IFC China Energy Efficiency Finance (CHUEE) Program – China

The China Energy Efficiency Finance (CHUEE) supports banks in lending to energy efficiency and renewable energy projects. The program, which offers technical advisory services, catalyzes further lending for implementation of similar projects, allowing partner banks to build significant new portfolios in sustainable energy finance. The program demonstrates to banks that sustainable energy finance makes sense for business and for the environment.

Fast facts:

19 million tons of carbon dioxide reductions per year since 2006;
226 loans with a total value of USD 790 million issued;
USD 1.88 billion in energy efficiency and renewable energy investments mobilized;
174 energy-related events supported, reaching 772 entities and 9,276 people through training programs

The problem

China emits a quarter of the world’s total greenhouse gases emissions, making it the world’s largest emitter. In recent years, China has suffered serious pollution problems. Although China is in dire need of energy efficiency and renewable energy investment, such projects are usually capital-intensive and need considerable front-end investment. In addition, development of such projects is a service-intensive task and requires technical engineering skills that are often lacking.

The solution

The CHUEE program initiated by the International Finance Corporation (IFC) – the private-sector arm of the World Bank Group – reduces risk for banks and offers advisory services, unlocking private finance for energy efficiency and renewable energy projects in China.

The program provides a risk-sharing facility where IFC covers a portion of the loan in case of default. This mechanism gives banks confidence to issue loans for sustainable energy projects, and allows them to build their green portfolios. Accompanying technical support develops banks’ in-house technical capacity, raises awareness of market opportunities, and fosters cooperation among various stakeholders. IFC delivers tailored training packages with policies, real case studies, transaction structuring, and energy service company lending.

Eligible projects include energy efficiency measures in buildings, industrial/manufacturing processes, and waste energy recovery. Renewable energy projects for electricity generation are also eligible projects.

Helping the planet

More businesses investing in sustainable energy technology means less use of fossil fuel, which reduces greenhouse gas emissions. Both energy efficiency and renewable energy projects reduce combustion of coal, decreasing air pollution in local communities.

Helping people

Communities benefit from cleaner air and more stable electrical supply. The project has specifically benefitted some less-advantaged communities – at least 65 projects have taken place in China’s generally poorer non-coastal or northeastern provinces. Since China is among the world’s largest emitters of greenhouse gas emissions, reductions there address climate change around the whole world.

Scaling up

The program has been able to diversify into new areas, and banks are following the program’s lead by tailoring loans. As CHUEE has opened these market opportunities, financial institutions are now making long-term investments in green projects. CHUEE is also working on a World Bank Group-wide program to expand climate-smart cities incorporating promotion of green building.

By sponsoring workshops and seminars, publishing market studies, and media outreach, CHUEE further raises market awareness. IFC also works with relevant associations to build a sustainable energy financing platform for information exchange and policy dialogue. CHUEE has also influenced the adoption of China’s green credit policy, and similar guidelines are now in place in a number of countries around the world.