GEF Grant to Help Boost Energy Efficiency in China

Today the World Bank’s Board of Executive Directors has approved a grant of US$13.4 million from the Global Environment Facility (GEF) to the People’s Republic of China to improve quality and sustainability of energy efficiency programs in Shandong, Shanxi and Jiangxi provinces. Technical assistance and capacity building activities will be financed by the GEF grant.

China is making unprecedented efforts to improve energy efficiency, and launched an ambitious set of energy conservation policies, regulations and programs during the 11th Five-Year Plan (2006-2010). The 12th Five-Year Plan (2011-2015) that has been just announced lays out a path for continued efforts in energy conservation. Provincial governments play a critical role in implementation of the country’s energy conservation drive, because this is the government level that interfaces with large consumers, consolidates resources for specific activities, and organizes implementation on the ground. During the 12th Five-Year Plan, the provinces are faced with the challenge to accelerate delivery of energy efficiency through the timely but effective design and implementation of huge, largely new, comprehensive energy conservation programs. However, local human and financial capacities need strengthening to meet the challenge.

The GEF-funded Provincial Energy Efficiency Scale-Up Project will help three Chinese provinces with representative characteristics - Shandong, Shanxi, and Jiangxi – to meet their energy efficiency goals, by strengthening their institutional systems, improving implementation capacity, and deploying more market-based incentive mechanisms for energy efficiency investments. “Shandong Province is the largest energy consuming province with high level of industrialization, Shanxi Province is the largest coal producing province with one of the most energy intensive economies in China, and Jiangxi Province is in the process of large-scale industrialization,” said Gailius Draugelis, World Bank’s Senior Energy Specialist and Task Team Leader of the project. “The GEF grant will provide targeted technical assistance and capacity building tailored to each province’s characteristics, and create a platform for better learning and practical experience sharing through intra-province exchange, inter-province exchange, and international exchange.”

In all three provinces, the project will support activities to help to develop energy efficiency service industry, establish an energy efficiency monitoring, supervision, and information dissemination platform, and build capacity for energy efficiency program management and supervision in local public-sector implementing agencies. In addition, in Shanxi and Jiangxi Provinces, the project will assist in developing energy pricing and fiscal policies to strengthen incentives for energy efficiency activities and investments, and strengthening the energy efficiency statistics system. It will also help develop an energy efficiency appraisal system for fixed-assets investment in Jiangxi Province and support expansion of the building energy efficiency program in public buildings in Shanxi Province.

Energy efficiency has been a focus of the World Bank’s program in China. The Bank has introduced energy conservation program concepts and helped to customize them to China’s local circumstances. One example has been the introduction, adaptation and scale up of energy performance contracting through the First and Second WB/GEF China Energy Conservation Projects.

The new project is part of a recent multi-year initiative by the World Bank in partnership with Chinese agencies and other international partners to support continuing and increasing energy efficiency gains through provincial government programs, including both investment financing and technical assistance.