Web Exclusive

World Bank to support energy efficiency lending by Minsheng Bank

(chinadaily.com.cn)
Updated: 2010-06-25 17:50

The Board of Executive Directors of the World Bank have approved a loan of $100 million to China's Minsheng Bank for energy efficiency projects to help China to achieve its target of a 20 percent reduction in energy intensity by 2010.

Minsheng Bank will lend the funds to industrial enterprises or energy service companies for eligible energy efficiency projects.

"The project will continue assisting the Government of China in scaling up energy efficiency commercial lending in China," said Wang Leiping, an World Bank energy specialist.

The China Energy Efficiency Financing II Project of World Bank is designed to aid commercial investments in industrial energy efficiency rehabilitation projects, and demonstrate mechanisms for financing industrial energy efficiency investments that can be replicated by other commercial banks in China.

The major types of energy efficiency projects supported by the program include: replacement of inefficient industrial technologies with more efficient industrial boilers, kilns, and heat exchange systems; recovery and use of by-product gas, waste heat and pressure; installation of highly efficient mechanical and electrical equipment, including motors, pumps, heating and ventilation equipments; and industrial system optimization to reduce energy use.

The financing will be available for both private and State-owned enterprises and small and medium-sized enterprises will be particularly encouraged, the Bank said.

Related readings:  World Bank predicts 9.5% growth for China  No 'hard landing' risk for China, World Bank says  China to grow 9-10% after 'overheated' quarter, World Bank says  China gains more say in World Bank

Besides the $100 million provided by World Bank, Minsheng Bank will also provide at least $500 million equivalent of its own resources to finance energy efficiency and renewable energy projects.

World Bank will also provide technical assistance to Minsheng Bank, in order to strengthen its capacity for developing low-carbon lending businesses, carbon finance and managing environmental and social risks.

In the past few years, the World Bank Group has assisted the Chinese government in two programs to encourage commercial debt financing of energy efficiency projects. The China Utility-Based Energy Efficiency Project I and II, funded by the International Finance Corporation (IFC) and Global Environment Facility (GEF), supported energy efficiency commercial lending with guarantee facilities established in selected Chinese commercial banks.

In order to meet the energy efficiency target, investment requirements for energy efficiency improvements in the next few years are estimated at more than $20 billion per year. Contributions from the commercial banks are strongly needed in order to meet the requirements.