not enough systematic and standardized and industry management is weakness. We should make "Valuation of Intangible Assets Management Rules" to regulate the evaluation system, strengthen the management assessing, strengthen the assessment review, public assessment process, clear assessment responsibility, strengthen the integrity of supervision, to ensure a fair evaluation. Strengthen legal education to raise the legal awareness and operational level of the evaluators. 3.2.2 Standardized registration procedures Emission rights pledge belong to rights pledge. China's "Property Law" provides the pledge is established since documents of title are delivered to pledgee. Those who has not the documents of title the pledge is established from registration of pledge by the relevant departments. But there are no specific departments to register the emission rights pledge, and what’s more there is lack of specifically registration management means, which resulted in the slow development of this business. Registration system should be standardized as soon as possible, special registration units should be established, and specific "Registration of management approach" should be introduced. 3.2.3 Strengthen contract management With the rapid development of China's economy, intangible assets pledged are increasing. Intangible assets pledged have different characteristics with the pledge of tangible personal property, If let it go it could lead to confusion of the market order. So it is necessary to strengthen the management of the emission rights pledged contract. We can dedicatedly establish a functional department, to manage the 590 registration of intangible assets pledged contract, which include protecting emission rights excluding the trademarks and patents. Intellectual Property Office can be combined with the Trademark Office. After the merger of the departments they can set up a specialized agency to be responsible for registration and management of intangible assets pledged contract. 3.2.4 Strengthening the management of pledge The pledge we're usually talking about refers to the pledger will transfer the moveable property to the pledgee and the pledgee keep it personally. This is carried out entirely based on the voluntary of the parties, and therefore does not involve collateral management. Emission rights pledged make intangible right as pledged objects. It is different from tangible movable collateral. And the emission right is a kind of economic means to coordinate the relationship between the economy and environment. Therefore, if want to regulate emission rights pledged, China should change its laissez-faire situation, the establish specialized institutions to manage the emission rights pledged. More feasible approach is to add emission rights by the relevant environmental protection department in the process of managing emission rights. For example the certification of emission rights management, the emission rights pledged contract and the realization of the emission rights and so on. This will ensure that the emission rights to pledge emissions are in a unified and orderly environment, realizing the harmony development of economy and environment. 3.2.5 The implementation of emission rights quota securitized The uncertainty weak liquidity of emission rights’ value decides that the pledge of emission rights must be taken into implementation that differs from the collateral mortgage. The rise of securities of foreign assets gives us a new perspective. Asset securitization is the process of transferring the stock of non-negotiable or the foreseeable future income of original beneficiary to financial products that can sale and circulates in the capital markets. The assets that are suitable for asset securitization are those lack of liquidity, but can produce predictable and stable cash flow assets in the future. The liquidity of emission rights is not strong, so it can produce a predictable future cash flow. And quality and credit of asset is good (including the cash flow stable income and low default rates and losses), which has the basic characteristics of asset securitization transactions. The securitization of emission rights quota can enhance its liquidity and liquidity, so that the exchange value which is the basis of collateral is easily achieved to reduce risk of the bank loans. In the process of asset securitization , loans banks are always transferring a certain amount assets that consists of collateral credit assets to the institutions who has special purpose to securitize their assets, so that the proposed securitization of assets can isolate from other assets of the lending bank, even if the bank becomes insolvent and will not affect the interest of securities investors’ securitized assets; Secondly, the intermediary institutions issue securities based on transferred asset; Finally, the credit enhancement institutions and credit rating agencies on the asset-backed securities do credit enhancement and credit rating, so that Asset-backed securities can be sold and circulated in the stock market. From a legal point of view, the core concept of asset securitization financing structure is asset split, that is to separate assets to be securitized from credit risk of the capital requirements. Bank of its intellectual property as security for loans secured credit claims can be expected to recover the principal and interest of the future cash flows obtained the right to claim transfer of the transfer of funds, which allows banks to recover loans ahead of schedule, thus eliminating the risk of long-term loan debt, and enhance the efficiency of bank capital operation. 3.2.6 Promote intermediary organizations to provide security for enterprises pledged Since the emission rights have the nature of intangibility, large fluctuations in the value and liquidity difficulties, emission rights pledge is at higher risk. For these characteristics of emission rights, we can use the intermediary organizations to provide guarantees for businesses pledged, to provide a stable environment for the emission rights pledge and to increase people's confidence in the pledge of the right. A feasible approach is that we can establish the insurance for emissions right pledge. The payer a certain amount of insurance, and the insurance agencies guarantee the risk of decreasing emission rights’ value. Moreover, we can also set up a professional certification body. The institutions through the expertise and ability to estimate the risk certificate the emission rights to determine the value, in order to provide corresponding guarantee for pledge enterprises. 3.2.7 Develop the emissions trading market vigorously 591 Emissions rights pledge are part of emissions trading, it is necessary to improve the emissions trading market in order to implement emission rights pledge policy, thus to solve the problem of realization of the sewage rights. Sound emissions trading system for emission rights can to provide accurate and efficient supply and demand information for the two sides who has pledged, and promote the development of emission rights pledge; the development of emissions trading market, can provide convenient way to trade and a stable market place for the emission rights pledge, thereby promoting the emission rights pledge to develop orderly in a stable environment. References [1]. Zhang Wei. The case studies about economic transition performance and the urban environment infrastructure investment system [M] Taiyuan: Shanxi Renmin Publishing House, 2007.199-203. (in Chinese). [2]. Eric Cowan. Topical Issues In Environmental Finance[R]. Was commissioned by the Asia Branch of the Canadian International Development Ageney(CIDA),1999. [3]. Sonia Labatt, Rodney R.White. Environmental Finance[M]. New York: John Wiley and Sons, 2002. [4]. Jose Salazar, 1998. Environmental Finance: Linking Two World, presented at a workshop on Financial Innovations for Biodiversity Bratislava, Slovakia. 592