China, People's Republic of : Shandong Green Development Fund Project

Sovereign Project | 51194-001

The Shandong Green Development Fund Project (SGDF) will pilot an innovative leveraging mechanism to catalyze private, institutional and commercial (PIC) capital for the development of climate positive infrastructure and business in Shandong Province, People's Republic of China (PRC). The project will support a portfolio of mitigation and adaptation subprojects assessed against both climate and financial eligibility criteria. The project will contribute to the province's transition to low-carbon and climate-resilient development patterns: Shandong faces mounting climate change (CC) and environmental protection challenges. The Province tops the country's energy consumption and the number of motor vehicles, responsible for most of the greenhouse gas emissions (GHG). The project aims to leverage private, institutional and commercial (PIC) finance for climate resilient subprojects assessed against both climate and financial eligibility criteria.

Project Details

  • Project Officer
    Leung, Kang Hang
    Sectors Group
    Request for information
  • Country/Economy
    China, People's Republic of
  • Sector
    • Finance
Project Name
Shandong Green Development Fund Project
Project Number
51194-001
Country / Economy
  • China, People's Republic of
Project Status
Active
Project Type / Modality of Assistance
  • Loan
Source of Funding / Amount
Loan 3824-PRC: Shandong Green Development Fund Project
Source Amount
Ordinary capital resources US$ 100.00 million
Loan: Shandong Green Development Fund Project
Source Amount
KfW Bankengruppe US$ 113.69 million
Agence Francaise de Developpement US$ 84.53 million
Loan 8385-PRC: Shandong Green Development Fund Project (Additional Financing)
Source Amount
Green Climate Fund US$ 100.00 million
Operational Priorities
  • OP1: Addressing remaining poverty and reducing inequalities
  • OP2: Accelerating progress in gender equality
  • OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
  • OP6: Strengthening governance and institutional capacity
Sector / Subsector
  • Finance / Infrastructure finance and investment funds

Gender
Effective gender mainstreaming
Description

The Shandong Green Development Fund Project (SGDF) will pilot an innovative leveraging mechanism to catalyze private, institutional and commercial (PIC) capital for the development of climate positive infrastructure and business in Shandong Province, People's Republic of China (PRC). The project will support a portfolio of mitigation and adaptation subprojects assessed against both climate and financial eligibility criteria. The project will contribute to the province's transition to low-carbon and climate-resilient development patterns: Shandong faces mounting climate change (CC) and environmental protection challenges. The Province tops the country's energy consumption and the number of motor vehicles, responsible for most of the greenhouse gas emissions (GHG). The project aims to leverage private, institutional and commercial (PIC) finance for climate resilient subprojects assessed against both climate and financial eligibility criteria. The project consists of a mix of public and private sector capital of $1.2 billion and catalytic resources of $300 million from international financing institutions (IFI), which is required to reach sufficient critical mass of funding to achieve a significant leverage ratio over 5. The project finances a portion of the total capital expenditures of selected climate resilient subprojects for a capped period to make the subprojects bankable, by addressing the upfront project risks, as well as promoting advanced technologies and an integrated approach for climate change. The level of catalytic fund and the financing terms are linked to the climate criteria and performance in line with the Green Climate Fund (GCF) investment criteria and framework.

The SDGF is expected to be effective in July 2020.

Additional financing from the Green Climate Fund is expected to be approved in 2020 Quarter 3.

Project Rationale and Linkage to Country/Regional Strategy

Policy Framework (National): Under the 13th Five Year Plan, PRC actively promotes a paradigm shift from gross domestic product (GDP)-oriented development to a development model centered on quality of growth. The Intended Nationally Determined Contribution (INDC) details the PRC's commitment to climate change actions by 2030, notably to: (i) achieve the peaking of carbon dioxide emissions around 2030; and (ii) increase the share of non-fossil fuels in primary energy consumption to around 20%.

Context (Regional): Shandong ranks the 8th in terms of provincial GDP per capita and the GDP of Jinan ranks 21 out of 34 PRC provincial capital cities. Shandong is a labor reservoir for migrants, partially a result of extensive industrial investment. However, the Province is facing multiple climate vulnerability challenges and investment is now targeted for industrial transformation and low carbon development that supports Climate Change (CC) adaptation and mitigation policies. Because of its history of rapid industrial development, the Province tops greenhouse gases (GHG) emissions and was selected to pilot for this Project. Shandong is required to reduce its CO2 emission intensity by 20.5% by 2020, the most stringent goal set at the provincial level. Shandong also targets to achieve peaking of CO2 emissions around 2027, three years earlier than the national goal. The Province faces many challenges in meeting these goals due to heavy reliance on coal and expanding traffic concerns; in 2017, Jinan was ranked as the most congested city in the PRC. In response, the State Council approved Shandong to become a comprehensive pilot area for shifting the growth paradigm with new drivers and investment. Meeting this paradigm shift and CC targets requires better access to climate specific finance, which the Project aims to support.

Priority Investments: Investment priorities are determined from the climate analysis and assessment of sectors, where financing mechanisms have most impact. For mitigation sectors the priorities are to address the main sources of GHG emissions (including but not limited to): (i) energy sector with renewable energy including wind, solar, biomass, geothermal and emerging technology investments; (ii) green (energy efficient) building and heating/cooling systems; and (iii) low carbon transport with supporting investments in new energy vehicles and bus rapid transit green corridors. Based on the Provincial modeling of climate vulnerabilities, Shandong's adaptation priorities are (including but not limited to): agricultural and urban water supply infrastructures; city flood resilience or sponge cities through low impact development that includes flood proofing and urban lifeline systems such as water supply, drainage; city greening, coastal protection and solid waste.

Challenges and Project Response: Over the last ten years, the Government with the support of the development partners built a strong policy and regulatory framework for CC. Given the very large investment identified, new mechanisms of financing climate-positive investments are required. Traditional sovereign financing and banking systems have little incentive to cater to CC investment needs that include longer term, flexible structuring and competitively pricing. A new approach is needed to unlock significant climate finance for cities, especially from Private, Institutional and Commercial (PIC) sources. The Project supports a long-term engagement in the PRC to finance a new generation of climate resilient infrastructure projects with higher risk profile that would otherwise rely on exclusively long-term sovereign funding or not proceed because of public funding gap.

ADB's country partnership strategy 2016-2020 facilitates the Government's reform agenda of "managing climate change and the environment." Investments under the Project also contributes to several Sustainable Development Goals (SDGs), namely SDG 9, "Industry, Innovation and Infrastructure" building climate resilient infrastructure and fostering new climate finance models innovation; and SDG 13, "Climate Action" taking urgent actions to promote climate related investments.

Impact

Peaking of carbon dioxide emission around 2030 or earlier on best efforts achieved

Project Outcome

Description of Outcome

Climate resilience in Shandong Province enhanced

Progress Toward Outcome
No issues.

Implementation Progress

Description of Project Outputs

SGDF established with PIC financing leveraged

Knowledge and skills of local governments, civil society, and private sector to prepare climate-positive subprojects enhanced

Status of Implementation Progress (Outputs, Activities, and Issues)

SGDF I has completed fund registration on 9th Feb 2021, and has raised RMB 1.46 billion capital (on a total commitment basis), including RMB 0.68 billion IFIs (i.e., ADB KfW, and AFD, here after as "IFIs), RMB 0.35 billion from Qingdao municipal government (including Laoshan District) and RMB 0.41 billion PICs.

The structure of SGDF II is planned to be preliminary established in 2022, with amount of RMB 3.3 billion.

During the reporting period, SGDF inspected the gender equality of the first qualified enterprise and found out that the female employees accounted 27.5% of the total, much higher than the rate of the whole industry (4.92%). To protect the rights of female employees, the qualified enterprise provided them with a more detailed physical examination plan and work benefits which are more suitable for women. The investment from SGDF will provide more job opportunities for women in its Qingdao branch.

SGDF planned to invest 2 mitigation subprojects and at least 1 adaptation subproject. The subprojects will be assessed under the green criteria. The assessment reports will be prepared.

Geographical Location
Shandong

Safeguard Categories

Environment
FI
Involuntary Resettlement
FI
Indigenous Peoples
FI-C

Summary of Environmental and Social Aspects

Environmental Aspects
The environmental and social management system (ESMS) was first cleared in March 2020 and the revised ESMS was cleared in July 2020.
Involuntary Resettlement
SPCM compliance memorandum was signed on 3 September 2020.
Indigenous Peoples
SPCM compliance memorandum was signed on 3 September 2020.

Stakeholder Communication, Participation, and Consultation

During Project Design
During Project Implementation

Business Opportunities

Consulting Services
$10 million capacity development assistance as per the Project Administration Manual
Procurement

Follows ADB Procurement Framework for Financial Intermediation Loan

Green Procurement for the supply chain implemented on a voluntary basis by subprojects sponsors

Contact

Responsible ADB Officer
Leung, Kang Hang
Responsible ADB Department
Sectors Group
Responsible ADB Division
Finance Sector Office (SG-FIN)
Executing Agencies
Shandong Provincial Finance Department

Timetable

Concept Clearance
03 Oct 2017
Fact Finding
30 Jul 2018 to 17 Aug 2018
MRM
09 Jul 2019
Approval
25 Sep 2019
Last Review Mission
-
Last PDS Update
28 Sep 2022

Funding

Loan 3824-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
25 Sep 2019 17 Dec 2019 13 Apr 2020 30 Jun 2027 - -
Financing Plan
  Total (Amount in US$ million)
Project Cost 463.33
ADB 100.00
Counterpart 363.33
Cofinancing 0.00
Loan Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 0.01 0.00 0%
Cumulative Disbursements 06 Jun 2024 0.49 0.00 5%

Loan 8385-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Oct 2020 30 Mar 2022 18 Jul 2022 30 Jun 2027 - -
Financing Plan
  Total (Amount in US$ million)
Project Cost 100.00
ADB 0.00
Counterpart 0.00
Cofinancing 100.00
Loan Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 0.00 46.15 46%
Cumulative Disbursements 06 Jun 2024 0.00 28.00 28%

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
Shandong Green Development Fund Project: Audited Project Financial Statements (January-December 2022) Audited Project Financial Statements Dec 2023
Shandong Green Development Fund Project: Audited Project Financial Statements (13 April 2020-31 December 2021) Audited Project Financial Statements Aug 2022
Amendment to the Loan Agreement for Loan 8385-PRC: Shandong Green Development Fund Project (Additional Financing) Loan Agreement (Ordinary Resources) Aug 2022
Project Agreement (ADB Green Climate Fund) for Loan 8385-PRC: Shandong Green Development Fund Project (Additional Financing) Project/Program Agreements Mar 2022
Loan Agreement (ADB Green Climate Fund) for Loan 8385-PRC: Shandong Green Development Fund Project (Additional Financing) Loan Agreement (Ordinary Resources) Mar 2022
Shandong Green Development Fund Project: Project Administration Manual Project/Program Administration Manual Oct 2020
Shandong Green Development Fund Project: Gender Action Plan Gender Action Plans Oct 2020
Shandong Green Development Fund Project: Project Administration Manual Project/Program Administration Manual Oct 2020
Shandong Green Development Fund Project: Additional Financing Report Additional Financing (Cofinancing) Oct 2020
Loan Agreement (Ordinary Operations) for Loan 3824-PRC: Shandong Green Development Fund Project Loan Agreement (Ordinary Resources) Dec 2019
Project Agreement for Loan 3824-PRC: Shandong Green Development Fund Project Project/Program Agreements Dec 2019
Shandong Green Development Fund Project: Report and Recommendation of the President Reports and Recommendations of the President Sep 2019
Shandong Green Development Fund Project: Gender Action Plan Gender Action Plans Sep 2019
Shandong Green Development Fund Project: Project Administration Manual Project/Program Administration Manual Jul 2019
Shandong Green Development Fund Project: Procurement Plan Procurement Plans Jun 2019
绿色金融促进基金 : 项目数据表 Translated PDS Mar 2018

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
Shandong Green Development Fund Project: Plume Abatement Green Environmental Protection Smart Facility Project Social and Resettlement Due Diligence Report Safeguards Due Diligence Reports Feb 2024
Shandong Green Development Fund Project: Jiulong River Basin Comprehensive Management Subproject (Phase I) in Weihai Economic and Technological Development Zone Draft Initial Environmental Examination Initial Environmental Examination Nov 2023
山东绿色发展基金项目: 威海经济开发区九龙河流域综合治理一期子项目初始环境审查 Initial Environmental Examination Nov 2023
Shandong Green Development Fund Project: Environmental and Social Monitoring Report (July-December 2022) Environmental and Social Monitoring Reports Mar 2023
Shandong Green Development Fund Project: Environmental and Social Monitoring Report (July-December 2021) Environmental and Social Monitoring Reports Apr 2022
Shandong Green Development Fund Project: Environmental and Social Monitoring Report (13 April 2020-30 June 2021) Environmental and Social Monitoring Reports Sep 2021
Shandong Green Development Fund Project: Environmental and Social Management System Arrangement Environment and Social Management System Arrangements Jul 2020
Green Finance Catalyzing Facility: Environmental and Social Management System Arrangement Environment and Social Management System Arrangements Jun 2018
促进气候融资(山东): 环境和社会管理体系安排(草稿) Environment and Social Management System Arrangements Jun 2018

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
Monitoring, Evaluation, Report and Verification (MERV) Firm - Consulting Closed
Design, Review and Advisory (DRA)- Green Assessment Firm - Consulting Closed
Green Rating Firm - Consulting Closed
Monitoring, Evaluation, Report and Verification (MERV) Firm - Consulting Closed
Green Rating Firm - Consulting Closed
Monitoring, Evaluation, and Verification and Framework Firm - Consulting Closed
Carbon Emission Verification Firm - Consulting Closed
Green Assessment Consultant Individual - Consulting Closed

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

Title Document Type Document Date
Shandong Green Development Fund Project: Procurement Plan Procurement Plans Jun 2019