The PBOC announced yesterday that it will introduce a new policy tool for carbon reduction, which is in line with the Chinese government’s goal of achieving carbon neutrality by 2060. Under the new tool, the POBC will provide low-cost funding to commercial banks for loans for eligible green financing projects in three main categories: a) clean energy; b) energy saving and environmental protection; and c) technology-related carbon capture and storage. This is in line with our previous discussion that peak carbon emissions and carbon neutrality will be the key medium- and long-term focuses of the Chinese government. The new policy tool also offers a definition for clean-energy, energy-saving, and environmental-protection projects. We maintain the view that new energy, and energy storage and transmission names will be the near-term focus of the market. Related names include CATL [300750.CH], EVE Energy [300014.CH], Xinyi Solar [0968.HK], Irico [0438.HK], Goldwind Science Tech [2208.HK], Xinyi Energy [3868.HK], LongYuan [0916.HK], XY Elec Storage [8328.HK], Skyworth [0751.HK], CSCD [0830.HK] and Wasion Group [3393.HK].