39653-043: Guangdong Energy Efficiency and Environment Improvement Investment Program - Tranche 3

Project Data Sheet (PDS): Details

Description

The Project is to promote energy efficiency and environmental protection in Gungdong Province using advanced technologies, and is justified in technical, economic, and financial terms. The energy savings will result from retrofitting existing equipment with more efficient equipment, which in aggregate will reduce the need to construct and operate a conventional coal-fired power plant. The Project will consider only retrofits of proven energy efficiency technologies in the following areas: (i) motors and motor-drive systems; (ii) transformers and reactive power compensators; (iii) lighting; (iv) heating, ventilation, and air conditioning; (v) air compressors and pumping systems; (vi) recovery of waste energy from industry; (vii) coal-fired industrial boilers and industrial cogeneration; and (viii) other related energy efficiency improvement projects. The Project will have multiple benefits: (i) energy security improves as lesser new power supply capacity will be needed to meet future demand, and less coal will be used for power generation; and (ii) the local and subregional environment improves, and the contribution to global climate change is lower because of avoided coal use.

Project Rationale and Linkage to Country/Regional Strategy

Currently, PRC is one of the largest energy consumers in the world. Within its energy mix, approximately 70% of the primary energy demand is met by coal, and about 80% of electricity is generated from coal. The large share of coal-fired power generation results in serious environmental issues and accounts for about 50% of the PRC's SO2 emissions and 80% of NOx emissions. Rapid implementation of energy conservation measures, including implementation of EPPs, will lower the burden for later addressing the consequence of carbon emissions and climate change. Guangdong has the largest and fastest-growing economy among all the PRC provinces. Its gross domestic product (GDP) has grown at 14% per annum since 1995. Electricity consumption is dominated by energy-intensive heavy industries, with the industry and manufacturing sectors combined representing about 73% of total electricity use. The province has relatively low natural resource endowments. It imports 100% of coal requirements and 80% of oil needs; approximately 20% of electricity is imported from other provinces. The demand for power has outpaced supply and power shortages have been experienced during the summer peak periods. About 75% of the generation capacity is from coal-fired power plants, which have caused serious air pollution. Therefore, improving energy efficiency is a high priority for GPG to help address both energy security and environmental issues. Guangdong also provides a good setting to pilot the EPP model because of its vibrant economy and the large impact that energy savings will have in comparison with less industrialized provinces.

Impact

Improved overall energy intensity and reduced emissions in Guangdong province

Project Outcome

Description of Outcome

The outcome will be an improvement in energy efficiency in industry and commercial sectors in Guangdong province

Progress Towards Outcome

The Project became effective on 20 February 2012 and Loan Inception was conducted from 23 to 24 May 2012. By 10 Sep. 2013, the accumulated withdrawal under Tranche 3 reached $42.12 million, approximately 98% of the loan amount. Five of the six subborrowers under Tranche 3 have fully withdrawn their subloans.

Implementation Progress

Description of Project Outputs

Energy efficiency projects of Tranche 3 implemented ESCO sector developed in Guangdong Capacity developed for promotion and assessment of energy efficiency projects

Status of Operation/Construction or Implementation Progress

To be assessed. Not yet due. Not yet due.

Safeguard Categories

Environment: FI
Involuntary Resettlement: C
Indigenous Peoples: C

Summary of Environmental and Social Aspects

Environmental Aspect
Tranche 3 is classified as environmental category 'FI', in accordance with ADB's Safeguard Policy Statement (2009). The proposed subprojects are energy efficiency projects not located in any designed environmental protection zone, and will be constructed and operated in accordance with relevant national environmental laws and regulations according to the EA. The proposed subprojects, therefore, meet the environmental criteria for subproject selection in the schedule 5 of the FFA. Also, all proposed subprojects are screened against the Prohibited Investment Activity List stated in ADB s Safeguard Policy Statement (2009) and no subproject is found to fall into the list. The potential environmental impacts are limited to the disposal of the replaced electrical and mechanical equipment. Disposal will fully comply with related GPG s environmental regulations to minimize any potential impacts according to the EPP-PMO.

Involuntary Resettlement
Tranche 3 is classified as category C for involuntary resettlement and for indigenous peoples, as subprojects will not have any adverse social impacts on ethnic minorities. As all subprojects are either retrofit projects or located on the existing premises, Tranche 3 subprojects will not involve any land acquisition, demolition or resettlement of people.

Stakeholder Participation and Consultation

During Project Design
During the project design, various stakeholders were consulted, such as Guangdong provincial finance bureau, Guangdong Development and Reform Commission, Guangdong Economic and Information Commission, Project Management Office, and Guangdong Finance and Trust Company.

 

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.

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