Energy – Regional Knowledge Sharing Initiative

Fostering Green Transformation in the Chemical Industry in the PRC

De-risking investments in high-impact, green technologies enabled the large-scale demonstration of energy-efficient production and emission reduction retrofits.

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Overview

The chemical industry is the second largest industrial energy consumer in the People’s Republic of China (PRC), after iron and steel. It is a major emitter of toxic pollutants and greenhouse gases (GHGs). Within the chemical industry, the production of plastics is particularly energy and emissions intensive.

China National Chemical Group (ChemChina), the country’s largest producer of fluoropolymers, polyvinyl chloride (PVC), and synthetic resins, has developed and pilot-tested technologies and process transformations that can improve energy efficiency and cut emissions but scaling these up has been difficult.

A project supported by the Asian Development Bank (ADB) helped ChemChina to overcome technical limitations and lack of funds that were holding back the commercial development and large-scale adoption of new, cleaner, and more energy-efficient production methods for PVC and fluoropolymer. As a result, the project helped the PRC take a major step forward in its drive to reduce energy consumption, phase out mercury use, and cut GHG and toxic emissions in the chemical industry.

Project information

47051-002 : 47051-002: Chemical Industry Energy Efficiency and Emission Reduction Project

Project snapshot

- - Approval date: 30 Oct 2015
  - Closing date: 6 Sep 2021
  - Amount of loan: US$ 138 million
  - Executing agency: China National Chemical Group (ChemChina)
  - Financing: Asian Development Bank

Context

The PRC is the world’s largest producer of PVC. More than 80% of its PVC industry uses an energy-intensive, coal-based process that relies heavily on mercury as a catalyst. As a result, the PVC industry in the PRC accounts for nearly 50% of global mercury use, and the country continues to mine mercury to meet demand.

Fluoropolymer, a synthetic carbon-based plastic commonly used to provide corrosion-resistant coating, is an important source of emissions of fluoroform (HFC-23), a GHG that is 14,800 times more potent than carbon dioxide.

The government puts a high priority in reducing the threat to the environment and public health posed by the use of toxic substances, including mercury and coal in the chemical industry.

Challenge

The chemical industry in the PRC faces unique challenges in reducing energy intensity because unlike other major chemical producers worldwide, it predominantly uses coal—rather than petroleum or natural gas as feedstock and fuel—because it is abundantly available and has a cost advantage in the domestic market. Coal-based processes are inherently more energy intensive and produce significantly more GHG emissions and toxic pollutants.

Technological innovations and process transformations are essential to further improve energy efficiency and reduce emissions. However, important market barriers still remain in energy-intensive industries, including the chemical industry, which continues to slow down or prevent investment in large-scale, innovative technology that improve energy efficiency and in emission reduction retrofits.

ChemChina faced the following challenges in scaling up energy efficiency initiatives and cleaner production technologies, such as mercury-free PVC production:

perceived and real technical risks;
lack of debt financing because commercial financing institutions have a weak understanding of the financial viability of such projects;
lack of strict regulatory requirements to incentivize investments, as relevant technologies have not been demonstrated at commercial scale; and
lack of a suitable energy service company (ESCO) that can bring together technical knowhow and suitable financing.

Solution

Approved in 2015, the Chemical Industry Energy Efficiency and Emission Reduction Project was crucial in addressing these key issues and barriers and facilitating commercial-scale demonstration of strategic technologies.

A financial intermediation loan of $100 million from ADB supported de-risking of investments. The funds were disbursed through the China Construction Bank to selected industrial plants of ChemChina to finance innovative, high-impact technologies and process transformations that will improve energy efficiency and reduce emissions. The outputs are (i) more efficient and less hazardous PVC technology demonstrated at commercial scale at the Dezhou Shihua Chemical plant and (ii) energy efficiency and GHG abatement measures implemented at Zhonghao Chenguang Research Institute of Chemical Industry.

The project leveraged ADB financing by (i) using a revolving escrow fund for multiple rollovers of funding, (ii) engaging in collaborative commercial cofinancing, and (iii) employing a sector-specific ESCO. Due diligence and enhanced monitoring measures were put in place to ensure adequate management of technical and other associated risks. Business models were developed to ensure timely replication.

The Dezhou Shihua Chemical subproject focused on the energy-saving transformation of PVC production chains supplying 400,000 tons per year. It supported the first-of-its-kind demonstration at commercial scale of a new mercury-free catalyst technology that utilized calcium carbide, together with dichloroethane, to synthesize vinyl chloride monomer, which was then processed into PVC. The subproject was envisioned to demonstrate a viable approach for gradually eliminating mercury catalysts in the country’s calcium carbide-based PVC plants.

The Zhonghao Chenguang Research Institute of Chemical Industry subproject financed comprehensive energy efficiency and management measures at a fluoropolymer facility in Zigong City in Sichuan Province. The target is to reduce energy consumption by over 10,000 tons of coal equivalent a year and abate HFC-23, a powerful GHG that is an unwanted by-product of fluoropolymer production. The subproject was implemented through the ESCO modality. By mainstreaming ESCO in the project’s structure, the project addressed a key barrier that has so far prevented industry-specific ESCO participation in energy efficiency retrofits in energy-intensive industries in the PRC.

Results

The Dezhou Shihua Chemical plant subproject demonstrated a scaled-up application of a successfully pilot-tested mercury-free catalyst to produce PVC at the chemical facility. Meanwhile, the Zhonghao Chenguang Research Institute of Chemical Industry subproject implemented energy efficiency optimization measures, including scaled-up plasma incineration of HFC-23.

After full operation in 2024, the first batch of subprojects is expected to save energy amounting to 604,399.6 tons of coal equivalent, avoid 15.71 million tons of carbon dioxide equivalent, and eliminate the use of 35 tons of mercury annually. The subprojects have improved energy efficiency and reduced harmful emissions and served as a model for environmental improvement in the PRC’s chemical industry. With the estimated annual energy saving, the two subproject owners will also benefit from reduced energy costs.

The project has a positive social impact by reducing GHG emissions, expediting the elimination of mercury use in PVC production, and fast-tracking the phaseout of mercury mining. It has helped curb climate change impacts and lessen the hazardous effects of mobilizing mercury in the environment. The successful demonstration of the new technology could lead to the complete elimination of the currently used mercury catalyst in PVC production technology. This would be a major step toward the implementation of the United Nations’ Minamata Convention of Mercury, which aims to end the intentional use of mercury and control and reduce its global emissions.

The energy efficiency project will further promote the transformation and development of ChemChina. The technologies applied in the two subprojects can provide a business model for promoting similar technologies in other chemical factories. Under the Zhonghao Chenguang Research Institute of Chemical Industry subproject, the packaging of HFC-23 destruction with energy efficiency measures has provided a business model for ESCOs in the PRC.

Lessons

Financing. The project developed an innovative financing structure to leverage commercial cofinancing and mainstream ESCO participation. Because of the relatively shorter payback period for typical industrial energy efficiency projects compared to traditional infrastructure projects, the financial intermediation loan modality was chosen for this project. This allowed multiple rollovers of the ADB loan over the loan tenor. By further leveraging commercial cofinancing with ADB funding, the project could target higher impact, with greater improvements in energy efficiency and emissions reduction than would be possible under a project loan.

Testing and validation. Technology innovations should be encouraged but with caution. Innovations need to be verified during implementation. Realizing stable operations using transformative technologies may require additional trials and time for verification, possibly leading to a longer implementation period.

Acceptable PVC products have been made through the new mercury-free production process under the Dezhou Shihua Chemical subproject. The performance indices met the design goals, but more data and time were needed to verify the process, including certifications from professional organizations.

Upgrades and retrofits. The energy efficiency improvement for the production system of organic fluorine under the Zhonghao Chenguang Research Institute of Chemical Industry subproject was completed, with energy savings and emission reductions meeting the design goals. The upgrading and retrofitting were carried out in the production process, resulting in mutual interactions and uncertain impacts, which may cause implementation delays and safety risks. These factors should be taken into consideration when implementing device-upgrading projects in the future. For example, factories should be equipped with more safety and environmental protection personnel, and enough time should be allotted for projects that include upgrading of production processes.

References

Asian Development Bank (ADB). 2015. Report and Recommendations of the President to the Board of Directors: Proposed Loan to the People’s Republic of China for the Chemical Industry Energy Efficiency and Emission Reduction Project. Manila.

ADB. 2022. Completion Report: People’s Republic of China: Chemical Industry Energy Efficiency and Emission Reduction Project. Manila.

Author

Xinjian Liu

Senior Project Officer (Energy), East Asia Department, ADB

This blog is reproduced from Development Asia.

A Virtual Power Plant that Creates Real Energy

In the People's Republic of China, a project is saving enough energy to match the equivalent of building a 107-megawatt power plant.

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Overview

Since 2000, electricity use in the People’s Republic of China has been rapidly increasing at an annual rate of over 13%. By 2004, serious power shortages had become persistent, and more than half of the provinces in the country had to curtail power supplies during the peak periods in summer.

Furthermore, approximately 80% of the electricity is produced by coal-fired power plants, generating substantial amounts of air pollutants and greenhouse gases. More than half of the cities in the country have failed to meet the national ambient air quality standards.

Increased energy consumption has also led to more fuel imports. In 2013, the People’s Republic of China imported 327.1 million tons of coal. Projections suggest that oil imports will increase to about 13.1 million barrels per day in 2030, up from 3.5 million barrels per day in 2006.

In 2008, the People’s Republic of China and the Asian Development Bank embarked on an energy efficiency program to improve the country’s energy security and environment. The Guangdong Energy Efficiency and Environment Improvement Investment Program focused on creating additional system capacity through an efficiency power plant in Guangdong province.

An efficiency power plant is a strategic option that would help increase a country’s power generation capacity without building additional power plants. Because an efficiency power plant is a virtual power plant, building it does not mean constructing power generation infrastructure. Rather, it entails investments in conservation and efficiency measures that reduce energy demand and yield energy savings equivalent to the capacity generated by an actual power plant. Conservation measures include retrofitting electrical equipment for power savings and using more energy-efficient equipment and technologies.

Project information

39653-023 : China, People’s Republic of: MFF: Guangdong Energy Efficiency and Environment Improvement Investment Program – Tranche 1

Project snapshot

- - Approval date: Jun 2008
  - Closing date: Dec 2011
  - Amount of loan: US$ 35 million
  - Executing agency: Guangdong Provincial Government Geographical
  - Financing: Asian Development Bank

Challenges

Guangdong is in southern People’s Republic of China. Its population of 92 million has grown an average 2.2% per year since 1995. Its economy is the largest and fastest-growing among the country’s provinces.

In 2007, before the project started, Guangdong’s installed generation capacity totaled 59.3 gigawatts, one of the biggest in the country. However, power demand has grown 13% per year since 1995, and Guangdong imports its coal, oil, and electricity (100%, 80%, and 20%, respectively) from other provinces. Power demand has outpaced capacity, causing severe power shortages during peak hours in summer.

Solution

Choosing Guangdong

Guangdong was chosen as the best site because the project would help expand power generation capacity in the country’s largest provincial economy and secure energy supply without further harming the environment. It was envisaged that the success of this project would potentially spur more cities in the country to explore using efficiency power plants.

Implementing energy efficiency subprojects

To create the efficiency power plant, Guangdong implemented eight energy efficiency subprojects for Tranche 1 of the program, which retrofitted, upgraded, and replaced appliances and equipment owned by end users, industries, and commercial establishments. It also implemented subprojects on waste-to-energy measures.

The municipal government established the Efficiency Power Plant Project Management Office to handle overall implementation of the energy efficiency subprojects.

For Tranche 1, eight agencies ran subprojects as subborrowers. Upon completion, the subprojects created an efficiency power plant capacity of 130 megawatts, saving 651 gigawatt hours per year.

Strategic lending mechanism

Many companies do not seek loans for energy efficiency projects because it takes funding away from their core business operations. They would rather seek funding for business expansion or the establishment of a new business. To address this, the program used a financial intermediary loan scheme with strengthened implementation supervision and a simplified process for subproject appraisal. This scheme not only made funding for retrofits available to companies, but also gave Guangdong needed flexibility to quickly complete energy efficiency projects. It functioned as a revolving fund; new subprojects could be financed as subloans for each repaid subproject, multiplying energy savings.

Using Asian Development Bank loan proceeds, the project established a special single-purpose trust fund managed by a financial intermediary, the Guangdong Finance Trust Company. Together with the Efficiency Power Plant Project Management Office, they appraised subproject applications and the Guangdong Finance Trust Company on-lent to financially viable efficiency power plant subprojects. Repayments of subloans, net of transfers to the Guangdong provincial government for servicing the loan, were used for further on-lending. The trust was available only for efficiency power plant projects and could not be mixed with other trust funds.

Numbers and facts

107 megawatts power generated
175,813 tons/year coal use projected reduction
415,560 tons/year carbon dioxide emissions projected reduction
1,785 tons/year suspended particulates emissions projected reduction

Results

Upon completion in 2011, Tranche 1 generated efficiency power plant capacity totaling 130 megawatts and energy savings totaling 651 gigawatt hours per year, exceeding the initial target of the entire investment program (i.e., 532 gigawatt hours of energy savings per year and an equivalent 107 megawatts in capacity).

In addition, the project demonstrated how efficiency power plants can be created in a systematic way. It tasked two entities for two aspects of program implementation. The Efficiency Power Plant Project Management Office appraised the technical feasibility of the subprojects and subproject implementation, whereas the Guangdong Finance Trust Company appraised the financial viability of subborrowers and on-lending. Thus, each entity complemented and supplemented the other. The project management office ensured smooth implementation and timely loan repayment by subborrowers, freeing loan availability for the next subproject borrower. This partnership facilitated more energy saving projects.

Moreover, the project facilitated the development of energy service companies. At the outset, two energy service company subborrowers implemented waste heat recovery and industry energy-efficiency retrofitting projects. By 2011, two other subborrowers had established their own energy service companies.

Guangdong’s efficiency power plant model has attracted attention from other municipalities in the country, and many made study visits to learn about it. Shandong and Hebei provinces have already replicated Guangdong’s model.

Lessons

Creating a replicable model

The structure of Guangdong’s efficiency power plant model was straightforward. The project created a trust company and a project management office with distinct but complementary tasks in facilitating energy efficiency projects. Together, they were able to exceed project expectations, demonstrating that a simple structure with clear-cut delineations can ease implementation, especially in areas where the efficiency power plant is relatively unknown. Project implementation was easier for subproject borrowers because it simplified the whole efficiency power plant process, from loan request to completion. Other municipalities can easily replicate the model.

Savings and on-lending

Subborrowers who successfully implement efficiency power plant subprojects can anticipate both energy and financial savings. Their loans yield monetary benefits, and full repayment is rolled over to the next borrower, expanding loan availability for other agencies seeking funds to implement their own efficiency power plant projects.

References

ADB. China, People’s Republic of: MFF: Guangdong Energy Efficiency and Environment Improvement Investment Program – Tranche 1

ADB. 2013. Completion report: MFF: Guangdong Energy Efficiency and Environment Improvement Investment Program – Tranche 1. Manila.

ADB. 2015. Knowledge and Power: Lessons from ADB Energy Projects. Manila.

Guangdong Energy Efficiency and Environment Improvement Investment Program, Tranche 1: Providing Additional Power Capacity through Energy Savings

Same Energy, More Power: Accelerating Energy Efficiency in Asia

State-of-the-art Technology Boosts Energy Efficiency in Uzbekistan

Improving Energy Efficiency in South Asia

Author

Xinjian Liu

Senior Project Officer (Energy), East Asia Department, ADB

This blog is reproduced from Development Asia.

Closing the Industrial Energy Efficiency Financing Gap

Accessible funds for the industry sector accelerated investments in energy efficiency and enhanced institutional capacities.

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Overview

A project supported by the Asian Development Bank (ADB) highlighted the impact of supporting the industry sector to invest in technology innovations that lead to reduced energy costs and enhanced market competitiveness.

This project showcased how a financial intermediation loan modality can accelerate private sector investments required for improving energy efficiency through enhanced provincial capacity in financing and managing energy conservation projects.

Project information

40524-013 : People’s Republic of China: Shandong Energy Efficiency and Emission Reduction Project

Project snapshot

- - Approval date:18 Aug 2011
  - Closing date: 19 Sep 2017
  - Total project cost: $100 million
  - Executing agency: Shandong Provincial Government
  - Financing: Asian Development Bank

Context

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 – coal (77%) and oil (21.2%) – causing high level of emissions. The province’s total energy consumption in 2009 was 324 million tons of standard coal equivalent or 10% of the national total. Its economy has grown consistently at a rapid rate, expanding at an average of 12.49% per annum from 1995 to 2009.

Shandong province is committed to reduce energy emissions in the long term. Despite some achievements, the underinvestment in energy efficiency and the existence of many energy-intensive industries in the province provide significant opportunities for further energy intensity reductions through targeted investments.

Development Challenge

Existing industrial energy efficiency financing mechanisms in Shandong were designed mostly for large projects. A large financing gap existed for small and medium-sized energy efficiency efforts that involve all or part of an industrial manufacturing process because of the following:

lack of familiarity with the latest energy efficient technologies, combined with the enterprises’ perception of production interruptions and/or loss of revenues;
difficulties for commercial banks to assess cash flow benefits and forgo collateral for such investment projects which do not generate additional revenues; and
lack of capacity for evaluation and risk assignments for energy conservation investments by commercial banks.

Solutions

Through the Shandong Energy Efficiency and Emission Reduction Project, 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 because of its sound track record. It is a major onlender of loans from foreign governments and international financial institutions. It is also familiar with the policies and procedures of Shandong Provincial Finance Department.

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.

Subprojects

Lufang's zero coal copper ore smelting furnace technology

The Lufang subproject developed oxygen bottom-blown smelting (OBBS) technology with flue gas recovery and residual-heat utilization. The flue gas recovery component utilizes the most advanced vanadium catalyst and rhodium catalyst so that its sulfur dioxide conversion rate can reach 99.85%. At the same time, the sulfur dioxide emission concentration can be less than 20mg/m3. The residual-heat utilization component utilized waste heat for power generation. Because of the successful implementation of the new OBBS technology, other metal and iron smelting enterprises in Shandong have also started to apply these technologies through Lufang.

Hider's advanced heat exchangers and pumps

The Hider subproject replaced coal-fired boilers with advanced heat exchangers and customized pumps. Their technology can use wastewater heat from a combined heat and power plant to warm up aquaculture ponds to up to 12 centigrade. Hider covered 45 clients for energy efficiency renovations.

During the project implementation, Hider also developed other energy conservation and emission reduction technologies like frequency motor application technology in oil fields, enhanced natural gas energy conservation technology, and waste heat power generation technology.

Jintai's ultra-frequency magnetic fluid heating equipment

The Jintai subproject replaced the traditional resistance heating method with advanced ultra-frequency magnetic fluid-heating equipment to heat oil in the Shengli Oil Field pipeline. Their technology improved energy efficiency by 30% to 70%.

Because of its successful implementation, other oil fields across the country have replicated Jintai’s technology. Jintai scaled up its technology application to Daqing Oil Field, Changqing Oil Field, and several oil fields in Xinjiang Uygur Autonomous Region. Successful promotion of this technology led to multiplier effects in energy conservation and emission reduction in the oil sector in the People’s Republic of China.

Lvxi's energy conservation and renewable energy utilization technologies

The Lvxi subproject developed advanced energy conservation and renewable energy utilization technologies like solar central air condition systems, air-source heat pumps, distributed PV stations, and absorption and compression cooling systems to enable the complementarity of diversified renewable energy utilization and improve the energy efficiency of public buildings.

From 21,344 tons of coal equivalent per year, the actual energy consumption of Lvxi clients was reduced to 19,511 tons per year – effectively improving client energy efficiency by 91% – after implementing the new technologies. The Lvxi technologies were also tested on a university campus. This became the first micro-emission campus in Shandong and a flagship of micro-emission or near-zero-emission campuses.

Results

The four subprojects achieved total annual energy savings of 263, 417 tons of coal equivalent per year and reduced emission by 647,129 tons of carbon dioxide and 2,943 tons of sulfur dioxide per year as of 2018. The accumulated energy savings were almost 1.6 times the original target.

Improved energy efficiency reduced the negative impacts of coal consumption on public health. The improvement in environmental quality has benefited the poor who are more exposed to health risks such as air pollution and coal burning.

The subprojects successfully adopted new technologies. This encouraged new projects in Shandong and other parts of the PRC to replicate these technologies. The wider application and selling of energy-efficient technologies created jobs in the energy sector thereby promoting overall economic development.

The private sector invested in upgrading their existing equipment and facilities to conserve energy and reduce emissions. All companies involved in implementing the subprojects were key players in different renewable energy and energy efficiency subfields in Shandong. As sub-borrowers, they benefited financially through reduced energy costs and increased sales of their auxiliary services and products, which enhanced their market competitiveness.

As a financial intermediation loan, the project improved the capacity of the government and the China Everbright Bank in planning, investment, and management of energy conservation in Shandong province. The Shandong Provincial Government further strengthened its policies to promote energy conservation in industries. It encourages public-private partnership including diversification of financing and investment channels to promote green financing.

China Everbright Bank has built its capacity in evaluating and assessing renewable energy and energy efficiency improvement projects. It is now more experienced in coordinating subproject selection, approval, implementation, disbursement, and audit of subloans. The institutional mechanism required for effective subproject processing and implementation in succeeding batch of projects has been established and operational.

Lessons

Financial intermediation works

Financial intermediation has made the implementation of energy conservation and efficiency improvement projects possible. To provide for more market-oriented financial intermediation loans, it is recommended that (i) local governments consider relaxing the requirements for financial guarantee, and (ii) for the intermediary to take full responsibility in assessing the types of guarantee or collateral needed as the precondition for approving subprojects.

Incentives for enhancing emission reductions

To provide incentives for sub-borrowers, the intermediary could consider green bonds financing to give interest rebates with clearly defined milestones, so that sub-borrowers who achieved emissions targets can benefit from their action in a timely manner. Likewise, a carbon dioxide reduction registry system for the sub-borrowers could be established to link with nationwide carbon trading in the near future.

References

Asian Development Bank. 2012. 2011 Clean Energy Investments: Project Summaries. Mandaluyong.

ADB. 2011. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People’s Republic of China for the Shandong Energy Efficiency and Emission Reduction Project. Manila.

Author

Lanlan Lu

Senior Project Officer, East Asia Department, ADB

This blog is reproduced from Development Asia.

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8th Asia-Pacific Energy Sustainable Development Forum

With the theme of “Green and Stable Energy Transition toward Carbon Neutrality”, the 8th Asia-Pacific Energy Sustainable Development Forum will be held in Tianjin on 21 to 23 September in a hybrid format. This sub-forum below on “Enable Energy Transition and Facilitate Carbon Neutrality” will be held on 23 September.

Zoom link:

https://zoom.us/j/94712612395pwd=L29HUmN3NUZ5V2VCcHZsWDRrUitWdz09

Online Meeting ID: 947 1261 2395

Password: 669900

Agenda:

Agenda

Time	Program
09:00 – 09:10	Opening Remarks Munlika Sompranon, Vice Chair of Expert Group on New and Renewable Energy Technologies (EGNRET), APEC Energy Working Group (EWG), APEC
	Session I. Enable Energy Transition and Support Renewable Energy Development
09:10 – 09:20	Supporting energy transition in APEC economies MA Jinlong, Vice President, APSEC
09:20 – 09:40	Energy transition in East Asia from ADB’s perspectives Atsumasa Sakai, Senior Energy Specialist, Asia Development Bank
09:40 – 10:00	Assessment of energy system and energy transition Shabbir Gheewala, Director, Life Cycle Sustainability Assessment The Joint Graduate School of Energy and Environment, King Mongkut’s University of Technology, Thailand
10:00 – 10:20	Rural smart energy technology for carbon neutrality ZHANG Xiaofeng, President, Global Green Development Alliance, the US
10:20 – 10:40	High density city energy transition toward the carbon neutrality WANG Shengwei, Director, Research Institute for Smart Energy, Hong Kong Polytechnic University, Hong Kong, China
10:40 – 11:00	Energy transition and electrification in PNG Chris Lohberger, President, Solar Energy Association of Papua New Guinea, Papua New Guinea
11:20 – 12:10	Panel Discussion Chair: MA Jinlong, Vice President, APSEC
	Session II. Achieving Emission Peaking and Carbon Neutrality Chair: SUN Yong, Researcher, APSEC GE Beiqing, Associate Researcher, APSEC
14:00 – 14:20	Global trend of energy transition and sustainable development LIU Xiaowei, Director, Asia Project, World Energy Council
14:20 – 14:40	Toward low carbon goals in Australia SHI Xunpeng, University of Technology, Sydney, Australia
14:40 – 15:00	Deployment of energy storage technologies Matthew Rowe, Director, Power Grids, Asia Pacific DNV, Singapore
15:00 – 15:20	Energy transition and renewable energy development in Malaysia Adarsh Kumar Pandey, Director, Research Centre for Nano Materials and Energy Technology , Sunway University, Malaysia
15:20 – 15:40	Renewable energy development and grid integration in Viet Nam Loc Nguyen, CEO, BBCO Energy, Viet Nam
15:40 – 16:00	Clean district energy system and applications Mikael Jakobsson, Executive Director, Asia Pacific Urban Energy Association, Sweden
16:00 – 16:20	Innovative approach to scaling up renewable energy development in APEC region SUN Yong, Researcher, APSEC
16:20 – 17:10	Panel Discussion Chair: MA Jinlong, Vice President, APSEC

Modernizing District Heating Systems in Heilongjiang

A district heating project taps the help of private sector companies to promote higher energy efficiency and lower emissions.

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Overview

A project supported by the ADB has provided safer, cleaner, and more reliable heating services to 1.21 million urban residents in six cities of Heilongjiang province in the PRC. As the primary users of heating services, the health of women and children in the project areas improved through better quality of indoor and outdoor air. It expanded and upgraded district heating systems to make them more energy-efficient, thereby reducing emissions of greenhouse gases and air pollutants in the project areas.

Project information

44011-013: Heilongjiang Energy Efficient District Heating Project

Project snapshot

- - Approval date: 25 Sep 2012
  - Closing date: 29 Nov 2019
  - Amount of loan: US$ 353 million
  - Executing agency: Heilongjiang Provincial Government, the PRC
  - Financing: Asian Development Bank

Context

Heilongjiang is an underdeveloped northeastern province regularly battered by frigid Siberian winds. The province experiences long winter seasons that last 6 to 7 months and temperatures that could fall as low as -40°C. Space heating is one of the basic needs and provides essential support to socio-economic activities. District heating systems are most suitable for areas where heating seasons are relatively long.

Challenge

Inadequate coverage of district heating in low-income urban areas forced poor households to use indoor coal-based stoves for space heating. These heating systems were old, inefficient, lacked proper emission control equipment, and a major source of respiratory diseases. Small heat-only boilers in many cities of Heilongjiang had a combustion efficiency of 55%, far below the 87% that modern combined heat and power plants or large heat-only boilers can achieve. The burning of coal through boilers and stoves worsened indoor and outdoor air quality. Women and children were particularly vulnerable to high indoor pollution as they tend to spend more time at home.

Solution

The Heilongjiang Energy Efficient District Heating Project was designed to expand and upgrade the district heating systems in Heilongjiang Province. Funded by a $150 million loan from ADB, the project installed energy efficient heating sources and heat exchangers; insulated pipelines; computerized monitoring and control systems; and removed and dismantled small, inefficient, and polluting neighborhood coal-fired boilers and coal-fired household stoves.

The project adopted environment-friendly boiler technology with high energy efficiency and lower emissions. The installment and use of computerized monitoring and control systems to manage the demand and supply of heat prevented the overheating of buildings and supported two private enterprises to promote private sector participation.

Installing energy efficient district heating supply systems

The project was implemented in six cities (Harbin, Jiamusi, Qitaihe, Tongjiang, Yichun Tangwanghe, and Hailin), installing 406 megawatt thermal-equivalent of three energy-efficient heat generators, 226 heating exchange stations, 161 km of insulated heating pipelines, and 5 computerized monitoring and control systems. It also removed 361 small, inefficient, and polluting neighborhood coal-fired boilers and 116,160 coal-fired household stoves.

Promoting private sector participation in district heating

The project supported two private heating companies―Tongjiang Changheng Cogeneration Company and Hailin Hailang Thermal Power Company―which operate in remote small cities through financing and capacity development. It also improved energy efficient heat generation capacity in the cities of Tongjiang and Hailin.

Enhancing institutional capacity and energy conservation awareness

The capacity of the executing agency, the project management office, and the six subproject implementing agencies to supervise and manage project implementation was strengthened through training and logistics provision. Knowledge-sharing sessions were organized between private sector companies and state-owned enterprises to promote good business practices.

The project also raised the awareness of the public, particularly women, through energy conservation awareness programs. Women are the primary users of heating services and their participation in these sessions was critical for a gender-sensitive delivery and quality of district heating services.

Results

Low-carbon heating for residents

The expanded coverage of upgraded district heating systems reached 30 million m2 without a net increase in emissions benefiting about 1.21 million urban residents or 226,499 urban households, including 21,137 poor households and 1,829 households headed by women. The disposal of low-efficiency, high-pollution coal-fired household stoves has lessened the domestic chores working hour allowing women more time to spend for income-generating activities, learning, or recreation. Through heating tariff subsidies, waived connection fee, and discounts, the project benefited poor female-headed households with access to a cleaner, safer, and reliable heating system.

Better air quality and energy savings

By 2020, the project improved energy efficiency of the district heating systems in six urban areas in Heilongjiang. It saved 882,460 tons of estimated annual raw coal consumption. This has contributed to emission reductions of 5,787 tons of sulfur dioxide, 98,552 tons of total suspended particulates, 11,566 tons of nitrogen oxide, and 1,299,831 tons of carbon dioxide. The air quality in the project areas improved to meet Class II air quality standards. With reduced annual coal use and improved energy efficiency, the incidence of respiratory diseases and other air pollution-related health risks in the project areas are expected to decrease significantly in the long term.

Lessons

Commitment of project stakeholders is critical to the success of a project. Project implementation should be carried out under effective supervision, monitoring, and cost control. Emission of heat source pollutants during the operation period should be continuously monitored to ensure that standards are met.

With rapid urbanization comes the need for investment and rehabilitation of old heating systems. Private sector participation helps fill the huge gap in investment demand. Good practices and knowledge from the private sector could also be shared with state-owned heating companies to enhance the viability of the heating business. Generally, private heating companies attain higher tariff collection rates because of market-oriented business practices with better customer orientation.

References

Asian Development Bank (ADB). 2012. Report and Recommendations of the President to the Board of Directors: Proposed Loan to the People’s Republic of China for the Heilongjiang Energy Efficient District Heating Project. Manila.

ADB.2013. 2012 Clean Energy Investments: Project Summaries. Manila.

ADB. 2021. Completion Report: People’s Republic of China: Heilongjiang Energy Efficient District Heating Project. Manila.

Author

Xinjian Liu

Senior Project Officer (Energy), East Asia Department, ADB

This blog is reproduced from Development Asia.

Clean Heating Technologies: A Pilot Project Case Study from Northern PRC

Mitigating Energy Shortages in the PRC

In Heilongjiang, PRC, Modernizing of Heat Sources Spreads Warmth and Cuts Pollution

For many decades, heating in Heilongjiang Province, PRC, depended heavily on out-of-date, inefficient boilers. Coal stoves for space heating were a major cause of indoor air pollution and respiratory diseases in poor households.

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In 2012, ADB approved a loan of $150 million for the Heilongjiang Energy Efficient District Heating Project to expand and upgrade district heating systems. The goal was to make heating systems energy efficient and reduce greenhouse gas emissions.

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Overall living conditions improved through adequate and reliable heating services, while heating expenditures were reduced by switching from individual household stoves and decentralized heating systems to centralized energy efficient heating systems.

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Winter falls hard in Heilongjiang Province, an underdeveloped inland area in the northeast of the People’s Republic of China (PRC). Temperatures drop as low as -40 degrees Celsius, and the province is often enveloped in sub-zero temperatures for more than six months.

“For many decades, heating in the province depended heavily on out of date and inefficient boilers,” says Xinjian Liu, Senior Project Officer for the Asian Development Bank. “Coal stoves for space heating were a major cause of indoor air pollution and respiratory diseases in poor households of Heilongjiang. Emissions from small neighborhood boilers also affect outdoor air quality and cause significant long-term harm to public health.”

The Heilongjiang provincial government has long recognized the importance of improving energy efficiency in district heating, and earmarked it as a priority as it works to improve energy efficiency and quality of life.

Upgrading Heating

In 2012, ADB in 2012 approved a $150 million loan for the Heilongjiang Energy Efficient District Heating Project. The aim was to expand and upgrade district heating systems in cities of Heilongjiang Province, to make heating systems more energy efficient, and reduce emission of greenhouse gases and air pollutants.

The project was carried out in six cities (Harbin, Jiamusi, Qitaihe, Tongjiang, Yichun Tangwanghe, and Hailin). Energy-efficient heating sources and heat exchangers were installed, pipelines were insulated and compuThe project was carried out in six cities (Harbin, Jiamusi, Qitaihe, Tongjiang, Yichun Tangwanghe, and Hailin). Energy-efficient heating sources and heat exchangers were installed, pipelines were insulated and computerized monitoring and control systems were introduced. The project also removed 361 small, inefficient, and pollution-generating neighborhood coal-fired boilers and 116,160 coal-fired household stoves.

By 2020, the project had extended the coverage of the district heating system in the six project cities and towns by 30 million meters2 without a net increase in emissions. It also promoted private sector participation in district heating sector in two project cities, and held three knowledge sharing sessions.

Some 226,499 urban households—including 21,137 poor households and 1,829 households headed by women—now have access to district heating systems. Conservation awareness campaigns covered 683,600 women within the project areas.

The project improved air quality and reduced greenhouse gas emissions across the six urban areas. By 2020, it reduced annual raw coal consumption by 882,460 tons, avoiding annual emissions of 1,299,831 tons of carbon dioxide, 5,787 tons of sulfur dioxide, 98,552 tons of total suspended particulates, and 11,566 tons of nitrogen oxides, compared with 2012 levels. By 2020, air quality in project-targeted areas improved to Class II of the PRC’s ambient air quality standards.

By 2020, the Heilongjiang Energy Efficient District Heating Project reduced annual emissions* of

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Carbon dioxide

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Nitrogen oxides

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Sulfur dioxide

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Annual raw coal consumption

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Suspended particulates

0 Improved to Class II

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*Compared to 2012 figures

Cleaner Environment

“The project achieved its intended impact of improving energy efficiency and a cleaner environment in Heilongjiang Province,” says Yolanda Fernandez Lommen, ADB Country Director in the PRC. “It created significant social and environmental benefits and helped reduce poverty by creating job opportunities, improving health and welfare, and driving economic growth while reducing pollution.”

A total of 1.21 million urban residents of the project areas—including 683,600 women, 55,246 people from poor families, 109,794 children and 14,020 teachers in 94 schools, along with 43,947 patients and 9,994 medical staff in 50 hospitals—benefited directly from improved energy efficiency and a cleaner environment.

Also, overall living conditions were improved through adequate and reliable heating services, while heating expenditures were reduced by switching from individual household stoves and decentralized heating systems to centralized energy efficient heating systems. The new systems also provided a better schooling environment during the winter by providing cleaner and reliable heating services.

“This upgraded district heating system created a more comfortable and conducive environment for residents in the project areas,” says M. Teresa Kho, ADB’s Director General for East Asia. “The reliable indoor heating ensured residents a warm and cozy living environment, particularly during the COVID-19 pandemic, when most residents had to spend a major portion of their daily lives indoors. With reduced annual coal use and improved energy efficiency, the incidence of respiratory diseases and other air pollution related health risks are expected to reduce significantly in the long term.”

Author

Graham Dwyer

Principal Communications Specialist, Department of Communications, ADB

This article is reproduced from Asian Development Bank.

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