ADB offers 100m loan to support China's emission reduction projects

MANILA -- The Asian Development Bank (ADB) has agreed to grant a $100 million loan to China to support the country's efforts to reduce energy consumption, phase out mercury use and cut greenhouse gas and toxic emissions in its chemical industry.

China remains the largest producer worldwide of PolyVinyl Chloride, a kind of popular synthetic plastic polymer known as PVC, according to the ADB.

More than 80 percent of its PVC industry uses a coal-based process that is highly energy-intensive and also relies heavily on mercury as the catalyst, the ADB said in its latest news release published on Monday.

As a result, the country's PVC industry "accounts for nearly 50 percent of global use of the element" and China still engages in mercury mining to meet demand, according to the ADB.

"The (Chinese) government puts a high priority in reducing the threat to the environment and public health posed by the use of toxic substances, including mercury and coal in the chemical industry," the ADB said, citing Annika Seiler, a finance specialist for energy.

"To date, however, technical limitations and a lack of financing have held back large scale adoption of processes that could lead to new, cleaner, and more energy-efficient production methods," the specialist said.

"The goal of the ADB's assistance is to overcome current barriers and demonstrate the viability of these technologies on a commercial scale," Seiler stressed.

The funds will be distributed by China Construction Bank to industrial plants belonging to the China National Chemical (Group) Corporation, the country's largest producer of chemical products. The Group will use them to demonstrate state-of-the-art energy efficiency and emission reduction projects.

The two initial sub-projects of the group, with one at Dezhou Shihua Chemical Plant in Shandong Province and the other at a fluoropolymer facility in Zigong City in Sichuan province, have been selected to pave the way for solving specific, major transboundary environmental issues facing China's chemical industry.

The first sub-project loan will be a trial for large-scale use of a successfully tested mercury-free catalyst in the production of PVC in Shangdong Province, with an expectation of eliminating the use of 35 tons of mercury per year by 2019. It will also allow China to end mercury mining in the country.

The second sub-project will finance comprehensive energy efficiency and management measures, aiming to reduce energy consumption by more than 10,000 tons of coal equivalent a year.

By taking combined measures, it is expected to cut the equivalent of annual carbon dioxide emissions of two gigawatt-scale coal-firing power plants.

In addition, the ADB's support is complemented by cofinancing of more than $81 million from China Construction Bank. Counterpart support of more than $63 million in the form of equity contributions is provided by the borrowing companies of the Group. The project will run for about five years with expected completion in February 2021.