The industry sector is the main energy consumer in Shandong, a province in the People’s Republic of China (PRC). In 2009, it consumed more than three-quarters of the province’s total energy supply. Moreover, the energy supply in Shandong is heavily dependent on high carbon fossil fuels causing high level of emissions. Shandong province is committed to reduce energy emissions in the long term.
Through the Shandong Energy Efficiency and Emission Reduction Project, the ADB approved in 2011 a financial intermediation loan of US$ 100 million to finance the reduction of energy intensity and emissions from energy-intensive industries in Shandong. The project aimed to:
- expand investment in energy efficiency and emission reduction measures in the province’s industry sector,
- develop energy service companies, and
- enhance institutional capacity to identify and manage energy efficiency and emission reduction projects.
The China Everbright Bank, particularly the Jinan branch in Shandong, was selected as the financial intermediary in rolling over the fund.
Financial intermediation loan was chosen as the modality to:
- build the knowledge and capacity of the provincial government to evaluate and assess risks for energy efficiency project investments;
- reduce investment transaction complexities;
- enable rollover of the ADB loan to support multiple batches of subprojects and leverage additional domestic investments; and
- enhance governance and safeguard compliance for energy efficiency projects.
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