10 December 2015

First ADB Policy-Based Loan to PRC Supports Air Pollution Control in Beijing Capital Region

MANILA, PHILIPPINES - The Asian Development Bank (ADB)  approved its first policy-based loan of $300 million to the People’s Republic of China (PRC) to help address the longstanding air pollution problem of the greater Beijing capital region. Such efforts will also contribute to the PRC’s commitment to reduce greenhouse gas (GHG) emissions by cutting the region’s coal consumption, as discussed at the ongoing 21st Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change in Paris.

ADB’s loan accompanies expected cofinancing from KfW development bank of Euro150 million in support of the estimated expenditure of the Hebei Clean Air Action Plan 2015-2016 of $4.8 billion in Hebei Province.

“Poor air quality has reached such a serious level that it is jeopardizing health and sustainable growth in the capital region,” said Satoshi Ishii, an ADB Senior Urban Development Specialist. “ADB’s assistance will help reduce emissions and strengthen the environment regulatory framework and capacity of environmental monitoring and enforcement. Better air quality will benefit the economy and people’s health, both in the region and beyond.”

The capital area—comprising Beijing, Tianjin, and Hebei (BTH)—is home to about 109 million people and accounts for 10% of the national gross domestic product. The region’s unprecedented growth has resulted in serious air pollution from industrial and urban development, and from a sharp rise in the use of motor vehicles. Concentrations of inhalable particulate matter of less than 2.5 micrometers (PM2.5) in the area have reached several times higher than cities in developed countries, becoming a significant cause for concern—not only for local residents but also neighboring countries and the rest of the world. The World Health Organization concludes that no amount of PM2.5 is safe.

Hebei Province is the main bottleneck of pollution control in the capital area and the PRC’s second-largest coal consumer, relying heavily on resource intensive and polluting heavy industries. In 2014, seven of the 10 cities with the worst air quality in the PRC were in Hebei.

With ADB support, Hebei is making fundamental reforms in its energy and socioeconomic policies and establishing a solid basis for incremental reforms and investments in improving air quality and public health. These include policy actions to switch from coal to cleaner energy, promote public transport in urban areas, and increase use of biomass for energy in rural areas. It will also develop a monitoring and analysis system and help strengthen environmental regulatory enforcement. Job support and social protection will be provided for workers affected by industrial transformation.

Based on ADB estimates, these policy actions will help reduce Hebei’s annual coal consumption by about 12.4 million tons, representing about 4% of the province’s total coal consumption in 2012. They will also help cut air pollutants and GHG emissions substantially, with carbon dioxide emissions alone reduced by 18 million tons a year against 2012 levels.

The program will build a solid foundation for possible future ADB support to the region’s environmental sustainability and social inclusiveness, and to the global environment. ADB intends to further expand its support to the BTH region in the next 5 years.

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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