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MANILA, PHILIPPINES (9 January 2004) - ADB has approved a US$500,000 technical assistance (TA) grant to prepare a project to improve the urban environment in Jiangsu, the People's Republic of China (PRC).

The planned urban environment project, expected to be backed by an ADB $100 million loan in the pipeline for 2004, will help Jiangsu develop a natural gas project to reduce pollution levels by demonstrating the efficient use of natural gas in urban and rural areas of the province. .

The TA financed feasibility study will assess the most cost effective pipeline network, the required gas infrastructure, possible uses of compressed natural gas (CNG), and costs.

The assistance will also review the policy and regulatory framework for the natural gas sector in Jiangsu, and appropriate gas tariffs and the conversion of coal-fired boilers in industries to gas-fired ones.

"The eventual project should be able to serve as model not only for the rest of the province, but also for other energy-deficit and coal dependent provinces in the PRC with access to natural gas," says Edu Hassing, ADB Principal Project Specialist.

Jiangsu, one of the PRC's fastest growing provinces, gets 80% of its energy needs from coal. The remaining 20% is sourced from hydropower, petroleum products, and nuclear power.

The emission of major air pollutants peaked in 1995 and emissions have declined since then: sulfur dioxide (SO₂)by 16%; dust by 33%; industrial dust by 37%; and carbon dioxide (CO₂)by 17%. Despite the improvement, air pollution remains a serious problem, which affects the environment and people's health. Over 63% of major cities do not meet the Grade II national quality standards.

Also, assuming continued strong economic growth industrial pollution intensities, pollution loads, and contamination of the ambient environment almost certainly will increase if present abatement incentives are not adjusted.

The PRC's Tenth Five-Year Plan gives high priority to increasing the share of cleaner natural gas in the primary commercial energy supply mix and major gas infrastructure projects are currently being developed.

A $5.6 billion gas transmission line from the Tarim basin in the Xinjiang Uygyr Autonomous Region to the Shanghai area is expected to be completed in 2005. As part of its environmental improvement plan, the Jiangsu provincial government plans to use the gas from the pipeline so that it can cut back on the production and use of coal, town gas, and petroleum products.

The extensive dependence on coal has serious negative effects on the environment. Coal combustion produces harmful particulate matters, (SO₂, and nitrogen oxides (NO_x). SO₂ and NO_x are the main causes of acid rain.

Roughly 80% of SO₂ emissions in the PRC come from coal combustion in the power and industry sectors, causing damage amounting to US$14 billion a year.

CO₂ and methane, both greenhouse gases, are also harmful by-products of inefficient coal combustion and coal mining. The PRC is currently the second largest CO₂-producing country in the world.

Environmental pollution associated with the use of coal in the PRC has disproportionately affected the poor, who are the most vulnerable to diseases caused by environmental pollution and are the least financially capable to seek medical care.

The provincial government of Jiangsu is the executing agency of the TA, which is due for completion around July 2004. The PRC Government will contribute US$200,000 equivalent toward the total cost of US$700,000.

Read the full TA report.