The World Bank’s Board of Executive Directors has approved a US$300 million (€276.5 million) loan to support the transition to renewable and low-carbon energy sources in China’s Shaanxi province's heating sector. The project also aims to pilot a pricing reform program.
China's heating sector, which relies heavily on coal and natural gas, contributes approximately 10% of the country's total greenhouse gas emissions. Renewable energy penetration in this sector remains limited compared to the electricity sector.
The Shaanxi Energy Transition and Innovation Demonstration in the Heating Sector Project seeks to implement innovative solutions for increasing heat supply from renewable sources such as geothermal, waste heat, and electricity. Additionally, it will promote pricing and billing reforms to enhance the financial sustainability of the heating sector. The funding will support infrastructure investments and the design and implementation of the reform pilot program.
“The Shaanxi Energy Transition and Innovation Demonstration in the Heating Sector Project aims to help China demonstrate a pathway to facilitate the energy transition in the heating sector through a comprehensive approach on both supply and demand sides,” said Mara Warwick, World Bank Country Director for China, Mongolia, and Korea. “It also provides an opportunity to generate important lessons to be shared with other provinces in China and other countries with heating demand for replication.”
The project aligns with China's climate goals of peaking carbon emissions before 2030 and achieving carbon neutrality before 2060 while contributing to global public goods.
Total financing needs over five years are estimated at $585 million, with $300 million (€276.5 million) financed through an International Bank for Reconstruction and Development loan from the World Bank. The remaining funds will come from Chinese counterparts.
This initiative is consistent with the World Bank’s Country Partnership Framework (CPF) for China for FY2020 to 2025, which focuses on promoting greener growth and reducing greenhouse gas emissions while generating replicable global knowledge.