China, People's Republic of: Energy Efficiency and Emission Reduction Project in Shandong Province

Sovereign Project | 40524-012 Status: Closed


The proposed technical assistance (TA) will prepare an energy efficiency and emission reduction project of about $100 million in Shandong Province with significant demonstration effects to further strengthen this strategic linkage.

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Project Name Energy Efficiency and Emission Reduction Project in Shandong Province
Project Number 40524-012
Country China, People's Republic of
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7295-PRC: Energy Efficiency and Emission Reduction Project in Shandong Province
Technical Assistance Special Fund US$ 700,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Energy - Energy sector development and institutional reform

Gender Equity and Mainstreaming No gender elements
Description The proposed technical assistance (TA) will prepare an energy efficiency and emission reduction project of about $100 million in Shandong Province with significant demonstration effects to further strengthen this strategic linkage.
Project Rationale and Linkage to Country/Regional Strategy

The ADB aims at inclusive economic growth in an efficient, equitable, and sustainable manner. In its Long-Term Strategic Framework II (2008?2020), ADB has identified energy as a core operational sector and achieving environmental sustainability as a strategic priority. ADB has introduced several initiatives (e.g., the Energy Efficiency Initiative and the Carbon Market Initiative), and adopted new and more client-oriented operational modalities (e.g., the multitranche financing facility [MFF] and nonsovereign public sector financing facility) to assist its developing member countries acquire low-carbon technologies and implement energy efficiency and emission reduction projects. The Country Partnership Strategy (2008?2010) for the PRC has also emphasized balanced and sustainable growth with more efficient uses of resources and more stringent protection of the environment. In 2007, ADB introduced an innovative mechanism to promote energy efficiency projects packaged as an ?Efficiency Power Plant? in its Guangdong Energy Efficiency and Environmental Improvement Investment Program. The proposed Energy Efficiency and Emission Reduction Project in Shandong (the Project) supports the 11FYP that reiterates energy efficiency improvement and pollution emission reduction, and specifically requires financial assistance from international financial institutions to be used for resource conservation, environmental protection, and infrastructure development. Apparently, there exists strong and clear consistency between ADB and the PRC priorities and strategies in the energy sector.

The proposed project preparatory technical assistance (TA) will prepare the Energy Efficiency and Emission Reduction Project (the Project) in Shandong of about $100 million with significant demonstration effects and enhance institutional capacities to further strengthen this strategic linkage and support both national and provincial development priorities. The proposed Project will incorporate lessons from earlier projects regarding design, preparation, risk assessment and management, and implementation arrangements.

Impact The TA impact will be energy efficiency improvement and pollution emission reduction in Shandong Province.
Project Outcome
Description of Outcome

The Ta outcome includes two parts:

Project Preparation: The TA will assist GSP prepare an Energy Efficiency and Emission Reduction Project (the Project). The subprojects to be included in the Project will be selected from industries that have significant scope for energy conservation. Successful implementation of the Project will demonstrate how EE subprojects can be planned, designed, financed, implemented, monitored, and have their emission reduction results validated. It is envisaged that domestic banks will be better mobilized to implement similar EE subprojects in similar industries, using the Project benchmarks for energy savings and pollution reduction.

Institutional Capability Building: The TA will reinforce GSP's capacity building activities to plan, originate, evaluate, facilitate (with fiscal incentives and regulatory measures), and monitor development of EE projects, and to oversee the implementation of the revised Energy Conservation Law (effective from 1 April 2008). The TA will also involve national consultants, whose experience and expertise accumulated through the TA and the Project can be utilized on a larger scale in the future and for developing EE projects in other provinces.

Progress Toward Outcome

The final PPTA workshop for Part A (project preparation) component of the TA was held on 26 April 2010.

Part B (institutional capacity building) recruitment process was completed and the cosulting team commenced work on 15 May 2010. Implementation of Part B of the Proejct is ongoing.

Implementation Progress
Description of Project Outputs

The TA will deliver the following outputs:

An improved financing mechanism for developing EE projects, based on the lessons learned from ADB's ongoing Guangdong EPP program, and including aspects on (i) providing incentives for enterprises to initiate and carry out EE subprojects; (ii) on-lending, trust, and revolving modalities of the investment funds; (iii) credit enhancement and risk management; and (iv) design of operational procedures and apparatus for managing technical, financial, environmental and social issues during the whole life-cycle of an EE subproject.

An agreement with GSP and the Government on the design of the Project, including the initial subproject selection, a detailed feasibility report, initial environmental examination, and project implementation arrangements.

A poverty and social assessment that summarizes the linkage between the Project and the Government's goals on poverty alleviation and socio-economic development.

A policy note analyzing and recommending strategies and measures to GSP to strengthen energy conservation and emission control, and to address climate change impacts on both mitigation and adaptation fronts. The policy note will reach the national level policy makers through National Development and Reform Commission (NDRC) and Ministry of Finance, and can be shared with other provinces.

A partnership agreement with local banks on possible joint financing of EE projects, in order to more effectively mobilize local financial resources and to leverage on ADB's catalytic roles. The China Development Bank has expressed its willingness to co-finance EE projects with ADB.

An assessment report on possible supports from the Clean Development Mechanisms for typical EE projects.

A note on stimulating development of Energy Service Companies in Shandong, which can target EE improvement in small-and-medium enterprises, commercial establishments (e.g., shopping malls, hotels, restaurants, and office buildings) and budget-supported entities (e.g., schools and hospitals).

Status of Implementation Progress (Outputs, Activities, and Issues) The provincial government representatives expressed their high appreciation for ADB's efforts to support energy efficiency and emission reduction in Shandong. The TASU continues to closely monitor the progress and do its part to keep the processes on track
Geographical Location Shandong Province, PRC
Safeguard Categories
Environment FI
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design

The NDRC and the Ministry of Finance have expressed strong support to the proposed Project. An ADB mission visited Shandong in late February 2008 to collect basic information and conduct preliminary consultations with provincial government agencies, industrial enterprises, financial institutions, energy service companies, and local consulting firms. An international study tour on energy conservation to Japan and the Republic of Korea was jointly organized by ADB and NDRC in March 2008 and included participants from Shandong, resulting in building up business relations with Japanese and Korean partners who could extend assistance in both EE project development and capacity building (such as knowledge sharing and training). A Memorandum of Understanding was signed with the China Development Bank for potential joint financing of EE projects in Shandong.

An initial poverty and social assessment will be conducted during the PPTA Fact-Finding mission to flag poverty and social dimensions aspects. The lessons learned from the TA and the Project will be widely disseminated to similar enterprises in energy-intensive industries in Shandong and other provinces.

During Project Implementation
Business Opportunities
Consulting Services

The PPTA will be carried out by a team of consultants with excellent knowledge and professional networks on energy efficiency and emission reduction in the PRC, as well as expertise and experience in (i) institutional, economic, technical, financial, and environmental analyses; (ii) impact evaluation and monitoring; and (iii) enhancement of local institutional capacities. The Government considers a larger role of national experts in the implementation of the PPTA to enable replication of the investment model that is suitable for a large number but relatively small energy-efficiency and emission reduction subprojects.

The estimated allocation of consulting services will be:

(i) a combined total of 6 person-months for 2 international consultants (energy efficiency and emission reduction experts), (ii) a combined total of 40 person-months for 8 national consultants (4 energy efficiency and emission reduction experts, 2 financial management specialists, 1 energy service company (ESCO) specialist, and 1 institutional capacity building specialist).

Responsible ADB Officer Shigeru Yamamura
Responsible ADB Department East Asia Department
Responsible ADB Division Energy Division, EARD
Executing Agencies
Shandong Provincial Government
Liang Zhenjiang
Shandong Provincial Economic and Trade Commission, Shandong Provincial People
Concept Clearance 30 Apr 2008
Fact Finding 20 May 2008 to 26 May 2008
Approval 05 Jun 2009
Last Review Mission -
PDS Creation Date 15 Apr 2009
Last PDS Update 13 Dec 2011

TA 7295-PRC

Approval Signing Date Effectivity Date Closing
Original Revised Actual
05 Jun 2009 01 Jul 2009 01 Jul 2009 31 May 2010 30 Sep 2012 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
700,000.00 0.00 200,000.00 0.00 0.00 0.00 900,000.00 05 Jun 2009 581,322.94

Safeguard Documents

See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents

See also: Independent Evaluation

None currently available.

Related Publications

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