IFC CHUEE Program is designed to support marketing, development and equipment financing services to energy users in the commercial, industrial, institutional and multi-family residential sectors to implement energy efficiency projects in China.
CHUEE brings together, for the first time, three key players - financial institutions, utility companies, and suppliers of energy efficiency equipment and services,- to create a new financing model for the promotion of energy efficiency. The new financing model is a result of IFC’s energy efficiency experience in other countries and its experience in China’s financial sector.
Energy utilities have been identified as the primary marketing and implementation partners for the Program, acting as a hub and offering a “one-stop shop” for end-users to develop their energy efficiency projects. The utilities will work in partnership with a network of energy efficiency equipment and service providers and with financial institutions who will provide loans for energy efficiency projects, supported by an IFC risk sharing facility to help secure these loans.
CHUEE is expected to have a significant developmental impact in promoting energy efficiency, reducing pollution and greenhouse gas emissions, and expanding lending to small and medium enterprises in China. The program is supported by grant funding from the Global Environmental Facility, Finland's Ministry of Employment and Economy and the Norwegian Agency for Development Cooperation, and, will support 5-10 billion in energy efficiency projects and equipment investment, which in turn is expected to achieve greenhouse gas reductions of about 20 million tons over six years.
Why CHUEE?
China is facing severe shortages of energy resources and rapidly growing energy demands. Expanded investment in energy efficiency projects and equipment is a development priority.
Despite government policies in favor of energy efficiency, market inefficiencies still limit the use of energy efficiency equipment. Marketing capacities for energy efficiency equipment are underdeveloped in China:
- Suppliers of energy efficiency products and services often lack strong marketing skills or experience;
- The end-users lack awareness of the economic and technical benefits of energy efficiency equipment;
Financial Institutions in China do not address the needs of the energy efficiency finance market, and they are reluctant to lend to energy efficiency projects due to the lack of first-cost financing security.
Objectives
The Program’s development objective is to create effective delivery mechanisms for systematically developing, implementing and financing energy efficiency projects. Over the course of the next six years the Program is expected to achieve:
- By 2010, 20 million tons of CO2 or other greenhouse gases emissions reduction per year;
- Finance up to RMB 5-10 billion for energy efficiency equipment projects across China;
- Further promotion of sustainable financing in China;
- Improved private enterprises' access to finance in the EE sector.
Through developing the capacities of these key market actors - financial institutions, utilities, and energy efficiency suppliers - a replicable Program model can be further improved on via an ongoing commercially sustainable basis.
