The Benefits And Risks Of Issuing Carbon Neutral Bonds By Electric Power Enterprises

To achieve China’s "30·60" goal,the interbank market has introduced carbon-neutral debt financing tools-carbon-neutral bonds.This has brought new opportunities to the financial market.Although the impact mechanism of carbon-neutral bonds has become a hot topic in academic research,studies on their benefits and risks are still relatively scarce.The main purpose of this article is to analyze the impact of carbon-neutral bonds as a sub-variety of green bonds on green projects and industrial investment and financing methods through the case of carbon-neutral bonds issued by China Huaneng International Power Development Corporation Limited,in order to deepen understanding.At the same time,the article will also propose countermeasures and suggestions to promote China’s green bond financing tools,and promote the organic integration of green investment and environmental protection.The case study in this article takes China Huaneng International Power Development Corporation Limited as an example,aiming to explore the impact of carbon-neutral bond issuance on clean energy enterprise financing and environmental protection.As one of the first batch of enterprises in China to carry out thermal power development business,China Huaneng International is currently focusing on the research and development of clean energy technologies such as wind energy as the strategic focus of the company.Therefore,as a thermal power company,it is representative in carbon-neutral bond issuance.This article first elaborates on the industrial background of issuing carbon-neutral bonds,analyzes the company background of China Huaneng International,and the basic conditions and funding usage of carbon-neutral bonds.Overall,the credit risk of the sample power company is generally controllable.Then,the article discusses the funding support for power companies in enterprise financing and carbon-neutral bonds,and explores the financial benefits,environmental benefits,social benefits,and reputation benefits of issuing carbonneutral bonds.Specifically,the issuance of carbon-neutral bonds can help clean energy companies raise funds for investment in clean energy projects,while also improving corporate image and attracting more investors and customers.Secondly,from the perspective of bond risk,the credit risk and "greenwashing" risk faced by China Huaneng International’s carbon-neutral bonds are analyzed.In terms of credit risk analysis,this article uses the KMV model to calculate the credit risk of China Huaneng International’s carbon-neutral bonds and summarizes the problems existing in the company’s carbon-neutral bond issuance.In addition,this article also discusses the impact of "greenwashing" risk on the issuance of carbon-neutral bonds and proposes corresponding solutions.Through the case study of China Huaneng International,this article deeply explores the impact of carbon-neutral bond issuance on energy company financing and environmental protection,and analyzes the risks and problems faced by carbon-neutral bond issuance,providing valuable reference for future carbon-neutral bond issuance.Finally,this article concludes that:(1)The issuance of China Huaneng International’s carbon-neutral bonds has positive financial,environmental,social,and reputation benefits.The construction of carbon-neutral bond fundraising projects can alleviate local employment,reduce the burden of local power grid supply,increase local government tax revenue,and achieve energy conservation and emission reduction.It also has a relatively mitigating effect on the mismatch between corporate financing costs and project duration.(2)With the support of national macro policies and corporate strategic transformation,the issuance of China Huaneng International’s carbon-neutral bonds has been greatly promoted.The policies provided by relevant departments have provided a guarantee for the issuance of carbon-neutral bonds by enterprises and attracted companies to participate in the carbon-neutral bond market.(3)There are still some deficiencies and risks in the issuance of carbon-neutral bonds by China Huaneng International.With the impact of macroeconomic fundamentals adjustment and changes in the competition pattern of new energy projects,the credit risk of the bonds issued in 2021 is relatively high.China Huaneng International needs to further strengthen the risk control and management of carbon-neutral bond issuance,perfect the risk warning mechanism,improve the safety and sustainability of the bonds,and protect the interests of investors.