IFC to Stimulate Chinese SMEs Energy Efficiency

THE International Finance Corporation (IFC), a member of the World Bank Group, said this week that it is offering more help to Chinese small and medium-sized enterprises (SMEs) in support of the countries efforts towards greater energy efficiency.

Dai Cunfeng, operations officer and team leader of the China Utility-Based Energy Efficiency Programme (CHUEE) revealed the new initiative after IFC's Independent Evaluation Group (IEG) made public an assessment report of the CHUEE's impact thus far on China's energy efficiency.

CHUEE is an integral part of IFC's efforts to focus on environmental sustainability and climate change and started in 2006 as China's spiraling demand for coal to generate electricity made it one of the world's largest emitters co2.

The programme is aimed at revitalising energy efficiency investments in China via bank guarantees for energy efficiency loans and to help implement energy efficiency projects.

Up to June last year 98 energy efficiency investments funded by the programme reduced greenhouse gas emissions by 14 million tonnes per annum, exceeding the initial target set for the program.

The IEG report stated:

"The timing for the programme was right, as the government was putting significant emphasis on promoting energy efficiency activities. And it has already put various policy measures in place."

Not all of the programme's original targets were met, leading to further promotion by the IFC.

Most of the CHUEE's beneficiaries have been larger companies, whereas the original plan placed emphasis on support for SMEs.

The IEG added:

"The original expectation was that 60 percent of the guaranteed loans would be small (about 200,000 U.S. dollars). In reality, the average loan size was 5.7 million dollars, and loans of 200,000 dollars or less constituted less than 10 percent of the actual portfolio."

The report highlights that SMEs remain the key target, as these companies have limited access to finance for energy efficiency projects.

"Actually, big enterprises already have adequate financing for energy efficiency as banks are much more willing to extend loans to them," said Dai.

Dai added that the next step for the IFC's CHUEE programme is to set aside a fund of $200 million just for energy efficiency financing of SMEs.

Picture by Robert Scoble

Thursday 15th July 2010

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