49232-001: Beijing-Tianjin-Hebei Air Quality Improvement-Hebei Policy Reforms Program | Asian Development Bank

China, People's Republic of: Beijing-Tianjin-Hebei Air Quality Improvement-Hebei Policy Reforms Program

Sovereign (Public) Project | 49232-001 Status: Closed

The Asian Development Bank is working with People’s Republic of China to reduce air pollution in the greater capital area, including Beijing and Tianjin municipalities, and Hebei province. The program supports policy reforms to strengthen environmental regulations and encourage industries to switch from coal to clean energy alternatives.

Project Details

Project Officer
An, Bo East Asia Department Request for information
Country
  • China, People's Republic of
Modality
  • Loan
Sector
  • Energy
 
Project Name Beijing-Tianjin-Hebei Air Quality Improvement-Hebei Policy Reforms Program
Project Number 49232-001
Country China, People's Republic of
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3356-PRC: Beijing-Tianjin-Hebei Air Quality Improvement-Hebei Policy Reforms Program
Ordinary capital resources US$ 300.00 million
Loan: Beijing-Tianjin-Hebei Air Quality Improvement-Hebei Policy Reforms Program
KfW Bankengruppe US$ 166.65 million
World Bank US$ 200.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector

Education / Education sector development - social protection initiatives

Energy / Energy sector development and institutional reform - Energy utility services - Oil and gas transmission and distribution - Renewable energy generation - biomass and waste

Public sector management / Public administration

Transport / Transport policies and institutional development

Gender Equity and Mainstreaming No gender elements
Description

The program supports the Hebei provincial government (HPG) in increasing its efforts to improve air quality in the greater capital area, comprising Beijing municipality (Beijing), Tianjin

municipality (Tianjin), and Hebei province (Hebei) (together, the BTH region). The program will (i) reduce emissions from major air pollution sources, (ii) strengthen environment policy and the institutional framework for implementation, and (iii) enhance employment support for inclusive industrial transformation. The program will provide HPG with a solid basis to introduce incremental reforms under the PRC's 13th Five-Year Plan, 2016 2020, while enabling HPG to consolidate and accelerate necessary actions during 2015 2016.

Project Rationale and Linkage to Country/Regional Strategy

In 2013, the BTH region, with a population of 109.2 million, generated a gross domestic product (GDP) of CNY6.2 trillion, accounting for 10% of the national total. While the region is an engine of socioeconomic development for the PRC, poor air quality jeopardizes its sustainable growth. The concentrations of sulfur and nitrogen oxides, ozone, and inhalable particulate matter of less than 2.5 micrometers in diameter (PM2.5) reached levels that may cause significant public health impacts. In 2014, the annual average PM2.5 concentration was 93.0 micrograms/cubic meter, several times higher than in cities of developed countries. In the BTH region, PM2.5 is locally generated and formed in the atmosphere by emissions from (i) industries, (ii) continuous coal burning for electricity generation and heating boilers in urban and rural areas, (iii) increasing motor vehicle emissions, and (iv) the burning of agricultural biomass waste. The topographical and meteorological characteristics of the region are also conducive to the buildup of air pollution.

An imbalanced socioeconomic structure in the BTH region has made Hebei the main source of air pollution and a clear bottleneck for air pollution control. Hebei's economy relies heavily on polluting secondary industries coal-fired energy generation, iron, steel, coking, and cement. In 2014, 7 of the 10 cities with the worst air quality in the PRC were in Hebei. Hebei emits more than 80% of total primary PM2.5 in the BTH region, and three times more nitrogen oxides one of the precursors of secondary PM2.5 than the total of Beijing and Tianjin. To improve the region's air quality, the first priority is to address Hebei's problems, while improving coordination of air quality improvement efforts in the region.

As a national priority, the central government is scaling up its efforts to address this environmental challenge together with climate change. The national air quality standards were updated in 2012 to be equivalent with those in most developed countries. The new environmental protection law came into force in 2015. In 2013, the State Council issued the Action Plan on Prevention and Control of Air Pollution, 2013 -2017. In 2013 2014, the central government budgeted CNY15 billion to improve the air quality in six northeastern provinces, including the BTH region. In the five-year Hebei Clean Air Action Plan (HCAAP), HPG commits to reduce by 2017 (i) PM2.5 concentration by 25% from the 2012 level, (ii) steel-making production capacity by 60 million tons, (iii) cement production capacity by 60 million tons, (iv) coal consumption by 40 million tons, and (v) glass production capacity by by 38 million weight boxes.

The introduction of the HCAAP and urgent air pollution mitigation requirements led to Hebei's fragmented policy framework. Pollution reduction efforts during 2013- 2014 only resulted in several short-term _end-of-pipe_ policy actions and the strengthening of legal enforcement against polluting industries to reduce production capacity and the number of old vehicles. In 2014, Hebei was the PRC's second-largest coal consumer with 90% of energy supplied by coal, much higher than the national average of about 70%. During 2013 2014, transport policies did not target the key issue of the increasing number of motor vehicles. Both urban and rural areas depend on old and inefficient infrastructure Both urban and rural areas depend on old and inefficient infrastructure for cooking and heating. The existing policies offered few alternatives to the seasonal burning of agricultural biomass waste. To remove constraints and enhance long-term development prospects, Hebei needs (i) a basic and comprehensive policy framework, (ii) well-coordinated actions to gradually enhance policies, (iii) investments to better manage air pollution reduction efforts, and (iv) private sector participation in financing necessary investments for industrial modernization.

Impact

Air pollution in the BTH region reduced

Public health in the BTH region improved

(Action Plan on Prevention and Control of Air Pollution in Hebei Province, 2013 2017)

Project Outcome
Description of Outcome Framework for incremental policy and investment actions in Hebei to improve air quality in the BTH region strengthened
Progress Toward Outcome Implementation on track.
Implementation Progress
Description of Project Outputs

1. Policies and actions to reduce air pollution from key sectors issued and approved

2. Environmental policy and institutional framework for implementation strengthened

3. Employment promotion for inclusive industrial transformation enhanced

Status of Implementation Progress (Outputs, Activities, and Issues) The one time tranche release to IA of $300 million was completed on 3 June 2016.
Geographical Location Hebei
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects

Due diligence during preparation concluded that the program's policy actions do not entail any involuntary resettlement or have any adverse impact on indigenous peoples or the environment.

The agreed policy actions would contribute to reducing Hebei's annual coal consumption by approximately 12.4 million tons of standard coal, representing 4% of Hebei's total consumption of 287 million tons in 2012. Estimated annual reductions of air pollution and greenhouse gas emissions against 2012 baselines will be 18 million tons of carbon dioxide, 170,000 tons of primary PM2.5 (19% reduction), 546,000 tons of sulfur dioxide (33%), 289,000 tons of nitrogen oxide (14%), and 71,000 tons of VOCs (5%). Policy actions focusing on upgrading air quality monitoring systems may further reduce emissions by improving regulatory enforcement and environmental supervision, but their actual contribution is difficult to quantify and thus not included in the estimates.

Involuntary Resettlement Due diligence during preparation concluded that the program's policy actions do not entail any involuntary resettlement or have any adverse impact on indigenous peoples or the environment.
Indigenous Peoples Due diligence during preparation concluded that the program's policy actions do not entail any involuntary resettlement or have any adverse impact on indigenous peoples or the environment.
Stakeholder Communication, Participation, and Consultation
During Project Design Program preparation involved consultation with key stakeholders such as academic professors, and provincial and municipal government officers from human resources and social security bureau, development reform commission, energy bureau, agriculture department, transport bureau, environmental protection bureaus, and the health department in Hebei province. Civil society organizations are not included in the policy actions.
During Project Implementation The stakeholders will continuously be engaged during the implementation, especially in the process of completing the agreed policy actions and the performance monitoring at the project completion stage.
Business Opportunities
Consulting Services Not applicable
Procurement Not applicable
Responsible ADB Officer An, Bo
Responsible ADB Department East Asia Department
Responsible ADB Division Public Mgt, Financial Sector and Regional Coop Division, EARD
Executing Agencies
Hebei Provincial Government
Hebei Provincial Finance Bureau
48 South Zhonghua St Shijiazhuang 050051
Hebei Province, People's Rep of China
Timetable
Concept Clearance 01 Sep 2015
Fact Finding 07 Sep 2015 to 11 Sep 2015
MRM 12 Oct 2015
Approval 10 Dec 2015
Last Review Mission -
Last PDS Update 30 Sep 2016

Loan 3356-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Dec 2015 23 Feb 2016 20 May 2016 30 Jun 2017 - 03 Jun 2016
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 4,798.15 Cumulative Contract Awards
ADB 300.00 10 Dec 2015 300.00 0.00 100%
Counterpart 4,131.50 Cumulative Disbursements
Cofinancing 366.65 10 Dec 2015 300.00 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.

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