MGF Produces Report on Cement Industry’s Low-Carbon Transition

Apr 20-2023   

The Macro and Green Finance Lab (MGF) at NSD has released a report which provides valuable insights for policymakers, cement companies, financial institutions and other stakeholders to achieve a low-carbon transition in the cement industry.

In the report, titled Low-Carbon Transition of China’s Cement Industry: Climate Scenario Analysis and Policy Implications, Prof. Ma Jun, MGF Director, and his four colleagues analyze the financial performance and credit risk of listed cement companies under different climate scenarios and provides a number of conclusions and recommendations.

They find that early policy action and clear carbon neutrality targets can incentivize companies to invest more in emission reduction and improve their financial performance. They suggest that the government establish stable policy expectations as soon as possible to guide corporate emission reduction investments.

Cement companies are advised to increase their R&D investment in low-carbon emission reduction and make use of transformation financial support tools, for achieving a certain level of emission reduction can lower the credit risk of cement companies in the medium and long term.

Financial institutions should support cement companies with strong and credible transformation plans because they have lower credit risks in the medium and long term. Meanwhile, financial regulatory authorities are advised to formulate policies to support banks and other financial institutions in carrying out transformation finance business.

In 2020, China produced 2.22 billon tons of cement, around one third of the global total. The country is working to hit peak carbon and carbon neutrality targets by 2030 and 2060 respectively.