William Chandler President Transition Energy, Ltd. supported by the Energy Foundation China Investme

1
William ChandlerPresidentTransition Energy,
Ltd.supported by theEnergy FoundationChina
Investment AssociationBeijing, China23
September 2007

• Facilitating Finance
• for Energy Efficiency
• ????????

2
Market Context/????

• Chinese industry often pays more for power than
  American industry.
• ???????,?????????????
• Power shortages continue in many provinces.
• ????????
• Existing market for waste heat recovery is
  several thousand megawatts.
• ?????????????

3
DEEDs Business

• Product Waste energy recovery
• ??????
• Market Cement, metallurgy
• ????????,????
• Business model BOOT
• ????BOT
• Financial constraints (and opportunities)????(???
  )
• Transaction costs/????
• Industrial policy constraints/???????
• CDM costs/CDM??
• Taxes/??

4
DEED Chinas Waste Recovery Power Generation
Leader
Tang Jin Quan
Jin Jiaman
5
Dalian East CV PartnerA Chinese Engineering and
Marketing Leader?????, ????????????????

• 100 ?????
• 57?????,??
• 38 ????
• 8 ??????
• 3 ???
• 2005 ??2????
• ????????
• ???550 MW
• ???72 MW
• ????89 MW
• ???????????????????

6
Design-Build Experience??-????

• Hubei Ge Zhou Ba
• 12 MW (turn key)
• Built 2003

• Fujian Long Yan Fu Long
• 6 MW (turn key)
• Built 2005

7
A Foreign-Invested BOOT Model for China
8
??????
????
?????
???? IFC ??
??????
??/????
????
????
????
??????
ERPA
???
9
Energy Policy ????Myth and Reality ?????

• MYTH China has an over-abundance of cheap coal
• REALITY Industrial coal is expensive
• MYTH China has a reckless disregard for the
  environment.
• REALITY China attaches great importance to
  energy conservation. We give top priority to
  conservation.
• - President Hu Jintao, 17 Nov. 2005

10
Key problems/????

• But cement plants cannot borrow directly from
  bank due to industrial policy
• ?????????????????????????
• Cap on interest rates discourages risk-based
  lending.
• ??????????????
• Company law constrains formation of EMCs.
• ?????EMC???

11
Disconnect Between Central and Provincial
Governments????????????

• China has enacted impressive national policies to
  promote clean and renewable energy.
• The Cleaner Production Promotion Law and
  Renewable Energy Law are examples of
  well-intentioned policies
• NEED To provide provinces with the human and
  financial capital to implement clean energy
  promotion policies.

12
Suggested Policy Solutions/????

• Exempt clean energy from investment controls.
• ????????????
• Provide VAT holidays and exemptions for clean
  energy companies and services.
• ???????????????
• Shift CDM from payment-on-delivery to
  payment-as-investment.
• ?CDM???????????
• Shift to risk-based clean energy lending
• ?????????????????

13
Solutions /???? Expand the IFC Loan
Guarantee Program/??IFC??????

• Launched in 2006
• 2006???
• The IFC and GEF guarantee private Chinese bank
  loans for energy efficiency projects.
• IFC?GEF???????????????????
• Combining training with guarantees has been very
  effective.
• ????????????????