|Project Rationale and Linkage to Country/Regional Strategy
Qingdao is a large city in Shandong Province, located in the northeastern part of the PRC where winter temperature drops to as low as 17 C, and sub-zero temperatures typically last for 5 months in a year. Heating services is an essential requirement for sustaining the people's livelihood. Like other large cities in the PRC, Qingdao has also been experiencing hazy sky and polluted air in winter. According to local air quality monitoring system, Qingdao's daily particulate matter less than 2.5 micrometers (PM 2.5) concentration ranges from 151 g/m3 200 g/m3 ,which is almost six to eight times higher than World Health Organization (WHO) guideline of 25 g/m3. Similarly, particulate matter less than 10 micrometers (PM10) in Qingdao have been measured as 132 g/m3, which is more than twice the WHO guideline.
It is estimated that 45% of PM 2.5 in the PRC is contributed by coal combustion. Current coal-based heating practice is a major cause of increased outdoor and indoor air pollution during winter months. The poor indoor and outdoor air quality increases the risk of acquiring respiratory and heart diseases, with higher impact on the sick, children, elderly and poor people. Large air pollution in the PRC also increases transboundary air pollution in neighboring countries such as Japan and Korea. A key lesson from the United Kingdom, which experienced the London Great Smog due to serious air pollution in 1952, is that a rapid switch from coal to clean energy consumption (mainly gas) can contribute greatly to pollution reduction. Fuel switching from coal to gas and renewable energy integration in the district energy system is the way forward in major cities in the PRC, including Qingdao, which are facing serious urban air pollution especially during winter season.
Qingdao is one of the national low carbon development pilot cities selected by the National Development Reform Commission (NDRC) in December 2012. One third of carbon dioxide (CO2) emission in Qingdao is contributed by the residential and heating sector. One of the key interventions to achieve the low carbon development in Qingdao is to replace coal-based boilers with natural gas and reduce losses in district heating network. In June 2013, the State Council of the PRC issued ten air pollution prevention and control measures, which includes the reduction of coal usage and increasing the utilization of natural gas and renewable energy in district energy. In July 2013, Qingdao Municipal Government (QMG) issued a comprehensive policy for urban air pollution reduction which includes a ban on using coal in district energy in urban areas. In January 2014, the PRC has set new targets for provinces to reduce air pollution by 5% 25%. Under the new regulation, Shandong Province will have to reduce PM 2.5 emission by 20% annually by 2017.
Apart from the use of cleaner and renewable heat sources and low-temperature heating, the proposed project will also introduce additional features that will bring the energy efficiency of district energy system to international current best practices. These features include (i) replacing the conventional insulated steel pipes by installing insulated plastic pipes to reduce the heat and water losses, (ii) installing heat storage facility for peak demand shaving, and (iii) installing centralized chillers utilizing waste heat and other clean sources for district cooling during the summer months. The proposed project will not only directly benefit to 450,000 households in the project area (36% of total urban population in Qingdao City) by providing cleaner district energy services and improved air quality, but also indirectly benefit the remaining urban population in downstream districts of Qingdao through improved air quality by removing the polluting sources from the project area.
The proposed project is directly responding to the urgent national, provincial, and municipal priorities to develop low carbon cities and reduce urban air pollution (para 4). Upon successful demonstration of the proposed project, the similar technical application can be replicated in other major cities in the PRC. It is closely aligned with ADB's Strategy 2020, where moving developing member countries are moving onto low-carbon growth paths by improving energy efficiency and introducing renewable energy has been identified as one of the key means of achieving environmentally sustainable growth. ADB's Energy Policy (2009) prioritizes energy efficiency and access to energy for all, including district heating. The PRC's country partnership strategy (2011 2015) identified environmental sustainability as one of the three pillars of ADB assistance.