China, People's Republic of: Chemical Industry Energy Efficiency and Emission Reduction Project

Sovereign Project | 47051-002

The Asian Development Bank is helping People’s Republic of China cut toxic emissions and power consumption at plants of the China National Chemical Corporation—the country’s largest producer of energy-intensive plastics products. The project is funding the testing of a mercury-free catalyst for PVC production at one plant and an energy efficiency system at another, which will cut power use and greenhouse gas emissions.

Project Details

  • Project Officer
    Liu, Xinjian
    East Asia Department
    Request for information
  • Country
    China, People's Republic of
  • Modality
    • Loan
  • Sector
    • Energy
Project Name Chemical Industry Energy Efficiency and Emission Reduction Project
Project Number 47051-002
Country China, People's Republic of
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3308-PRC: Chemical Industry Energy Efficiency and Emission Reduction Project
Ordinary capital resources US$ 100.00 million
Loan: Chemical Industry Energy Efficiency and Emission Reduction Project
China Construction Bank US$ 81.73 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Private sector development
Sector / Subsector

Energy / Energy efficiency and conservation

Gender Equity and Mainstreaming No gender elements
Description The proposed Chemical Industry Energy Efficiency and Emission Reduction Project will support demonstration of innovative technologies to improve energy efficiency and reduce emissions of pollutants from various plants belonging to the China National Chemical Corporation Group (ChemChina). Building up on the lessons learned from previous successful Asian Development Bank (ADB) loans in Anhui, Guangdong, Shandong, and Hebei provinces, this project proposes for the first time to directly cooperate with a large state-owned enterprise (SOE) to support industry-specific measures. It will also develop an innovative financing structure to leverage commercial cofinancing and mainstream energy service company (ESCO) participation from the beginning of project implementation. The innovative financing structure will be developed and firmed up during the early stage of the project preparatory technical assistance (PPTA) implementation.
Project Rationale and Linkage to Country/Regional Strategy

Energy efficiency investments are essential to curb demand growth and reduce carbon dioxide emissions. The International Energy Agency projects that energy efficiency improvements could account for 70% of the reduction in global energy demand in 2035. However, without demonstrating best available technologies, stronger policies and more innovative financing mechanisms, the agency warns that more than half of the economic potential may remain untapped. The People's Republic of China (PRC) is the world's largest energy consumer accounting for nearly 20% of global energy consumption. Its rapid energy consumption growth over the past 20 years was and continues to be mainly driven by industrial energy demand growth, which accounted for 71% of the total energy consumption in 2010. The chemical industry is among the PRC's (i) largest industrial energy users, and (ii) most energy-intensive industries. It alone consumed 361.2 million ton of coal equivalent (tce) in 2010, accounting for about 16% of industrial energy use. Compared to the PRC's average energy intensity of 1.034 tce per CNY10,000 of gross domestic product, ChemChina's energy intensity was 2.66 in 2010.

During the Eleventh Five-Year-Plan, 2006 2010, the PRC successfully targeted energy-intensive industries to realize energy savings and emission reduction through (i) mandating energy savings target on 1,000 key energy consuming plants, (ii) subsidizing energy efficiency investments, (iii) strengthening capacity of banks and ESCOs by multiple multilateral and bilateral cooperation projects, and (iv) undertaking other complementary administrative measures. These policy measures were continued, further strengthened and expanded to 10,000 key industries in the Twelfth Five-Year Plan, 2011 2015. However, important market barriers still remain in energy-intensive industries such as chemical industry, which continues to slow down or prevent investment in large-scale, innovative technology energy efficiency and emission reduction retrofits through the market. These barriers include (i) limited market-based incentives to implement such projects; (ii) lack of knowledge by enterprises about the best available technologies, combined with their focus on capacity expansion; (iii) inadequate capacity in commercial banks in evaluating risks and benefits of such retrofit projects combined with the projects' insufficient collateral value; and (iv) the underdevelopment of the industry-specific ESCO that can plan and implement such projects. To address these barriers and to enhance the overall impact of the proposed project, it is essential to develop and test new and innovative solutions to financing such projects and strengthen the ESCO model.

The project is directly relevant to achieve the objectives of the PRC's 12th plan for energy saving and emission reduction which targets to reduce (i) energy intensity by 16%, (ii) carbon intensity by 17%, and (iii) sulfur dioxide by 8% and nitrogen oxides by 10% from 2010 levels by 2015. It has a particular good fit with major tasks emphasized in the 12th plan of (i) strengthening industrial energy saving, and (ii) advancing emission reduction of major pollutants in key industries. The project is also consistent with the ADB's country partnership strategy, 2011 2015 for the PRC, which is closely aligned to the 12th plan priorities to support environmentally sustainable growth by demonstrating cutting-edge energy efficiency technologies.

The proposed first two subprojects include (i) demonstration of a new technology by Dezhou Shihua Chemical Co., Ltd. (DSC) to retrofit its polyvinyl chloride (PVC) production facility to reduce energy consumption by 40% and eliminate the use of mercury as a catalyst; and (ii) retrofitting the caustic soda production chain of Haohua Yuhang Chemical Co. Ltd. (HYC) with the current state-of-the-art technology that will consume 30% less energy. As per the International Energy Agency, caustic soda and PVC production consumes about two-thirds of total primary energy in the chemical industry worldwide. By targeting these two energy-intensive production processes, the project aims for larger impact on energy efficiency and emission reductions in chemical industry in the PRC. Similarly, by mainstreaming ESCO in the project's structure, the project will address a key barrier that has so far prevented industry-specific ESCO participation in energy efficiency retrofits in energy-intensive industries in the PRC. If proven successful, it may unleash ESCO model across energy-intensive industries.

Impact Environmental sustainability of the PRC's chemical industry enhanced
Project Outcome
Description of Outcome Energy efficiency in and emissions from PVC and fluoropolymer production within ChemChina reduced
Progress Toward Outcome Being achieved. The overall project implementation is on track.
Implementation Progress
Description of Project Outputs

More efficient and less hazardous PVC technology at commercial scale at DSC plant demonstrated

Energy efficiency and greenhouse gas abatement measures at CGY plant implemented

Status of Implementation Progress (Outputs, Activities, and Issues) Both subprojects are being implemented and outputs are being achieved.
Geographical Location Nation-wide, Dezhou, Zigong Shi
Safeguard Categories
Environment FI
Involuntary Resettlement FI
Indigenous Peoples FI
Summary of Environmental and Social Aspects
Environmental Aspects The Project has been classified by ADB as environment category "FI." The CGY and DSC subprojects have been classified by ADB as environment category A.
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services

The PPTA will be implemented in two parts. Part 1 will focus on the (i) development of an innovative ESCO financing mechanism, and (ii) energy audit and environmental impact assessment (EIA). A review of ChemChina and chemical industry energy efficiency and emission reduction market assessment and barrier analysis will also be undertaken during part 1. Since these activities are independent activities, four individual consultants (2 international for a total of 6.5 person-months and 2 national for a total of 7 person-months) will be recruited in accordance with ADB's Guidelines on the Use of Consultants (2010, as amended from time to time). The energy efficiency finance experts will work closely with ChemChina, NDRC, and ADB to develop the financing mechanism. The international environment expert will be supported by a national technical expert to prepare the energy audit and the EIA.

Part 2 will be undertaken by a consulting firm, which will prepare the technical, economic, and financial due diligence of the subprojects to be undertaken. It will also provide capacity strengthening and project implementation support and capacity development measures to the project management office and other stakeholders, if needed. The detailed tasks to be undertaken by the consulting firm will be firmed up towards the end of the part 1. The consulting firm will be recruited in accordance with ADB's Guidelines on the Use of Consultants (2010, as amended from time to time) through quality- and cost-based selection method (with a quality-cost ratio of 80:20) following the simplified technical proposal.

Responsible ADB Officer Liu, Xinjian
Responsible ADB Department East Asia Department
Responsible ADB Division PRC Resident Mission
Executing Agencies
China National Chemical Corporation Group
62, Beisihuan Xilu, Haidian District,
Beijing 100080
PRC
Timetable
Concept Clearance 17 Jun 2013
Fact Finding 16 Mar 2015 to 27 Mar 2015
MRM 04 Jun 2015
Approval 03 Nov 2015
Last Review Mission -
Last PDS Update 22 Sep 2021

Loan 3308-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
30 Oct 2015 29 Jan 2016 14 Jun 2016 31 Aug 2021 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 245.01 Cumulative Contract Awards
ADB 100.00 13 Oct 2021 70.00 0.00 100%
Counterpart 63.28 Cumulative Disbursements
Cofinancing 81.73 13 Oct 2021 70.00 0.00 100%

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Title Document Type Document Date
Chemical Industry Energy Efficiency and Emission Reduction Project: Audited Project Financial Statements (January-December 2020) Audited Project Financial Statements Jun 2021
Chemical Industry Energy Efficiency and Emission Reduction Project: Procurement Plan Procurement Plans Nov 2020
Chemical Industry Energy Efficiency and Emission Reduction Project: Audited Project Financial Statements (January-December 2019) Audited Project Financial Statements Sep 2020
Chemical Industry Energy Efficiency and Emission Reduction Project: Audited Project Financial Statements (January-December 2018) Audited Project Financial Statements Jul 2019
Chemical Industry Energy Efficiency and Emission Reduction Project: Audited Project Financial Statements (January to December 2017) Audited Project Financial Statements Jul 2018
Chemical Industry Energy Efficiency and Emission Reduction Project: Audited Project Financial Statements (January 2015-December 2016) Audited Project Financial Statements Jul 2017
Project Agreement for Loan 3308-PRC: Chemical Industry Energy Efficiency and Emission Reduction Project Project/Program Agreements Jan 2016
Loan Agreement (Ordinary Operations) for Loan 3308-PRC: Chemical Industry Energy Efficiency and Emission Reduction Project Loan Agreement (Ordinary Resources) Jan 2016
Chemical Industry Energy Efficiency and Emission Reduction Project: Report and Recommendation of the President Reports and Recommendations of the President Oct 2015
Chemical Industry Energy Efficiency and Emission Reduction Project: Project Administration Manual Project/Program Administration Manual Oct 2015
化工行业节能和减排项目 : 项目数据表 Translated PDS Sep 2013
Chemical Industry Energy Efficiency and Emission Reduction Project Initial Poverty and Social Analysis Jul 2013

Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Title Document Type Document Date
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Monitoring Report (January-June 2021) Environmental Monitoring Reports Aug 2021
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Monitoring Report (July-December 2020) Environmental Monitoring Reports Jan 2021
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Monitoring Report (January-June 2020) Environmental Monitoring Reports Jul 2020
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Monitoring Report (July-December 2019) Environmental Monitoring Reports Dec 2019
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Monitoring Report (January-June 2019) Environmental Monitoring Reports Jul 2019
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Monitoring Report (July-December 2018) Environmental Monitoring Reports Jan 2019
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Monitoring Report (January-June 2018) Environmental Monitoring Reports Jul 2018
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Impact Assessment Environmental Impact Assessments Mar 2018
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Monitoring Report (July-December 2017) Environmental and Social Monitoring Reports Jan 2018
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Monitoring Report Environmental Monitoring Reports Jul 2017
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Impact Assessment and Due Diligence Report Environmental Impact Assessments Aug 2015
Chemical Industry Energy Efficiency and Emission Reduction Project: Environmental Impact Assessment Environmental Impact Assessments May 2015

Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
3038-VIE: Second Health Care in the Central Highlands Project [E3 (Phase 2)] Invitation for Bids Closed 22 Nov 2019 10 Jan 2020
Project Implementation Specialist Individual - Consulting Closed 27 Jul 2018 09 Aug 2018
Environment Monitoring Specialist Individual - Consulting Closed 27 Jul 2018 09 Aug 2018

Contracts Awarded

No contracts awarded for this project were found