Page 150 - Low Carbon Development in China and India
P. 150
Box 2.7: Working Capital Loans for Energy Saving and 2.2
Emission Reduction by the Industrial Bank
A Shandong soda ash producer had a production capacity of 2.2 million tonnes of
soda ash and 420,000 tonnes of calcium chloride. The producer employed a limestone
vertical lime kiln to produce quicklime, and then make the quicklime react with water to
generate calcium hydroxide. The calcination process not only consumed a lot of coke
and electricity, but also generated a lot of carbon dioxide and calcium carbide sludge
as the by-product. The producer wished to improve the original soda ash production
process by using its independently developed ammonia alkali method for the soda ash
preparation process by taking calcium carbide sludge and carbon dioxide as the main
raw material. The project could produce 400,000 tonnes of soda ash and recycle the
calcium carbide sludge and carbon dioxide it generated. The implementation of the
project was short of funds and needed medium-and long-term financing matched with
the payback period of the project and timely access to new production line for starting
production. The Industrial Bank provided the producer a five-year project loan matched
with the cash flow structure of the project, which was earmarked to support the project.
After completion, the project achieved comprehensive utilization of 3.29 million cubic
metres of calcium carbide sludge, saved 115,000 tonnes of standard coal, and reduced
31.6 tonnes of carbon dioxide emissions. This not only prevented pollution from the
piling up of calcium carbide sludge, but also achieved reduction in greenhouse gas
emissions and environmentally friendly disposal of solid wastes.
Contractual energy management financing means that energy-
conservation service companies apply to banks for financing
construction and operation of contractual energy management
projects, use their shared energy-conservation benefits as the primary
source of repayment, and pledge future project income or employ
other guarantee types (Box 2.8).
Box 2.8: Contractual Energy Management Financing Model of
Tianjin Climate Exchange
Tianjin Climate Exchange established the six contractual energy management financing
modes on a pilot basis. These are (i) guarantee insurance, energy-saving project
factoring, income buyout, mortgage financing, financing leasing and trust scheme’.
Guarantee insurance refers to the insurance that insurance companies provide
to fund providers of contractual energy management projects for after-the-contract
energy management project risk assessment. The insurance provider contracts energy
management project funds for energy-conservation service companies after assessing
risks of the project. The subject matter of the insurance includes technical risks,
operational risks, and credit risks of contractual energy management projects. If the
energy service companies cause economic losses to the fund provider due to their acts
or omissions, the insurance companies shall be liable for the economic losses.
Chapter 2 Innovative Financing for Low Carbon Development 115
Emission Reduction by the Industrial Bank
A Shandong soda ash producer had a production capacity of 2.2 million tonnes of
soda ash and 420,000 tonnes of calcium chloride. The producer employed a limestone
vertical lime kiln to produce quicklime, and then make the quicklime react with water to
generate calcium hydroxide. The calcination process not only consumed a lot of coke
and electricity, but also generated a lot of carbon dioxide and calcium carbide sludge
as the by-product. The producer wished to improve the original soda ash production
process by using its independently developed ammonia alkali method for the soda ash
preparation process by taking calcium carbide sludge and carbon dioxide as the main
raw material. The project could produce 400,000 tonnes of soda ash and recycle the
calcium carbide sludge and carbon dioxide it generated. The implementation of the
project was short of funds and needed medium-and long-term financing matched with
the payback period of the project and timely access to new production line for starting
production. The Industrial Bank provided the producer a five-year project loan matched
with the cash flow structure of the project, which was earmarked to support the project.
After completion, the project achieved comprehensive utilization of 3.29 million cubic
metres of calcium carbide sludge, saved 115,000 tonnes of standard coal, and reduced
31.6 tonnes of carbon dioxide emissions. This not only prevented pollution from the
piling up of calcium carbide sludge, but also achieved reduction in greenhouse gas
emissions and environmentally friendly disposal of solid wastes.
Contractual energy management financing means that energy-
conservation service companies apply to banks for financing
construction and operation of contractual energy management
projects, use their shared energy-conservation benefits as the primary
source of repayment, and pledge future project income or employ
other guarantee types (Box 2.8).
Box 2.8: Contractual Energy Management Financing Model of
Tianjin Climate Exchange
Tianjin Climate Exchange established the six contractual energy management financing
modes on a pilot basis. These are (i) guarantee insurance, energy-saving project
factoring, income buyout, mortgage financing, financing leasing and trust scheme’.
Guarantee insurance refers to the insurance that insurance companies provide
to fund providers of contractual energy management projects for after-the-contract
energy management project risk assessment. The insurance provider contracts energy
management project funds for energy-conservation service companies after assessing
risks of the project. The subject matter of the insurance includes technical risks,
operational risks, and credit risks of contractual energy management projects. If the
energy service companies cause economic losses to the fund provider due to their acts
or omissions, the insurance companies shall be liable for the economic losses.
Chapter 2 Innovative Financing for Low Carbon Development 115
