Energy / Energy utility services

The PRC has experienced a rapid increase in energy consumption in tandem with sustained economic growth, especially since 2000. By the end of 2010, the primary energy demand in the PRC had increased to more than 3.00 billion tons of standard coal equivalent (btce), compared to 1.39 btce in 2000. The PRC relies heavily on carbon-intensive coal, which provided about 70% of its primary energy in 2010. Electricity generation and heat supplies account for about half of the total coal consumption in the PRC. The Government of the PRC has recognized the challenges posed by the rapid rise in energy consumption and associated emissions. It has committed to achieve 40% 45% carbon intensity reduction by 2020 compared with 2005, primarily by targeting energy intensity reductions. During the Eleventh Five-Year Plan, 2006 2010 the energy intensity was reduced by 19.06% compared with a target of 20.00%. During the Twelfth Five-Year Plan, 2011 2015 the PRC has set a further energy intensity reduction target of 16%, an 8% reduction of sulfur dioxide (SO2), and a 10% reduction of nitrogen oxide (NOx). Heilongjiang province has set corresponding targets of reducing energy intensity by 16.0%, SO2 emission by 2.0% (10,000 tons [t]), and NOx emission by 3.1% (23,000 t) by 2015 compared to 2010.

The PRC is the second-largest district heating market in the world, the Russian Federation being the largest. Because of the large demand, 13 provinces, 3 autonomous regions, and two cities have adopted centralized heating. The DHS coverage area is continuously expanding to keep pace with the rapid economic growth and urbanization. Between 2003 and 2010, centralized heating coverage in the PRC increased from 1.9 billion square meters (m2) to 4.4 billion m2. However, DHS still covers only 30% of the total floor area compared to coverage of about 60% in European countries. Coverage is particularly low in low-income urban areas.

Heilongjiang is an underdeveloped inland province in the northeastern region of the PRC. Heating service in Heilongjiang, where temperatures fall below 40 C and the heating season lasts for up to 6 months, meets one of the basic human needs and provides essential support to socioeconomic activities. Northeastern provinces, including Heilongjiang, are a source of transboundary air pollution such as acid rain. The centralized heating area in Heilongjiang has increased from 199 million m2 in 2003 to 384 million m2 in 2010. By 2015, the province plans to increase the district heating coverage area by another 200 million m2, which will cover up to 70% of the cities and counties in the province. Many existing heating systems in the province are old and inefficient, and lack modern emission control equipment. Combustion efficiency of existing small heat-only boilers of 55% in many cities is far below the 87% that can be achieved in modern combined heat and power (CHP) plants or large heat-only boilers.

The existing inadequate coverage of district heating in low-income urban areas in Heilongjiang compels households to use coal stoves for heating, and these are a major cause of indoor air pollution and respiratory diseases. The poor indoor air quality in households has a disproportionately high effect on women and children, who spend most of their time indoors. There were 18 cases of carbon monoxide (CO) poisoning and 10 fire accidents caused by household stoves from 2008 to 2010 in the project areas. Emissions from existing small and inefficient neighborhood boilers, most of which lack emission control equipment, also worsen outdoor air quality and cause significant cumulative harm to public health. Providing cleaner and reliable district heating services to households and other community areas will (i) reduce cases of respiratory diseases through improved indoor and outdoor air quality, reduce CO poisoning by providing safer district heating services, and improve the medical environment; (ii) improve living conditions; (iii) reduce heating expenditure by switching from individual household stoves and decentralized heating systems to centralized energy efficient heating systems; (iv) provide a better schooling environment during the winter; and (v) increase incomes through job opportunities created during construction and operation. Women and vulnerable people connected to the modern district heating networks will enjoy a cleaner, safer living environment.

The project will target selected cities where the poverty ratio is as high as 8.7% (compared to the national average of 7.7%) and district heating coverage is particularly low. The project will demonstrate that significant expansion of energy efficient DHSs to an additional 27 million m2 (270,000 households) can be introduced without increasing net emissions. The project will remove small, inefficient, and polluting neighborhood coal-fired boilers and coal-fired household stoves; and construct centralized district heating networks where heat is supplied by highly energy efficient CHP plants and large boilers, thereby reducing the overall carbon and air pollution footprints of district heating.

The project is closely aligned with Strategy 2020, where moving developing member countries onto low-carbon growth paths by improving energy efficiency has been identified as one of the key means of achieving environmentally sustainable growth. The Asian Development Bank (ADB) Energy Policy prioritizes projects on energy efficiency and access to energy for all, including district heating, for energy efficiency improvement and access to modern cleaner heating services for all. The country partnership strategy, 2011 2015 for the PRC identifies environmental sustainability as one of the three pillars of ADB assistance to the PRC.

Coverage of the district heating system in six project cities without net increase in emissions expanded

Energy efficient heat generation capacity in three project cities improved

Private sector participation in district heating in two project cities promoted

All procurement of goods and works shall be carried out in accordance with ADB's Procurement Guidelines (2010, as amended from time to time). ADB-financed civil works contracts, costing $10 million or more, and goods contracts costing $1 million or more, will be procured through international competitive bidding procedures using ADB's standard bidding documents. Goods contract packages costing more than $100,000 and less than $1 million will be procured using national competitive bidding, as will civil works contracts costing more than $100,000 and less than $10 million. Civil works and goods contract packages costing less than $100,000 will be procured using shopping procedures. The relevant sections of ADB's Anticorruption Policy (1998, as amended to date) will be included in all documents and contracts.

An 18-months procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and NCB guidelines are included as a linked document