AFD and China - Brochure

Xiaoguan, Beijing © Alexander Müller

FRENCH DEVELOPMENT AGENCY

CHINA

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Reconciling development and the environment

CHINA KAZAKHSTAN

MONGOLIA Pekin

Over the past 35 years, China has experienced unprecedented economic and social development, lifting over 500 million people out of poverty.

This growth has not been without consequences on the environment: China is now facing massive air, water and soil ­pollution, as well as a rapid degradation of its ecosystems and biodiversity.

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The Chinese Government has set out to address these challenges by rethinking its growth model, with the aim of reconciling development and ecology. Its commitment to achieving a more sustainable and low-carbon pathway has materialized in the adoption of the Sustainable Development Goals in 2015. They were followed

by China’s ambitious national contribution during the COP21, the main objectives of which are set out in the 13th Five-Year Plan (2016-2020).

AFD’s strategy in China Agence Française de Développement (AFD) has been working in China since 2004, in close partnership with the Chinese Ministry of Finance and the National Development and Reform Commission (NDRC).

In line with the mandate entrusted to AFD by the French Government, and in response to the Chinese authorities’ development priorities, its action aims to: Promote a low-carbon development model by supporting energy efficiency and clean energy projects, as well as the emergence of a “green” financial system; ■■ Mitigate the environmental footprint of Chinese cities by contri­ buting to the financing of resilient urban infrastructure and ­services; ■■ Preserve and develop natural and cultural heritage in rural and urban areas.

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Breakdown of commitments by sector (2003-2017) Protection of biodiversity and natural resources

22%

Clean energy and energy efficiency

45%

Sustainable urban development

33%

AFD operates in China via loans allocated on market terms to the Chinese Government, local authorities, companies and public banks.

AFD-funded projects also provide an opportunity to develop FrancoChinese partnerships by mobilizing French expertise to support the country’s ecological transition.

EUR 1.3bn of commitments since 2004, 30 projects financed, 25 for the climate.

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Achieving the transition towards a lowcarbon economy Faced with major environmental challenges, the Chinese Government has adopted an ambitious energy transition policy, which has been reaffirmed in China’s commitments in the context of the Paris Climate Agreement. It involves peaking its CO2 emissions by 2030 and increasing non-fossil energy to 20% of China’s energy consumption. The recovery and use of heat from industries and ­public collective use is one of the new technical approaches promoted to reach these objectives (see box).

This transition towards a low-carbon economy calls for a significant mobilization of financial actors: some EUR 300bn a year would be required to meet the environmental targets set by the Government (source: PBOC). AFD has responded to that challenge by supporting three Chinese partner banks for the development of their “green finance” portfolios: Shanghai Pudong Development Bank, Huaxia Bank and China Merchants Bank have benefited from EUR 180m of credit lines earmarked to finance green projects. Technical assistance has also been provided, comprising French and Chinese consultants.

As of 2016, 87 projects on energy efficiency and renewable energies have been financed in 22 Chinese provinces and 9,000 executives of the banking sector have been trained thanks to that cooperation.

13 million tons equivalent CO2 saved every year thanks to AFD-funded projects in China.

Recovering heat from wastewater for urban heating in Jinan In Jinan, the capital of Shandong Province, AFD is supporting a project that recovers heat from treated effluents from two wastewater treatment plants to supply the city’s collective heating network. This process, which will be extended to supply an additional heating surface area of some 3 million m2, will reduce greenhouse gas emissions by over 105,000 tons a year. The project also includes the construction of recovery facilities using heat pumps, as well as the dismantling or shutdown of a number of coal-fired district boilers. This will reduce coal consumption, as well as emissions of nitrogen oxide, sulfur dioxide, dust and particles.

Inefficient and polluting individual charcoal stoves are still widely used in China © G2S Creative Studio

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The smog which invades Chinese cities in winter is partly formed by coal combustion for heating © G2S Creative Studio

Mitigating the environmental footprint of cities China’s rapid urbanization has lead to a significant increase in the energy footprint of cities, local pollution, and greenhouse gas ­emissions. It is for this reason that AFD focuses almost a third of its financing on sustainable urban development, for example, by supporting innovation in urban heating or the use of state-of-theart technologies in water and sanitation services.

Promoting cleaner urban heating networks China is the second largest urban heating market in the world.

However, the efficiency of Chinese heating networks remains low compared to industrialized countries, which results in significant energy losses. AFD has responded by assisting the cities of Jinzhong, Taiyuan (Shanxi Province), Jinan and Zibo (Shandong Province) in the construction and rehabilitation of their heating networks. These projects have identified important sources of energy savings, adopted innovative and efficient technical solutions, and made significant improvements to the design and management of the networks.

Promoting state-of-the-art technologies for water and sanitation China is home to over a fifth of the world’s population, but only holds 7% of global water resources. This scarcity is exacerbated by the massive pollution of its surface water and groundwater resources. AFD’s financing in this sector aims to: ■■ Optimize water resources management and reduce energy consumption in drinking water and sanitation services; ■■ Promote state-of-the-art solutions in water and wastewater treatment, as well as sludge management; ■■ Recover greenhouse gases from sludge treatment and organic waste.

For example, AFD is supporting the cities of Xiangyang (Hubei Province) and Guilin (Guangxi Province) for the construction of new drinking water and wastewater treatment facilities.

Decentralized power generation systems AFD supports China’s energy transition by financing the development of decentralized energy systems (distributed energy). This involves efficient small-scale power plants run with clean or low-carbon energies which supply several types of energy (electricity, steam, heat, cooling) to a group of users in a concentrated area.

For example, AFD has provided its financial support to a tri-generation power plant project (86 MW) in Qingdao, an economic hub in Shandong Province.

It will supply electricity, steam, heat and cooling to companies and commercial and residential buildings in the Gaoxin area (north of Qingdao).

In addition, the power plant will make it possible to demolish four coal-fired boilers, reduce CO2 emissions by 260,000 tons equivalent a year, and reduce nitrogen dioxide emissions by a factor of three, while doing away with emissions of sulfur dioxide, dust and particles.

10 Chinese cities have to date benefited from AFD financing to improve their urban infrastructure These projects promote energy-efficient equipment and innovative approaches to wastewater treatment. AFD is also supporting a project to treat kitchen waste and recover biogas in the city of Shaoyang (Hunan Province).

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Preserving and developing natural and cultural heritage China is a country with exceptional biodiversity and an extremely rich cultural heritage, with over 50 UNESCO World Heritage Sites, 4,000 nationally protected heritage sites, and hundreds of thousands of listed traditional villages nationwide.

One of China’s main challenges is to reconcile the protection of this natural and cultural heritage with its economic and social development.

AFD is supporting several wetland restoration and ecotourism development projects with the aim of preserving these resources, in the provinces of Liaoning (Liaohe Delta in Panjin, Lake Wolong in Kangping) and Shanxi (Changyuanhe wetland, Qixian district). In Anhui Province, AFD is supporting a project to restore and manage the Tianma National Natural Reserve.

450,000 hectares of protected areas (wetlands, forests…) thanks to AFD-funded projects

Private actors: Partners for sustainable economic development in China Proparco, AFD’s private sector financing arm, has been operating in China since 2005 and participates in financing local economic and financial actors.

Its operations focus on renewable energy and energy efficiency, waste treatment and recovery, health, water and sanitation, agro-industry and health projects.

At the end of 2016, Proparco had allocated 12 loans totaling EUR 160m to companies operating in China in climate, agro-industry, health, and financial intermediation sectors.

Gongyu Village (Xianju) © ZHAO Jiansheng

Xianju National Park: A model of Franco-Chinese cooperation In Zhejiang Province (Xianju District), AFD is assisting the local authorities in the creation of a national park.

This project comprises the conservation and development of the local natural and cultural heritage, as well as the implementation of management and governance mechanisms based on the system of French National Parks and Regional Natural Parks. Indeed, France has technical and technological expertise which reconciles the protection of the natural and cultural heritage and local socioeconomic development (ecological engineering, ecotourism, restoration and development of historical and cultural heritage, museography and scenography, etc.).

AFD, the Chinese Ministry of the Environment and Xianju district are supporting the project to create Xianju National Park (XNP), based on the model of French National Parks and Regional Natural Parks, in partnership with the Regional Natural Park Ballons des Vosges. AFD has provided EUR 75m of financing to this project, which has an estimated total amount of EUR 153m.

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Agence Française de Développement (AFD), a public financial institution that implements the policy defined by the French Government, works to combat poverty and promote sustainable development. AFD operates on four continents via a network of 85 offices and finances and supports projects that improve living conditions for populations, boost economic growth and protect the planet. In 2016, AFD earmarked EUR 9.4bn to finance projects in developing countries and for overseas France.

Proparco – a subsidiary of the Agence Française de Développement (AFD) devoted to private sector funding – has been supporting sustainable development since 40 years. It operates in 80 countries in Africa, Asia, Latin America and the Middle East and helps finance and support financial institutions and corporate privatesector projects.

The French Facility for Global Environment (FFEM) is a financial instrument of French cooperation and development policy, dedicated to the protection of the global environment in developing countries and emerging markets. With funds of €90 million for 2015-2018, the FFEM supports innovative work in developing countries in the following areas: climate, biodiversity, international waters, soil degradation including deforestation, persistent organic pollutants and the ozone layer. At the end of 2016, the FFEM had received financial pledges of €355 million, with 301 projects in their portfolio, 68% of which are in Africa and the Mediterranean.

www.proparco.fr

www.ffem.fr - ffem@afd.fr

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Creation: Planet 7 – June 2017 – Printed in China

Worker at a plant in Nanjing © AFD - All right reserved