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China: Thermal Power Efficiency Project (PPAR)

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The China Thermal Power Efficiency project sought to reduce coal consumption and greenhouse gas emissions per unit of electricity in three provinces in China – Shanxi, Shandong and Guangdong. The project was conceived as a response to the predominance of coal in China’s energy mix and the need to find ways of improving existing infrastructure over and above weaning the country away from this Show MoreThe China Thermal Power Efficiency project sought to reduce coal consumption and greenhouse gas emissions per unit of electricity in three provinces in China – Shanxi, Shandong and Guangdong. The project was conceived as a response to the predominance of coal in China’s energy mix and the need to find ways of improving existing infrastructure over and above weaning the country away from this reliance as an energy source. China’s rising energy demand had relied heavily on domestic coal production and the rapid expansion of local thermal power generation plants that utilized this coal. Increasingly, these plants were having adverse environmental impacts, particularly in regions experiencing significant increases in energy demand from manufacturing sector. Ratings for the project are as follows: Outcome is satisfactory, Risk to development outcome is moderate, Bank performance is satisfactory, Borrower performance is satisfactory, and Monitoring and Evaluation is satisfactory. Lessons from the project include: (i) Piloting and demonstrating potential technological improvements to lower costs and improve environmental performance works well in environments where operators are risk averse and constrained by government policy. (ii) The World Bank’s international experience and expertise has the capacity to make an important contribution to pollution reduction in the thermal power sector. (iii) External help and international expertise provided by World Bank projects at the provincial level in middle income countries helps support and reinforce successful central government policy. (iii) Analytical work needs to respond to the immediate needs of the sector rather than being determined by supply-side factors. (iv) A ‘hands-off’ approach by the World Bank in high capacity environments can lead to missed opportunities in maximizing a project’s potential. (v) Barriers to the closure of small inefficient power units are often political. Fostering the key relationships with partners is essential in knowing what and how reforms can be implemented in challenging environments.

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