MANILA, PHILIPPINES – The Asian Development Bank (ADB) has approved a loan of $150 million to introduce a first-of-its-kind low carbon and low emissions heating system utilizing natural gas and wind power, in Hohhot, capital of the Inner Mongolia Autonomous Region (IMAR) of the People’s Republic of China (PRC).

“Coal has been the predominant fuel for heating in IMAR, an area that experiences subzero temperatures for typically half of the year, causing indoor and outdoor air pollution and affecting human health,” said Na Won Kim, an ADB Environment Specialist. “The project will reduce respiratory diseases in the local population by designing a centralized district heating system that offers cleaner, cheaper, and more reliable heating.”

Hohhot faces critical gaps in its heating infrastructure, and its existing inefficient and polluting coal-fired boilers or stoves need to be replaced. Given the reliance on coal, the city suffers frequent hazy skies due to the high concentration of inhalable particulate matter during winter. In addition to being the PRC’s top coal producing province, IMAR has large reserves of natural gas and excellent potential for wind power.

The project will introduce a hybrid district heating system using low emission natural gas boilers and zero emissions wind-based boilers, as well as pioneering a new business model for wind-powered district heating sharing renewable energy subsidies.

After completion, the project will emit 60% less carbon dioxide and 82% less nitrous oxide, 98% less sulfur dioxide, and produce negligible particulate matter compared to the existing heating system. About 294,500 households—or 30% of the city’s population—will directly benefit, along with 18 schools, 35 kindergartens, and 12 hospitals.

The project aims to develop a business model that can be replicated across IMAR and other cold northern provinces, and is expected to lead to a new policy promoting wind power utilization for heating in the northern PRC.

The total project cost is $403 million, of which the Shanghai Pudong Development Bank will cofinance $162.4 million and the Hohhot City Development, Investment, and Operation Company will provide $90.8 million through an equity contribution. Estimated completion date for the project is the end of April 2020.

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 2013, ADB assistance totaled $21.0 billion, including cofinancing of $6.6 billion.

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