China, People's Republic of : Air Quality Improvement in the Greater Beijing–Tianjin–Hebei Region—China National Investment and Guaranty Corporation’s Green Financing Platform Project

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

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 ImprovementHebei 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) 20132017 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.

Air pollution reduced and public health in the BTH region improved

Air quality improvements and CO2 emission reduction accelerated

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

The subprojects financed or guaranteed by the GFP have leveraged CNY9.84 billion cofinancing. 13 financial institutions joined the platform as partners for entrusted loans or cofinancing. Ten subprojects of promoting green transport in Beijing, Zibo and Langfang were financed. CNY3.16 billion invested in energy efficiency and distributed renewable projects to reduce share of coal to 56% in the mix in 2021. About 2.29 million square meters of floor area were retrofitted with energy-efficiency heating. CNY478 million were financed for four clean and energy-efficient agriculture biomass utilization demonstration subprojects.

CNY1.95 billion has been invested in SMEs and ESCOs for green investment projects by the GFP, including CNY831 million of entrusted loans and CNY1.12 billion of guaranty services._Three commercial banks, e.g. Bank of Beijing, Ping An Bank, and Bank of Communications, joined the platform to cofinance SMEs and ESCOs.More than 1,000 subprojects were appraised for cofinancing by commercial banks or financial leasing companies.

Eight workshops on energy management were organized with over 300 participants. Five workshops on project appraisal and management were organized with about 200 participants. 40 trainings on ESMS implementation and project management were offered to the subborrowers and the enterprises committed to green and low carbon business; the number of trainees exceeds 700.