The Asian Development Bank is working with the People's Republic of China to support green and pollution-reduction projects in the greater Beijing-Tianjin-Hebei region. The project is mobilizing domestic financing for long-term, coordinated efforts across many different sectors, including energy, transport, urban, and agriculture, to bring about air quality improvements.
|Project Name||Air Quality Improvement in the Greater Beijing–Tianjin–Hebei Region—China National Investment and Guaranty Corporation’s Green Financing Platform Project|
|Country||China, People's Republic of
|Project Type / Modality of Assistance||Loan
|Source of Funding / Amount||
|Strategic Agendas||Environmentally sustainable growth
Inclusive economic growth
|Drivers of Change||Governance and capacity development
Private sector development
|Sector / Subsector||
Energy / Energy efficiency and conservation - Renewable energy generation - biomass and waste - Renewable energy generation - solar
Finance / Small and medium enterprise finance and leasing
Transport / Urban public transport
|Gender Equity and Mainstreaming||No gender elements|
|Description||The proposed project will establish a dedicated green financing platform for this purpose which will overcome the three barriers mentioned above (limited commercial bank financing, lack of incentive structures, and the lack of strategy for pollution control). The proposed Green Financing Platform (GFP) will introduce innovative financial instruments, recommended in the recently issued Green Financing Guidelines by China Banking Regulatory Commission and NDRC, to mobilize private and social capital for green investments. The proposed financing facility will offer a variety of financial products, which may include: (i) debt financing with limited recourse to fixed asset collateral; (ii) loss guarantee support to low-carbon development, energy saving, and environmental improvement projects for easier access to commercial bank financing; and (iii) mezzanine financing in the form of subordinate debt or preference share investments in promising SMEs, etc. This proposed project will also introduce international experience and bring advance technologies to the greater BTH region to help industries become low-carbon, low-emission and efficient green industries, thereby improving the air quality.|
|Project Rationale and Linkage to Country/Regional Strategy||
The proposed project builds on the policy actions initiated in Hebei Province under the Policy Based Loan (PBL) for Beijing-Tianjin-Hebei (BTH) Air Quality Improvement Hebei Policy Reforms Program, approved by Asian Development Bank (ADB) in 2015. The PBL included policy actions supporting (i) adjustment of the energy structure, (ii) promotion of public transportation, (iii) reduction of seasonal biomass burning and promotion of clean energy in rural area, (iv) capacity development in environmental monitoring, administration and supervision, and (v) employment promotion for inclusive industrial transformation. The proposed project will further (i) strengthen and complement implementation of these policy actions throughout the greater Beijing-Tianjin-Hebei region (hereinafter referred to as BTH region), and (ii) accelerate air quality improvements in a sustainable manner. In particular, it will address the critical need to provide more efficient and effective credit access to enterprises and project developers to stimulate actions on these policy actions. The intervention will be in the core areas for air quality improvement with significant co-benefits of carbon dioxide (CO2) emission reductions to help the region simultaneously achieve both objectives of better air quality and low-carbon development.
The BTH region is one of the most important economic regions in the PRC, with more than a third of the country's gross domestic product (GDP). But this region also consistently experiences poor air quality. In 2013, the Government of the PRC promulgated its first Comprehensive Action Plan for Air Pollution Prevention and Control (CAAP) 2013 2017 to help improve air quality in the core BTH region. But the BTH air quality is still far below national and World Health Organization standards. Since BTH's air pollution problem is transboundary, an integrated approach is required to tackle the air pollution issues in the BTH region. The approach includes advanced and effective pollution control measures with efficient coordination among BTH, stricter environmental policy and regulation, innovative financing mechanisms, and a robust results monitoring and verification system.
In parallel with the efforts to control air pollution and respond to environmental degradation, the PRC government is committed to peak its CO2 emission by 2030. Maintaining sustainable economic development while also undertaking low-carbon transformation and fixing environmental degradation is challenging. In order to succeed, a set of complementary policies is needed to improve air quality (by reducing coal and other fossil fuel consumption), abate CO2 emissions, and foster green growth. The Government's policy framework for climate change, _National Plan for Addressing Climate Change (2014-2020)_ was issued in 2014, and stresses the importance of mitigating climate change through a holistic and integrated approach, including improving energy efficiency, optimizing the energy consumption structure, restructuring the industrial sector, and restoring the ecological system and protecting the environment.
According to the People's Bank of China, an annual investment of $330 billion in each of the next five years would be needed for green growth in order to meet the environmental targets announced by the Ministry of Environment. Based on a report prepared by the Clean Air Alliance of China, implementation of CAAP for core BTH region will need direct investment of $37.8 billion. As of 2013 and 2014, the dedicated financial support from the central government was only $0.76 billion and $1.52 billion. Although the core BTH region is getting support from ADB and Kreditanstalt f r Wiederaufbau's (KfW) for the approved PBL and the World Bank's for the Program-for-Results financing assistance, serious financing shortage and limited financing resource hinder the green growth and low-carbon transformation for the BTH region.
|Impact||Air pollution reduced and public health in the BTH region improved|
|Description of Outcome||Air quality improvements and CO2 emission reduction accelerated|
|Progress Toward Outcome||The investment in pollution reduction leveraged by the GFP Project has amounted to CNY 7.75 billion (including 37 subprojects financed and 2 subprojects guaranteed by the Green Financing Platform).There are 37 subprojects financed by the GFP with total entrusted loan of CNY 2.18 billion, among which there are 23 financial leasing subprojects. The GFP also provided CNY 584 million of guaranties to 2 subprojects. The 39 subprojects are estimated to reduce CO2 emissions by 2.35 million tons per year.|
|Description of Project Outputs||
BTH-dedicated green financing platform established and commercial financing for pollution-reduction projects leveraged
For SMEs and ESCOs from the green financing platform, barriers lowered and financing scaled up
Capacity in new financial products and to appraise and implement green financing projects strengthened
|Status of Implementation Progress (Outputs, Activities, and Issues)||The 39 subprojects financed or guaranteed by the GFP have leveraged CNY5.57 billion cofinancing. Eight financial institutions joined GFP as partners for entrusted loans/cofinancing.Thirteen subprojects concerning energy efficiency and distributed renewable energy were financed CNY 710 million. About 0.69 million square meters of floor area were retrofitted with energy-efficient heating by two subprojects. Five subprojects of promoting green transport in Beijing were financed through green leasing in the amount of CNY49.4 million. Four subprojects of agriculture biomass utilization were financed CNY478 million. There are 11 SMEs that have been financed through Bank of Beijing. CNY213 million has been invested in SMEs for green investment projects by the GFP. The 39 subprojects have been appraised for cofinancing by commercial banks and financial leasing companies with total cofinancing amount of CNY5.57 billion. 22 trainings were delivered on energy management with more than 300 people attended.Ten workshops on project appraisal and management were organized with 370 people trained.|
|Geographical Location||Beijing, Hebei, Henan, Inner Mongolia, Liaoning, Shandong, Shanxi, Tianjin|
|Summary of Environmental and Social Aspects|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design|
|During Project Implementation|
|Consulting Services||Not Applicable.|
|Procurement||The subborrowers will use the commercial practices acceptable to ADB for procuring goods and services using the proceeds of subloans and investments. A procurement manual has been prepared to provide guidance on how the commercial practices can be adopted in a manner consistent with ADB's procurement principles.|
|Responsible ADB Officer||Zhou, Yun|
|Responsible ADB Department||East Asia Department|
|Responsible ADB Division||EASI|
China National Investment and Guaranty Corporation
9 Floor, Office Bldg,
No. 100 Xisanhuan Beilu,
Beijing, PRC 100048
|Concept Clearance||25 Jul 2016|
|Fact Finding||29 Aug 2016 to 05 Sep 2016|
|MRM||04 Oct 2016|
|Approval||12 Dec 2016|
|Last Review Mission||-|
|Last PDS Update||07 Sep 2020|
|Approval||Signing Date||Effectivity Date||Closing|
|12 Dec 2016||25 May 2017||14 Aug 2017||30 Sep 2022||-||-|
|Financing Plan||Loan Utilization|
|Total (Amount in US$ million)||Date||ADB||Others||Net Percentage|
|Project Cost||2,137.10||Cumulative Contract Awards|
|ADB||499.60||12 Dec 2016||0.00||0.00||0%|
|Cofinancing||310.00||12 Dec 2016||407.37||0.00||76%|
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ADB Approves Second Loan of €458 Million to Help PRC Improve Air Quality in Greater Beijing AreaADB has approved €458 million ($499.6 million) for a financing platform to support green and pollution-reduction projects in the greater Beijing-Tianjin-Hebei (BTH) region, which faces the worst air pollution in the PRC.
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