In Washington D.C.
Lucie Giraud
Phone: +(202) 458 4662
Email: lgiraud@ifc.org
Rita Jupe
Phone: +1 (202) 458 8967
Email: Rjupe@ifc.org
In Hong Kong
Andrew Mak
Phone: +852 2509 8110
E-mail: amak@ifc.org
In Beijing
Wenqin Zhu
Phone: +86 10 58603130
E-mail: wzhu@ifc.org
IFC Establishes Risk-Sharing Facility with Industrial Bank to Boost Energy Efficiency Project Lending in China
Shanghai, May 17, 2006—The International Finance Corporation, the private sector arm of the World Bank Group, today signed an agreement to provide Industrial Bank with risk-sharing coverage of RMB 200 million ($25 million). This will help Industrial Bank establish a loan portfolio of RMB 460 million ($58 million) of energy efficiency equipment loans to small and midsize energy users in China. The risk coverage will be provided under IFC’s China Utility-Based Energy Efficiency Finance Program (CHUEE). The program 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 also supported by grant funding from the Global Environmental Facility and Finland’s Ministry of Trade and Industry.
“IFC’s energy efficiency program in China provides a great opportunity to develop market-based solutions that address environmental issues,” said IFC Executive Vice President Lars Thunell, who signed today’s agreement. “IFC is proud to partner with Industrial Bank and to help the Chinese government achieve a key policy objective--reducing energy consumption through energy efficiency and conservation measures.”
IFC’s program brings together, for the first time, three key players--utility companies, suppliers of energy efficiency equipment, and commercial banks – to create a new financing model for the promotion of energy efficiency. Industrial Bank will provide commercial lending, while utility partners and equipment suppliers will act as marketing agents and service providers. Overall, IFC’s program will support over $150 million in energy efficiency projects and equipment investment, which in turn are expected to achieve greenhouse gas reductions of about 5 to 10 million tons.
Industrial Bank’s President Li Renjie stated, “Industrial Bank has been focusing on financial innovation. The new program is a successful example of partnership to create a new financing model for energy efficiency. This model is a win for all of us, and Industrial Bank can use the market-based financing model to leverage IFC’s risk-sharing facility on a more scalable basis. It not only solves the problem of SME energy financing, but also supports China’s energy conservation business. It achieves both social and economic benefits.”
The new financing model is a result IFC’s energy efficiency experience in other countries and its experience in China’s financial sector. IFC found that utilities, such as gas or electricity distributors, can be effective agents for marketing and delivering energy efficiency projects. Utilities can act as a “one-stop shop,” offering advice on reducing energy consumption and pollution, and providing equipment, such as gas boilers and heating systems, to realize these improvements. At the same time, utilities can partner with commercial banks that provide loans for the equipment.
