On June 26, the Ministry of Environmental Protection set Shandong and Hainan as two pilot provinces where local banks, governments and investment institutions will contribute capital to provide preferential loans to support small enterprises' environmentally friendly projects. The plan is for a total of 12 billion yuan ($1.9 billion) to be given out it credit.

The China Banking Regulatory Commission issued a guideline on such "green credit" in March 2012, urging banks to pay "special attention" to the likely environmental and social impacts of their customers' projects and determine credit ratings and entry and exit terms partly on that basis.

According to Li Junfeng, director of the banking regulatory bureau of Guizhou Province, financial institutions in the province had issued 98.43 billion yuan in loans to 673 energy conservation and environmental protection projects by the end of May.

Li said that, although the banking and financial institutions in Guizhou have gone to great efforts in developing green credit, the growth of the sector is still plagued by many problems such as difficulties in risk assessment for green projects, slow profit growth, high management cost and a lack of compatible stimulus policies.

Gao Xiqing, former general manager of the China Investment Corporation, called on governments of different countries to join hands to lower the cost of new energy.

At the same time, Gao noted that government intervention in this aspect of finance should be limited and follow market rules.

Zuo Xiaolei also urged financial institutions to abandon their maximization of profits and return to their original role of resource allocation, which is not only important to the development of the green economy, but also necessary in avoiding financial crisis.

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