SHANGHAI—Loopholes in China’s green financing rules could allow big state-owned firms to use proceeds from “carbon-neutral bonds” to fund day-to-day operations including coal-fired power plants, according to research published on Tuesday. The Institute for Energy Economics and Financial Analysis (IEEFA) examined the first batch of yuan-denominated carbon-neutral bonds issued this year by giant state-owned energy corporations such as China Energy Investment Corporation (CEIC) and the China Huaneng Group. It said 30 percent of proceeds from the bonds were to be allocated to the working capital of the issuers. “The promise of green bonds is that they can help channel capital to energy transition investments,” IEEFA researcher Christina Ng said. “But potentially the proceeds raised by the SOEs from these bond deals could be spent on maintaining a steady or growing coal business, particularly as they have new coal assets in the pipeline.” Neither CEIC nor Huaneng responded immediately to a …