China will tap the potential of financial instruments in enhancing environmental protection during the 14th Five-Year Plan (2021-25) period, with climate mitigation as one of the priorities, according to the Ministry of Ecology and Environment.

Following consistent endeavor, Sun Shouliang, director general of the ministry's comprehensive department told a news conference on Wednesday that the country had made "great achievements" in applying such instruments in the past decade.

He noted the robust growth in green credit, saying the balance reached 15.9 trillion yuan ($2.5 trillion) in 2021, compared with 5.2 trillion yuan in 2013. Last year, the balance of the clean energy industry's green credit surpassed 3 trillion yuan. 

He added that great efforts have been made to motivate companies to increase environmental protection measures through tax reduction and exemption.

In 2020, environmental protection tax in China totaled 20.7 billion yuan, Sun said, while tax reductions and exemptions for emitters that managed to achieve low emissions reached 10 billion yuan. 

The county has also experienced marked progress in exploring a mechanism to protect river basins by compensating upstream areas for their environmental conservation efforts, he said.

In a move to accelerate the establishment of the mechanism along the country's two most important watercourses, Sun said that last year, central authorities allocated two billion yuan and one billion yuan to supplement compensation funds for the Yangtze and Yellow rivers, respectively. 

Support has also been offered to other areas with cross-regional water bodies, he added, for example along the Chishui River, which crosses Yunnan, Guizhou and Sichuan provinces in Southwest China.

The three provinces agreed in 2018 to contribute 200 million yuan a year to a fund dedicated to the river's conservation. As the region to gain the least economic benefit from joint environmental protection efforts, Yunnan contributes 10 percent of the fund under the mechanism, and will get 30 percent of proceeds.

Guizhou and Sichuan each contribute 50 percent and 40 percent. When it comes to proceeds, Guizhou's share will be 40 percent and Sichuan's 30 percent.