OREANDA-NEWS. September 07, 2011. Four years ago, the sewage-plagued Poyang Lake was a source of repeated frustration for the Jiangxi Provincial Government. The 99 prefectures in this province had only 14 sewage treatment plants, and untreated urban and industrial sewage poured in had gravely threatened the lake's ecosystem, reported the press-centre of CDB.

A proposed project to clean up the lake was met with immense funding shortfall. Things took a fortuitous turn though when China Development Bank (CDB) came on the scene with an innovative financing mechanism and led a syndicated loan of RMB 5.3 billion for this project. As a result, by the end of last year, a total of additional 85 urban sewage treatment plants had been put into operation across the province - a key effort to restore the lake's ecosystem, hence improve the livelihood of the local people.

This is only one of the many such projects financed by CDB for environmental protection, energy conservation and emission reduction. In the three and half years before June 2011, the Bank had lent RMB589.6 billion to eco-friendly projects such as urban sewage treatment and industrial pollution control, clean-tech and energy-efficient projects (remaining loan balance in this category RMB578.41 billion oustanding). In the first half of 2011, new lending to projects of the kind reached RMB119.84 billion, accounting for 13% of the Bank's portfolio. Important projects include Coal-fired Boilers Removal in Urumqi and Green Equipment Rental Project in Anji.

The concept of "green", or low-carbon, environmentally-friendly and sustainable, dominates the global trend of economic development; it also is what is required as China seeks to transform its growth model, as noted by a CDB official in charge. In recent years, CDB has been exploring green finance initiatives, pushing for the change in growth model, whilst building its own green business strategy. The Bank has stepped up efforts in working with government agencies including the Ministry of Environmental Protection, the National Development and Reform Commission, the Ministry of Housing and Urban-Rural Development, and local governments, to channel funds and direct investments to new strategic industries and green sectors for ecological and environmental protection purposes.

The Bank optimizes resources allocation to support the country's top ten energy conservation projects and projects of clean energy, watershed rehabilitation, integrated urban and rural environment governance, and technological upgrading of industrial enterprises so to cut emission and save energy. The Bank also implements a strict environmental impact assessment (EIA) process, allowing no loans to go to energy-intensive and -inefficient, pollution-heavy sectors, or industries with a problem of overcapacity.

So far in 2011, CDB has issued Project Development and Assessment Guidelines: Energy-efficient and Environmentally-friendly Industries, and Lending Plan 2011: Environmental Protection, Energy Conservation and Emission Reduction, giving priorities to green projects, including: energy conservation and environmental protection, recycling/reuse of resources, energy-efficient and environmentally-friendly services, urban environmental protection infrastructures, and watershed rehabilitation in major river basins. Meanwhile, CDB has been largely involved in the low-carbon eco-city projects in Suzhou Industrial Park and Wuxi Taihu New Town, and sewage treatment projects of Shenzhen Water Group and Beijing Enterprises Water Group. Also in the first half of 2011, CDB committed itself to lending RMB238.08 billion to green projects to support environment governance, industrial pollution control, cyclical economy initiatives, top ten energy conservation projects and clean energy projects.

CDB has earlier introduced a new mechanism to finance building urban solid waste disposal facilities. By the end of 2010, CDB ran a balance of RMB8,016 billion in loans to solid waste management (disposal, reuse and harmless treatment), including municipal refuse landfills, waste incinerators and power generation facilities.

Leveraging on its expertise in medium to long-term investment and financing, CDB continues to deepen its cooperation with government bodies in line with the country's Twelfth Five-year Plan. Among the major green projects that CDB finances for include water pollution control along the middle and lower reaches of Yangtze River, Taihu Lake, Dianchi Lake, Chaohu Lake and Huaihe River, and energy conservation and environment protection, cyclical economy initiatives, and urban waste disposal.