EUR 220 million from EIB to finance first projects under China Climate Change Framework Loan
- Release date: 02 April 2009
- Reference: 2009-053-EN
Drawing from the China Climate Change Framework Loan (CCCFL), signed with the People’s Republic of China in November 2007, the European Investment Bank (EIB) is providing a total of EUR 220 million in three operations that will contribute to the mitigation of climate change, as follows:
- EUR 50 million will part-finance two forestation programmes: (a) the establishment of a “bio-energy forest” through permanent tree plantation for biodiesel and edible oil production; the project will be implemented throughout the Jiangxi province; and (b) the establishment of permanent plantations with an environmental focus, contributing to erosion/desertification control and carbon sequestration; the programme will be implemented throughout the Inner Mongolia Autonomous Region.
- The construction of four wind farms with a total installed capacity of 254 MW, by four promoters located in three different provinces, namely Henan, Hainan and Guangdong. The project will increase the share of renewable energy production in the general power generation mix in China. A total amount of EUR 135 million will be allocated to these projects.
- The installation and operation of energy efficiency and pollution reduction equipment in the coking plant of an existing steel plant located in the Guangdong province, producing long products and plates to supply the regional market, mainly for construction and shipbuilding. The new equipment will reduce emissions of greenhouse gases and other pollutants, as well as improving energy efficiency, thereby contributing to the mitigation of global climate change. This project will receive a EUR 35 million loan.
All projects will seek CDM(1) registration for carbon credit generation. As of today, one of the wind farm project promoters has signed up to the “Post-2012 Carbon Credit Fund”(2) designed to provide an incentive to project promoters to pursue CDM registration beyond the end of the Kyoto protocol.
The three operations are in line with the CCC Framework Loan objectives and will contribute to the European Union-China Strategic Partnership, which among other things provides for joint efforts to mitigate climate change, in particular under China’s National Climate Change Programme.
It should be noted that all three operations were proposed to the Bank shortly after the signature of the CCCFL, proving the very proactive stance of the Chinese authorities to fulfil their objectives and meet their targets in a bid to tackle Climate Change issues in China.
The European Investment Bank is the EU’s long-term financing institution promoting European objectives. Set up in 1957, the EIB operates in the 27 EU Member States and more than 130 other countries in Asia and Latin America, Central and Eastern Europe, the Balkans, the Mediterranean region, Africa, the Caribbean and the Pacific. Lending operations outside the EU are part of EU cooperation policy with third countries.
Under the current Asia and Latin America mandate (ALA IV), covering the period 2007-2013, the EIB is authorised to lend up to EUR 3.8 billion for financing operations that contribute to climate change mitigation or support the EU’s presence in those regions through foreign direct investment or the transfer of technology and know-how. The EUR 3.8 billion regional ceiling is broken down into indicative sub-ceilings of EUR 1 billion for Asia and EUR 2.8 billion for Latin America.
In addition to the mandate, the Bank is running a Facility for Energy Sustainability and Security of Supply (ESF), a multiannual EUR 3 billion facility aiming to reinforce the EIB’s contribution to renewable energy and energy efficiency in non-member countries. The facility is used essentially when the Bank does not need the support of the EC guarantee to mitigate sovereign or political risk to protect its own credit standing (i.e. in investment-grade countries or where appropriate security can be provided). In contrast, the resources under the external lending mandate would be used when the support of the Community guarantee is needed to mitigate sovereign or political risks (mostly in lower-rated countries) or to support projects in other sectors. CCCFL was authorised under ESF.
(2) Set up with contributions from the EIB, KfW Bankengruppe (KfW), Caisse des Dépôts (CDC), Nordic Investment Bank (NIB) and Instituto de Crédito Oficial (ICO). The purpose of the Fund is to contribute to EU climate change mitigation policies through the promotion of confidence in the emergence of a post-2012 carbon credit market.