Future Banking: An Innovative Credit Product Linking Green Consumption to Carbon Emission Reduction

Abstract

Against the backdrop of global carbon neutrality goals and the accelerating green economic transition, green finance has become a critical strategic direction for financial institutions worldwide. However, existing green financial products remain predominantly enterprise-oriented, leaving a significant gap in individual and household green consumption financing. The product features a dual-incentive mechanism whereby users earn green points proportional to their verified carbon emission reductions from purchasing electric vehicles, energy-efficient appliances, and residential photovoltaic systems. These points can be applied to offset loan interest or principal, redeemed at partner merchants, or traded on carbon exchanges. We formalize the green credit scoring model, the carbon-to-points conversion algorithm incorporating machine learning-based dynamic green factors, and the compound interest-adjusted loan deduction framework. A comprehensive financial projection over a five-year horizon demonstrates that the product achieves accounting break-even by Year 2 with approximately 833 active borrowers, yields an internal rate of return (IRR) of approximately 20.5%, and attains a static payback period of 5.83 years. Market analysis confirms strong demand driven by China’s dual-carbon policy, rising consumer environmental awareness, and the expanding green finance ecosystem projected to exceed CNY 3 trillion in individual green consumption by 2030. The proposed framework bridges the “last mile” of green finance by transforming personal carbon reduction into quantifiable financial assets, establishing a sustainable closed loop of “green consumption-carbon reduction-financial reward.”