Yesterday the World Bank's Board of Executive Directors approved a loan of US$87 million to China to finance the Renewable Energy Scale-up Program, supplemented by a grant of US$40.22 million from the Global Environment Facility (GEF). The project's objective is to expand renewable electricity supply in China efficiently, cost effectively and on a large scale.

China is a world leader in the development of renewable energy resources, especially small hydropower. In the past, the focus of this development has been on providing rural areas far from power grids with access to electricity. However, China's abundant undeveloped resources of small hydropower, wind, biomass, geothermal and solar energy also could help the country reduce some of the environmental damage from its overwhelming dependence on coal for large-scale, grid-based power generation. Such a reorientation of China's renewable energy development faces a number of technical, administrative, and capacity constraints. To obviate these constraints, the Government of China has devised a comprehensive renewable energy strategy for making power generation from renewable energy sources competitive, on an economic basis, with coal –fired power plants in supplying electricity to large-scale power grids.

There are three main parts to the Government's new renewable energy strategy. The first is to design and put in place a legal and regulatory framework that encourages the development of economic renewable energy resources in line with power sector reforms that include the creation of a more competitive power market. The second is to provide potential power producers with access to advanced technology and techniques that will make renewable energy more competitive with fossil fuels in power generation. The third is to strengthen the capacity of existing companies to develop, finance, construct and operate renewable energy projects for power generation on a large scale, and further open the sector to private investors.

The Renewable Energy Scale-up Program will support the Government in implementing its strategy. It is the largest such project supported by the Bank and GEF in recent years. Over its lifetime, the project is expected to induce an increased capacity of renewable electricity of more than 20 GW, reduce carbon emissions by about 800 million tons, total suspended particulate emissions by more than 800 million tons, sulfur oxide emissions by more than 30 million tons, and nitrogen oxides emissions by more than 6 million tons.

The project will take place in four pilot provinces--Fujian, Inner Mongolia, Jiangsu and Zhejiang. It will finance a 100 MW wind farm in Fujian province and a pilot 25 MW biomass-fired generation unit in Jiangsu provinces. It will also provide grant funds which will support the government's efforts to jump-start further development of projects and the transfer of up-to-date wind and biomass technology from international suppliers.

"The project has come to life largely thanks to the commitment, dedication and hard work of many people at many levels in China,"said Noureddine Berrah, World Bank Task Manager for the Project. "The Project will support the implementation of a national policy framework that would legally require a share of electricity supply to be met from renewable resources. It will also support cost reduction of equipment to increase the competitiveness of high potential renewable energy technologies over time through improvements to the quality and performance of equipment and strengthening of the capability of the service industries in China so to enable them to respond to the increased market demand."

(China.org.cn June 17, 2005)