China, People's Republic of: Hebei Energy Efficiency Improvement and Emission Reduction Project

Sovereign Project | 44012-012 Status: Closed

Summary

The proposed Hebei Energy Efficiency Improvement and Emission Reduction Project will establish an industrial energy efficiency financing facility (IEEFF) through a financial intermediary loan (FIL) managed by Hebei provincial government (HPG) to finance industrial energy efficiency projects in medium to large industries. It is expected that the IEEFF would finance eligible energy efficiency subprojects in key energy-intensive industries. The rationale of the proposed project are (i) to stimulate the investments in energy efficiency in key energy-intensive industries such as iron and steel, cement and petrochemical as means to achieving energy intensity reductions; and (ii) help achieve greenhouse gas (GHG) intensity reduction targets set in the Twelfth Five-Year Plan, 2011-2015 for the People's Republic of China (PRC).

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Project Name Hebei Energy Efficiency Improvement and Emission Reduction Project
Project Number 44012-012
Country China, People's Republic of
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7788-PRC: Hebei Energy Efficiency Improvement and Emission Reduction Project
Technical Assistance Special Fund US$ 700,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change
Sector / Subsector

Energy - Energy efficiency and conservation

Gender Equity and Mainstreaming No gender elements
Description The proposed Hebei Energy Efficiency Improvement and Emission Reduction Project will establish an industrial energy efficiency financing facility (IEEFF) through a financial intermediary loan (FIL) managed by Hebei provincial government (HPG) to finance industrial energy efficiency projects in medium to large industries. It is expected that the IEEFF would finance eligible energy efficiency subprojects in key energy-intensive industries. The rationale of the proposed project are (i) to stimulate the investments in energy efficiency in key energy-intensive industries such as iron and steel, cement and petrochemical as means to achieving energy intensity reductions; and (ii) help achieve greenhouse gas (GHG) intensity reduction targets set in the Twelfth Five-Year Plan, 2011-2015 for the People's Republic of China (PRC).
Project Rationale and Linkage to Country/Regional Strategy

PRC has become the world's largest energy consumer and is increasingly dependent on energy imports to meet its primary energy supply. Soaring energy use is both a driver and a consequence of PRC's remarkable economic growth. The primary energy demand in PRC exceeded 2,900 Mtce (million tons of coal equivalent) in 2009 to become the world's largest energy consumer. Recognizing the adverse implications of rising energy intensity on the economy, environment and energy security, the Eleventh Five-Year Plan, 2006-2010 for PRC, set a target to reduce the energy intensity of its economy by 20% between 2005 and 2010 which is reported to be successfully achieved. In 2009, the government also announced to reduce the carbon intensity by 40%-45% by 2020 compared to 2005 as part of PRC's contribution to mitigate the global GHG emissions. The Twelfth Five-Year Plan has set a target to improve the energy intensity of gross domestic product (GDP) by further 16% during 2011-2015.

Hebei is one of the largest energy consuming and sulfur dioxide emitting provinces in the PRC. With a population of 70 million (5.3% of the national total) and a land area of 187,700 square kilometers (2.0% of the national total), Hebei consumes more than 8.9% of PRC's national primary energy supply. Hebei's economy is dominated by energy-intensive heavy industries, such as iron and steel, cement and petrochemical industries; which contribute more than 50% of the provincial GDP. The total primary energy consumption and installed electricity capacity in Hebei are equal to over 280 Mtce and over 41 gigawatt, respectively, with coal contributing to 89% of primary energy supply and 92.7% of installed electricity capacity. In spite of recent improvements, energy intensity at 1.64 tce per CNY10,000 in 2009 in Hebei is 47% higher than the national average for PRC.

The emphasis on reducing the energy intensity by the Government of the PRC has prompted the Hebei provincial authorities to initiate several measures to improve industrial energy efficiency. In 2002, Hebei Province set up the Demand Side Management Center (DSMC) to promote electricity demand savings/management in small and medium industries with the objective of reducing the peak electricity demand as well as energy savings through efficiency improvements. The DSMC is responsible for knowledge dissemination on energy efficiency and DSM technologies and promotion of new technologies and products.

The HPG has identified large potential for energy efficiency improvements in medium and large industries especially through waste heat recovery in industrial processes installed prior to 2007. But the retrofitting of existing industrial processes is not prioritized by the plant managers due to several reasons: (i) increasing pressure to scale-up the production capacity to meet growing demand, (ii) possible interruption to production process, and (iii) reluctance of domestic banks to finance energy efficiency investments due to difficulty in taking security over the assets financed. The proposed project will be designed to address these barriers through a combination of low-cost financing, capacity building at the level of industrial plant managers, energy management companies and financiers, and policy and regulatory interventions to compel industries to improve energy efficiency.

The country partnership strategy, 2011-2015 for the PRC, which is under preparation, is likely to include the improvement to the efficiency of resource use especially energy and shifting PRC's growth trajectory to a low-carbon growth path as one of the priorities of Asian Development Bank's (ADB's) assistance to PRC. ADB's Energy Policy has identified energy efficiency as one of the three pillars of ADB's energy sector assistance. The Energy Policy has explicitly identified expanding ADB's assistance to industrial energy efficiency improvement through collaboration with industry associations, domestic banks and specialized agencies for promoting energy efficiency and energy service companies as a key strategy for shifting developing Asia to a low-carbon growth path.

Impact Improved industrial energy efficiency in Hebei Province
Project Outcome
Description of Outcome Increased investments in industrial energy efficiency in Hebei Province in key industrial sectors
Progress Toward Outcome The subprojects feasibility studies have been approved and detailed designs are being carried out. The procurement activities for some of the subprojects have commenced.
Implementation Progress
Description of Project Outputs

Sustainable financing mechanism for industrial energy efficiency improvement

Capacity building of relevant agencies involved in implementing industrial energy efficiency projects in Hebei Province

Status of Implementation Progress (Outputs, Activities, and Issues)

The Huaxi Bank has been selected as the financial intermediary and the operational arrangements under the financing mechanism includuding the Revolving Escrow Account has been set up.

The capacity building activities of the Project Management Office, Financial Intermediary and Project Owenrs have commenced.

The draft final report has been reviewed and approved by ADB.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Extensive consultation with stakeholders--Hebei Provincial Finance Bureau, Hebei Provincial Development and Reform Commission, Hebei Demand Side Management Center, industrial enterprises in Hebei, commercial banks, and energy service/energy management companies active in Hebei--will be undertaken.
During Project Implementation
Business Opportunities
Consulting Services

The PPTA will be implemented in two parts to reduce the time in project preparation. Part 1 of the PPTA will focus on firming up the project scope and project design. Some key background analysis such as industrial energy efficiency market assessment and barrier analysis will also be undertaken during part 1. Since these activities are fairly independent activities, four individual consultants (two international for a total of 4 person-months and two national for a total of 3 person-months) will be recruited in accordance with the Guidelines on the Use of Consultants (2010, as amended from time to time).

Part 2 will be undertaken by a consulting firm, which would include detailed due diligence of selected subprojects to be financed under the proposed financing facility. The PPTA part 2 consultants will also assist the project management office (PMO) in finalizing the financing and implementation arrangements for channeling financing under the proposed loan to eligible subprojects through a financial intermediary. It will also provide project implementation support during the first 12-18 months of project implementation and capacity building to PMO. The consulting firm will provide 7 person-months of international and 24 person-months of national consulting inputs. The consulting firm will be recruited in accordance with the Guidelines on the Use of Consultants through quality- and cost-based selection method (with a quality-cost ratio of 80:20) following the simplified technical proposal. The equipment procured under the TA will be provided to the executing agency upon completion of both parts of the TA.

Responsible ADB Officer Pradeep Perera
Responsible ADB Department East Asia Department
Responsible ADB Division Energy Division, EARD
Executing Agencies
Hebei Provincial Government
Hebei Provincial Finance Bureau
48 South Zhonghua St Shijiazhuang 050051
Hebei Province, People's Rep of China
Timetable
Concept Clearance 15 Mar 2011
Fact Finding 25 Nov 2010 to 30 Nov 2010
MRM -
Approval 15 Mar 2011
Last Review Mission -
Last PDS Update 25 Mar 2013

TA 7788-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
15 Mar 2011 24 Mar 2011 24 Mar 2011 31 Dec 2014 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
700,000.00 0.00 100,000.00 0.00 0.00 0.00 800,000.00 15 Mar 2011 658,392.88
Title Document Type Document Date
Hebei Energy Efficiency Improvement and Emission Reduction Project Technical Assistance Reports Dec 2012

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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