In April 2007, IFC’s CHUEE program approved loans to fund two energy efficiency projects in western China. Industrial Bank (IB), the CHUEE program’s initial partner commercial bank, will disburse two loans of 16 million RMB ($2.1 million) each to Chongqing Qinan Machinery and Electronics Manufacturing Co., Ltd. (“Qinan M&E”) and Chongqing Tianzhu Cement Company Limited (“Tianzhu”) to finance their energy efficiency projects, namely, the engine cylinder head and block production line and the cement kiln waste heat recovery for power generation project. The two projects financed with CHUEE loans will contribute to a significant environment improvement and greenhouse gas (GHG) reduction in the region and improve the operating performance for the two companies.
Engine Cylinder Head and Block Production Line at Qinan M&E
Qinan M&E, incorporated in 1995, is specialized in manufacturing major automobile engine components, including cylinder heads and blocks. The engine cylinder head and block production line to be established with the support of CHUEE program shows very good economic returns and environmental benefits. Compared with a traditional production line, this project will reduce power consumption by 36%, save raw materials by 15%, and improve scrape rate by 5 percentage points. Through recycling waste water, the manufacturing system will realize a saving of 98% in water usage and minimizes the waste water pollution to the environment.
The implementation of this project will have extraordinary significance to a private SME like Qinan M&E. The implementation of this project will be the first time for Qinan M&E to serve international leading auto manufacturers as a supplier. Qinan M&E has signed an exclusive sourcing contract with Changan Ford Mazda Automobile Company Limited. The cylinder heads and blocks produced by this project will be used in the engines installed in the Changan Ford Mazda’s major vehicle products. This new supplying business may further extend to Ford’s North America operations. In addition, this project will lead the company to a higher technical and equipment level, improve its managerial competence over production and quality, and lay a solid foundation for the company’s future development.
Access to finance has always been a bottleneck preventing small and medium companies from implementing energy efficiency projects. The situation is even worse for SMEs located in the western part of China, where economy is less developed compared to the eastern part of China. With IFC CHUEE’s risk sharing facility and technical support, IB’s Chongqing Branch is encouraged to provide financing to SME companies such Qinan M&E. Once in operation, the proceeds of the project will serve as the primary source for the debt service to the commercial bank. This financing model shines great importance in helping SMEs, especially those in western China, to enhance their credit rating, ease their access to finance, and expedite their scaling-up efforts.
Cement Kiln Waste Heat Recovery for Power Generation at Tianzhu Cement
Tianzhu Cement is the first Chinese cement manufacturer to receive an IFC CHUEE loan. The kiln waste heat recovery for power generation project it plans to invest will build two waste heat power generation units of 3.5 MW each, using the waste heat discharged from cement clinker manufacturing process as feedstock. These units will have an annual output of 4200 kWh, accounting for 30% of its cement production’s power requirements. This waste heat recovery system generates power at a cost much lower than the grid supplying price of 0.65 RMB/kWh. It will save the company more than 10 million RMB in electricity bill every year and reduce its annual CO2 emission by close to 40,000 tons.
The Heat Recovery and Steam Generation (HSRG) technology that Tianzhu Cement plans to employ in this project is a well-known energy saving technology in dry-kiln cement production. It is a rather mature technology that has been in service for many years in China. Across the country, dry-kiln cement production systems produce over 300 million tons of cement every year, and the heat discharged directly from the process without any treatment is a loss of 6X1011kcal. If all were recovered for power generation, they could support a total installed capacity of more than 1000 MW. This would mean an annual enegy saving of 2.3 million tce and a redcution of CO2 emmission by 3.16 million tons.
China is the largest cement producer in the world with annual production at over 1 billion tons in 2005 at the cost of 168 million tce of energy resources. Cement industry is responsible for 20% of China’s industrial GHG emission. In terms of comprehensive energy consumption performance, Chinese cement industry is left far behind by its counterparts in the developed countries. Cement industry has been identified as one of the priorities in China’s Mid- and Long-term Energy Saving Plan. Besides HRSG, there are many other energy efficient technologies showing good economic viability and environmental benefits, such as kiln retrofitting with new technology and high/low voltage frequency variable adjusting speed technology. Due to problems like insufficient capital and low awareness, these technologies have not been widely used in China. The support by IFC CHUEE to Tianzhu Cement’s Heat Recovery for Power Generation project is expected to serve as a role model mobilizing more efforts on energy saving and environment protection within the cement industry.
(News and data from businesses have been authorized.)
