AIIB Invests USD500M for Low-Carbon Energy, Air Quality Improvement in China

The Asian Infrastructure Investment Bank (AIIB) is investing USD500 million to support China’s efforts to transition to a lower-carbon energy future. The Beijing-Tianjin-Hebei Low Carbon Energy Transition and Air Quality Improvement Project aims to increase the availability of natural gas to help reduce coal consumption and related emissions in the region surrounding China’s capital.

With a population of around 112.7 million1, the Beijing-Tianjin-Hebei region is one of the most important economic engines within China. However, it has been facing the dual challenges of increasing energy demand and addressing air pollution, which directly affect the quality of life of local residents. China is endeavoring to control coal consumption as part of its commitments under the Paris Agreement to peak its carbon dioxide emissions by 2030. Reducing coal consumption will also deliver the co-benefit of improving air quality. To meet its environmental commitments and still ensure adequate gas supply to maintain peoples’ livelihoods, an emergency reserve capacity is required. This became evident during a gas shortage which occurred in the winter of 2017/2018.

The project is AIIB’s first sovereign-backed financing in China. It involves the construction of a liquefied natural gas (LNG) terminal in Binhai District, Tianjin Municipality, covering LNG receiving, storage and regasification facilities and an unloading wharf.  AIIB financing will be used in the construction of LNG receiving, storage and regasification facilities. The project will be implemented by Beijing Gas Group Company Limited.

Upon completion, the project will reduce coal consumption by approximately 11.9 million tons per year and help improve air quality by reducing a significant amount of coal combustion-related emissions such as CO2, SO2, NOx and particulate matters in the Beijing-Tianjin-Hebei region.

“The project will support China’s efforts to fulfill its commitments under the Paris Agreement, and strengthen and contribute to the global response to the threat of climate change,” said AIIB Vice President and Chief Investment Officer D.J. Pandian. “It aligns well with AIIB’s commitment to sustainable energy for Asia and reducing the carbon intensity of energy supply.”

With this project, AIIB can augment its institutional capacity and expertise in LNG infrastructure for similar projects in other members.