MANILA, PHILIPPINES — The Asian Development Bank (ADB) has approved a $100 million loan that will help the People’s Republic of China (PRC) take a major step forward in its drive to reduce energy consumption, phase out mercury use, and cut greenhouse gas and toxic emissions in its chemical industry.

The funds will be onlent through a financial intermediary, China Construction Bank, to industrial plants belonging to the China National Chemical (Group) Corporation, the country’s largest producer of fluoropolymers, polyvinyl chloride (PVC), and synthetic resins. The Group will use them to demonstrate state-of-the-art energy efficiency and emission reduction projects. 

“The government puts a high priority in reducing the threat to the environment and public health posed by the use of toxic substances, including mercury and coal in the chemical industry,” said Annika Seiler, a Finance Specialist for Energy. “To date, however, technical limitations and a lack of financing have held back large scale adoption of processes that could lead to new, cleaner, and more energy-efficient production methods. The goal of ADB’s assistance is to overcome current barriers and demonstrate the viability of these technologies on a commercial scale.”

More than 80% of the PRC’s PVC industry, the largest producer of PVC worldwide, uses a coal-based process that is highly energy-intensive and also relies heavily on mercury as the catalyst. As a result, the PRC’s PVC industry accounts for nearly 50% of global use of the element and the PRC still engages in mercury mining to meet demand.

The two initial subprojects have been selected to pave the way for solving specific, major transboundary environmental issues facing the chemical industry of the PRC.

One subproject loan will trial the large-scale use of a successfully tested mercury-free catalyst in the production of PVC at the Group’s Dezhou Shihua Chemical Plant in Shandong Province. This subproject is expected to eliminate the use of 35 tons of mercury per year by 2019 and will help in the implementation of the United Nations’ Minamata Convention of Mercury, which is aimed at eliminating the intentional use of mercury, and controlling and reducing global emissions of the toxic element. 

As a party to the convention, the PRC is committed to phase out mercury as a catalyst for PVC production once an alternative mercury-free catalyst proves successful on a large scale. This will also allow an end to mercury mining in the PRC. 

Another subproject will finance comprehensive energy efficiency and management measures at a fluoropolymer facility in Zigong City in Sichuan Province that will reduce energy consumption by over 10,000 tons of coal equivalent a year. The subproject will also abate HFC-23, a powerful greenhouse gas that is an unwanted by-product of fluoropolymer production. The combination of measures will cut the equivalent of annual carbon dioxide emissions of two gigawatt-scale coal-fired power plants. 

ADB’s support is being complemented by cofinancing of over $81 million from China Construction Bank. Counterpart support of more than $63 million in the form of equity contributions is being provided by the borrowing companies of the Group. The project will run for almost 5 years, with expected completion in February 2021.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.

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