IFC and Bank of Jiangsu Promote Sustainable Energy Financing to Support Green Growth in China
IFC, a member of the World Bank Group, and Bank of Jiangsu today launched a risk-sharing facility to support energy-efficiency and renewable-energy projects in China’s coastal province of Jiangsu.
The risk-sharing facility helps mitigate Bank of Jiangsu’s default risk when financing climate-friendly projects and will promote loans worth 924 million yuan ($144 million) for around 30 sustainable-energy projects. Together with IFC, China’s Ministry of Finance, the Jiangsu Provincial Finance Department, and the China Clean Development Mechanism Fund are providing 462 million yuan ($73 million) for the risk-sharing facility with Bank of Jiangsu.
The Jiangsu facility comes under IFC’s China Utility-based Energy Efficiency Finance Program (CHUEE). It marks the first time that IFC works with the China CDM Fund as part of an innovative public-private-partnership that also leverages funds from central and provincial governments to address climate change challenges in a specific Chinese province. In addition to the risk-sharing, IFC will advise the funding partners and the Bank of Jiangsu on assessing sustainable energy projects and help ensure that lending to climate-friendly projects is a profitable business.
"IFC plays a critical role in China by promoting economic growth that is both inclusive and sustainable,” said IFC Executive Vice President and CEO Jin-Yong Cai at the launch of the facility. “We entice banks to finance climate-friendly projects by sharing some of their financial risk and we connect financial institutions with market expertise to help them better understand the energy-efficiency and renewable-energy sectors."
IFC established CHUEE in 2006. By the end of September this year, banks participating in the risk-sharing program had provided loans worth $783 million to 178 energy-efficiency and renewable-energy projects which reduce greenhouse-gas emissions by 19 million tons a year, roughly the equivalent of the annual emissions of nearly 40 medium-sized coal-fired power plants.
“At the World Bank Group, we are convinced that significant progress on the environment can be achieved by focusing on situations where the interests of the private sector, governments, communities, and future generations are clearly aligned," said World Bank Group President Jim Yong Kim. “CHUEE Jiangsu is an excellent example of how private-public partnerships can provide the solutions that generate economic opportunities while also conserving the environment.”
Bank of Jiangsu is headquartered in Nanjing, the capital of the Jiangsu province, which has the second-largest gross domestic product among China’s provinces. By assets, Bank of Jiangsu is the country’s third-largest city commercial bank.
“We are proud that Bank of Jiangsu is the first bank to implement a CHUEE program on the provincial level,” said Huang Zhiwei, chairman of the Bank of Jiangsu, “With support from the government at all levels and IFC, we are able to contribute to China’s low-carbon economy by helping Jiangsu enterprises implement renewable-energy and energy-efficiency projects.”