The World Bank said yesterday it has approved a plan to provide $440 million in loans to finance China's energy sector projects, accounting for about one-third of its budgeted 2008 lending to the country.

The funding would support the energy efficiency-financing project - co-financed by a $13.5 million Global Environment Facility grant - the Shandong flue gas desulfurization project and an infrastructure project in Liaoning province's second-tier cities.

"Improving energy efficiency is critical to China's ability to sustain economic growth and protect its environment," World Bank country director for China David Dollar said. "It is also a priority area for the World Bank's work in China."

Given China's rapid economic growth and massive achievements in poverty alleviation, the World Bank has shifted its focus in the country from poverty reduction.

"Our support is now focused on energy efficiency, renewable and clean energy, urban heating and power supply efficiency to help China better meet its energy needs and reduce greenhouse emissions for more sustainable growth," Dollar said.

A $200 million loan has been designed to stimulate energy-efficiency lending through the energy efficiency-financing project. The World Bank will initially lend money to the State-owned Export-Import Bank of China, the medium-sized lender Huaxia Bank, and other participating banks, enabling them to provide loans ranging from $5 million to $10 million for energy conservation projects, especially in heavy industries, the bank said.

The goal is for lenders to build teams of technical experts who can identify energy-saving investments in heavy industries, such as cement, which the banks would finance on commercial terms.

In Shandong province, one of China's major coal consumers and sulphur dioxide (SO2) emitters, the flue gas desulfurization project - to be financed by a $50 million loan - would fund installation of gas desulfurization and SO2 control facilities in four coal-fired heat and power plants, the bank said. It will also target local regulatory authorities' capabilities of monitoring and enforcing their SO2 emission-control programs.

A third loan of almost $200 million will target Liaoning's inefficient, polluting and outdated central heating systems. The project would fund construction of more efficient centralized heating systems, and the recovery of wasted heat from power generation and steel production, the bank said.

(China Daily 05/29/2008 page14)