China Funded for Wind Power Development

China Funded for Wind Power Development

ENS) – The Global Environment Facility has agreed to help the world's third largest energy consumer to harness wind power and reduce greenhouse gas emissions into the atmosphere.

The People's Republic of China received approval of a GEF grant of $12 million for a $98 million project during the November meeting of the Global Environment Facility's governing council. The remaining funds will be provided by the Asian Development Bank, and provincial power companies and banks in China.

Jointly implemented by the World Bank, United Nations Environment Programme (UNEP) and United Nations Development Programme (UNDP), the GEF is an independent multilateral financial mechanism helping developing countries protect the global environment.

The project supports efforts by China to diversify its energy sources and reduce its dependence on coal, which accounts for nearly 72 percent of total commercial energy production and contributes significantly to the high level of carbon emissions.

As China's economic growth of the past two decades continues, demand for energy is expected to increase at a rate of four to five percent annually through 2015. At this rate, China could be the world's largest energy consumer and greenhouse gas emitter by the year 2025, Chinese government officials predict.

"Heavy dependence on coal not only pollutes the atmosphere, it also has health and mortality consequences," noted GEF chairman and CEO Mohamed El-Ashry. "This project is a win-win for power generation and human health."

The GEF announcement comes just in time for a four day conference in Beijing on renewable energy that opened Tuesday. The China 2000 International Environment, Renewables and Energy Efficiency Exhibition and Conference is sponsored by the State Economic and Trade Commission, the Ministry of Science and Technology, the State Environmental Protection Administration, the State Power Corporation and the China Aviation Industry Corporation.

The government of China says in a document prepared for the conference that it "recognizes these challenges and the need to pursue aggressive programs to support environmental and social concerns while maintaining economic and energy development."

Key programs include deployment of energy efficient and renewable energy technologies to reduce reliance on coal and provision of energy to the estimated 60 million inhabitants who live in remote, rural areas and islands that lack access to an electricity grid.

The GEF project will accelerate the large-scale development and commercialization of wind powered electricity connected to the public grid.

It will increase by 78 megawatts the electrical capacity provided by wind power through the construction of three wind farms at Dabancheng in the Xinjiang Autonomous Region, at Fujin in Heilongjiang Province, and at Xiwaizi in Liaoning Province.

More than 200 wind power turbines are already in operation in Dabancheng located in the northwest of China. The generating capacity of the center makes up one-third of the total installed wind power capacity in the country.

The project is expected to remove policy, information and institutional barriers to wind power development and promote private sector investment. The GEF intends the funding to contribute to the creation of a firmer market for the supply of wind turbines and help make the transfer of wind turbine assembly and manufacturing operations to China more economical.

This project illustrates the new partnerships emerging in the GEF. It was identified and developed by the Asian Development Bank in collaboration with the United Nations Development Program. The Asian Development Bank will have major responsibility for executing the project.

The GEF is offering an innovative mechanism for financial support. Of the $12 million contributed to the project out of GEF's coffers, half comes in the form of a grant. The other $6 million will be an interest free contingent loan. This loan will be repaid if the wind farms are successful, but will be converted into a grant if they are not. This approach allows GEF to help bear the perceived risks associated with wind farms while helping to build confidence in the new technology.

Success in these three areas is expected to lead to replication in other parts of the country. Parts of China have a rich wind resource base and some wind farm sites boast world-class resources. However, present installed capacity is only about 265 megawatts, which is a fraction of one percent of the known wind power potential.

Overall estimates for new Chinese wind power capacity between now and 2010 vary from 1,000 megawatts to more than 5,000 megawatts.

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