IFC China Utility-Based Energy Efficiency (CHUEE) Program

This project works to create a sustainable energy finance market in China. “IFC China Utility-Based Energy Efficiency (CHUEE) Program” backs loans and advises companies and financial institutions on climate-smart energy projects. Through this, it has built the capacity among these banks and businesses to grow their own sustainable energy project portfolio. CHUEE has issued millions of dollars worth of loans, which in turn reduces emissions and helps create green jobs.

Fast facts:

USD 790 million worth of loans issued for 226 projects
The equivalent of 19 million tons of carbon dioxide reduced annually (for the projects from 2006)
6,500 people reached through training programs

The problem

China’s rapid development, while having lifted millions out of poverty, has come at a heavy cost to the environment. China has overtaken the United States as the world’s highest emitter of greenhouse gases. If China were to continue to develop at its current rate with no action taken, by 2030 the country would emit more greenhouse gases than all of today’s global emissions combined.

In financing sustainable energy loans in China, Chinese banks typically make credit risk decisions with the consideration of fixed assets as security. But few smaller companies have this kind of collateral. Projects were further hindered by a lack of awareness among end-users regarding the benefits of investing in energy efficiency equipment, while suppliers of energy efficiency products and services often had limited marketing skills or experience.

The solution

This program focuses on building the capacity of financial institutions and lowering the perception of risk for investment in sustainable energy. It provides in-depth advisory services to financial institutions, helping them grow their portfolios of local energy efficiency and renewable energy projects, while ensuring that these projects are profitable. It also shoulders some of the banks’ financial risk through guarantees of loans made for climate-smart energy projects.

The project raises market awareness through the dissemination of information, case studies, and research to both stakeholders and potential clients. It has supported more than 150 events and reached thousands of people through training programs.

Helping the planet

Less burning of coal and other fossil fuels improves the air quality. This helps to address China’s serious air pollution problem. The sustainable energy projects also reduce emissions of greenhouse gases linked with climate change. Supported projects such as a waste biogas unit, which converts poultry droppings into power, also reduce other forms of pollution that affect soil and water.

Helping people

This project’s development of sustainable energy creates thousands of green jobs. Chinese citizens enjoy cleaner air and other reductions in pollution, while the population of the whole planet benefits from prevention of further climate change.

Spillover effect

The program has already been able to diversify to new areas, including assisting small- and medium-sized enterprises, which can consume more energy than their larger industrial counterparts. The current program seeks increase its work, to reduce carbon dioxide emissions by 1.5 million tons per year. In the face of water scarcity due to climate change, it also addresses adaptation to climate change by financing water efficiency projects.

CHUEEE has leveraged nearly USD 1.8 billion in further funding for energy efficiency and renewable energy projects. In one case, a CHEEE partner bank expanded its business to implement 29 of its own energy efficiency projects across China, showing how capacity-building allows the project to expand. The project has received requests for information from as far away as Latin America. The production of a case-study book could act as a reference for financial institutions interested in carrying out sustainable energy projects.