|Project Rationale and Linkage to Country/Regional Strategy
People?s Republic of China (PRC) has achieved and sustained an impressive economic growth averaging about 9% for the past two decades. Compared with its 2000 level, the economy is expected to double by 2010 and quadruple by 2020. The sustained economic growth has exerted considerable pressure on natural resources and environment. The projected economic growth will have to confront the emerging binding constraints?the farmland, fresh water, energy and important mineral resources are relatively insufficient; the ecology is vulnerable; the structure of the economy does not adequately support efficient resource utilization. In 2005, the 11th Five-Year Plan (FYP) was formulated which aims to maintain a high economic growth rate but balance it with a more efficient resource utilization and environment preservation. It aims for (i) 20% reduction in energy intensity (energy consumption/unit GDP) from 2005 level; (ii) a 10% reduction in the total emission of major pollutants, namely, sulfur dioxide that is linked to the use of coal, and chemical oxygen demand that is linked to industrial effluents; and (iii) a 30% reduction of water consumption per unit of industrial value added. It also anticipates the utilization of industrial solid waste to increase from 55.8% to 60%. Achieving these targets is a serious challenge requiring a focused approach, particularly towards energy conservation (to reduce pollution) and energy intensity.
The Government has set up an inter-Ministerial Office for Resource Conservation (IMORC) in National Development and Reform Commission (NDRC) to provide oversight and enforce measures for promoting resource conservation and energy efficiency. The Government has issued other decrees and plans that support the 11FYP Guidelines. The Renewable Energy Law became effective from 1 January 2006 and related implementing decrees have been issued; these encourage implementation of domestically available natural resources that have low environmental impact. NDRC issued the ?China Medium- and Long-Term Energy Conservation Plan that identifies ten key ?projects? for reducing energy consumption. The State Council also issued the decree in August 2006 to enhance energy conservation. The 11FYP targets for reduction in energy consumption have been disaggregated and communicated to provincial governments, and the Top-1,000 Program launched in April 2006 requires the industrial enterprises that account for about 33% energy use to prepare and implement energy conservation measures. These measures have mainstreamed resource conservation and energy efficiency in the implementation of the 11FYP and created the right enabling conditions for promotion of a resource efficient society in PRC. However, the progress against the 11FYP targets has been less than satisfactory in the first completed year of the plan. IMORC faces the major challenges to sustain and translate the momentum of policies into a concrete set of activities to promote, sustain, monitor and control the resource conservation and energy efficiency. During the country program meeting in December 2006, the Government requested for a technical assistance (TA) to assist IMORC meet the challenges.
Promotion of clean energy sources and improvement of energy efficiency are ADB?s key strategic priorities in the sector. ADB also launched the Energy Efficiency Initiative (EEI) in mid-2005 for decreasing the rate of climate change through increased use of sustainable energy. ADB is engaged in the development of a large scale energy efficiency project in major energy consuming areas (Guangdong and Shanghai). The proposed advisory TA has a close fit with the objectives of the EEI and ADB?s ongoing and planned lending activities to promote energy efficiency.