PROJECT IDENTIFICATION FORM (PIF)
PROJECT TYPE: FULL-SIZED PROJECT
TYPE OF TRUST FUND: GEF TRUST FUND
PART I: PROJECT IDENTIFICATION
Project Title:
Country:
GEF Agency:
Other Executing Partner:
Green Energy Schemes for Low-Carbon City in Shanghai, China
GEF Focal Area:
Name of parent program:
Climate Change
China
WB
Shanghai municipal government
and Changning district
government, P. R. China
GEF Project ID:
GEF Agency Project ID:
Submission Date:
Project Duration:
Agency Fee:
March 15,
2011
48 months
$435,000
A. FOCAL AREA STRATEGY FRAMEWORK:
Focal Area
Objectives
Expected FA Outcomes
CCM-1
(Innovative
Low-carbon
Technologies)
(1) Advanced and innovative zeroemission buildings, including
energy efficiency (EE), renewable
energy (RE), and smart meter
technologies successfully
demonstrated, deployed, and
transferred;
(2) Innovative business models for
electric vehicles successfully
demonstrated, deployed, and
transferred.
(1) Policy frameworks of improving
EE in buildings adopted;
(2) Sustainable financing and
business models for building EE
demonstrated.
CCM-2
(Energy
Efficiency)
CCM-3
(Renewable
Energy)
(1) Policy frameworks for RE
distributed generation
recommended;
(2) Increased demand for green
electricity;
(3) Investment in RE increased.
CCM-4
(Urban
Transport)
Increased share of citizens taking nonmotor and public transport.
Expected FA Outputs
(1) Zero-emission buildings,
integrating innovative EE,
RE, and smart meter
technologies
demonstrated;
(2) New business models for
electric vehicles
demonstrated.
GEFTF
Indicative
Financing
from GEF
TF ($)
1,500,000
(1) Building EE policies for
retrofit and new buildings
in place;
(2) Investment in building EE
mobilized;
(3) Energy savings achieved.
(1) RE distributed generation
policy recommended;
(2) Purchase of RE green
electricity increased;
(3) RE capacity installed;
(4) Electricity and heat
produced from RE
sources.
Integrated green mobility
policy developed
GEFTF
1,610,000
142,005,000
GEFTF
500,000
50,000,000
GEFTF
300,000
300,000
GEFTF
3,910,000
435,000
4,345,000
245,925,000
1,305,000
247,230,000
Sub-Total
Project management cost for GEF
Total project costs
Trust
Fund
Indicative
Co
Financing
($)
53,620,000
B. PROJECT FRAMEWORK
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Project Objective: The overall objective is to pilot green energy schemes for low-carbon city in Shanghai, with a
focus in Changning District, thereby reducing greenhouse gas (GHG) emissions.
Grant
Trust
Indicative
Indicative
Project
Type
Expected
Fund
Financing
Co
Expected Outputs
(TA/
Component
Outcomes
GEF TF
Financing
INV)
($)
($)
2,910,000
193,425,000
1. Green
INV/ (1) Low-carbon
(1) Recommendations and
GEFTF
($2,000,000
(investment)
buildings
TA
district
implementation support of
INV
and
successfully
technologies, policies, and
$910,000
piloted in
institutional arrangements to
TA)
Shanghai
retrofit existing buildings to
municipality;
improve energy efficiency in
(2) Regulatory and
Changning district;
institutional
(2) Recommendations and
frameworks for
implementation support of
low-carbon
technologies, policies, and
development in
financing mechanisms (EE, RE,
Shanghai
and integration of intelligent twomunicipality
way meters) for near zero emission
established.
buildings in Changning district;
(3) Energy quota for public buildings
(commercial and government
buildings) implemented, and lowcarbon consumer behavior
promoted;
(4) Feasibility studies for investment
made to retrofit existing buildings
(funded by the counterparts and
possibly bank loan), and pilot new
near zero-emission buildings (GEF
funds share part of the incremental
costs of near zero-emission
buildings including smart meters)
in Changning district.
2. LowTA
(1) Improved
(1) Recommended policies and
GEFTF
500,000
50,000,000
carbon
carbon intensity
institutional arrangements for
(TA) (investment)
energy mix
of power and
distributed generation from
heat supply
renewable energy and natural gas;
through
(2) Increased purchase of green
distributed
electricity, and energy saving
generation from
(White) certificate trading and
renewable
possibly carbon emission trading
energy and
explored;
natural gas;
(3) Feasibility studies for investment
(2) Increased
made to improve carbon intensity
demand for
of power and heating supply
green
(funded by the counterparts and
electricity from
possibly bank loan).
renewable
energy.
3. Green
TA
Increased share of
(1) Integrated green mobility policy
GEFTF
300,000
2,300,000
transport
citizens taking nondeveloped;
(TA)
($2,000,000
motor and public
(2) Electric vehicles (buses) feasibility
investment
transport
studies, if possible, piloted to
and
connect between metro to buildings
$300,000
TA)
4. Integration
TA
Reduced carbon
(1) Green energy schemes on the
GEFTF
200,000
200,000
of green
and energy intensity
demand side in buildings and
(TA)
(TA)
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energy
schemes to
achieve
low-carbon
objectives
in Changning
district
transport as well as on the supply
side integrated;
(2) Institutional capacity sustained.
Sub-Total
Project management cost for GEF1
Total project costs
GEFTF
3,910,000
435,000
4,345,000
245,925,000
1,305,000
247,230,000
C. INDICATIVE CO-FINANCING FOR THE PROJECT BY SOURCE AND BY NAME IF AVAILABLE, ($)
Sources of Co-financing
Municipal Government
GEF Agency
Private Sector
Total Co-financing
Name of Co-financier
Changninig District Government
World Bank
To be determined
Type of Co-financing
Grant
Loan
Equity investment/Loan
Amount ($)
$15,000,000
$100,000,000
$132,230,000
$247,230,000
D. GEF RESOURCES REQUESTED BY AGENCY, FOCAL AREA, AND COUNTRY
GEF Agency
WB
Type of Trust
Fund
GEF TF
Focal Area
Climate
Change
Total Grant Resources
Country
Name
China
Grant
Amount
(a)
4,345,000
Agency Fee
(b)
Total
c=a+b
435,000
4,780,000
4,345,000
435,000
4,780,000
NOTE: THIS PROJECT ALSO APPLIED FOR $200,000 PROJECT RPEPARATION GRANT (PPG).
SO THE TOTAL PROJECT COST IS $5,000,000 INCLUDING PPG.
PART II: PROJECT JUSTIFICATION
A. DESCRIPTION OF THE CONSISTENCY OF THE PROJECT WITH:
A.1.1. THE GEF FOCAL AREA STRATEGIES:
As shown in Table A, the proposed Project is fully consistent with the GEF Climate Change Focal Area (1)
Strategic Objective 1 to promote the demonstration, deployment, and transfer of innovative low-carbon
technologies; (2) Strategic Objective 2 to promote market transformation for energy efficiency in industry and the
building sectors; (3) Strategic Objective 3 to promote investment in renewable energy technologies; and (4)
Strategic Objective 4 to promote energy-efficient, low-carbon transport and urban systems.
A.2. NATIONAL STRATEGIES AND PLANS
Consistency with National Strategies and Plans: This project is consistent with national strategies and the 12th
Five-Year Plan. The Government of China (GoC) is committed to (1) reducing carbon intensity by 40-45 percent
from 2005 to 2020; (2) cutting energy intensity by 20 percent during the 11th Five-Year Plan (2006-2010) and 16
percent during the 12th Five-Year Plan (2011-2015); and (3) increasing the share of non-fossil fuel in primary
energy to 15 percent by 2020.
Cities are at the center stage of the action plan to achieve the government’s target to reduce carbon intensity.
Urban areas contain 40 percent of the population, and contribute 75 percent of the Chinese national
economy and 84 percent of China’s commercial energy. CO2 emissions per capita in Shanghai, Beijing
and Tianjin, are already higher compared to leading cities in the world, and are three to four times
1
Same as footnote #3.
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higher than the national average. To this end, in August 2010, NDRC announced that areas in five
provinces and eight cities were selected to pilot low-carbon growth.
China is experiencing rapid urbanization, with projected 300 million people migrating to urban areas over the
next 20 years. As a result, energy demand for buildings and transport will increase rapidly – energy demand and
its related CO2 emissions would triple for the buildings and appliances, and more than quadruple for the transport
sector with a 10-fold increase in the vehicle fleet over the next two decades. The speed and scale of urbanization
provides an unprecedented opportunity to invest in clean energy technologies both at the demand and supply side
today in order to build low-carbon cities.
Consistency with Municipal and District Strategies and Plans: This project is also consistent with the priorities
and 12th Five-Year Plan of the Shanghai municipal and Changning district governments. Both are deeply
committed to an integrated approach building low-carbon city. In particular, the Changning district government is
dedicated to becoming a leading low-carbon district in Shanghai and China, and is willing to push for bolder
policies and incentives above the municipal and national levels. Based on the analysis of the abatement cost curve
and preliminary abatement scenarios, the Changning government considers a bold target that carbon emissions
would peak within the next 10-15 years, and decline thereafter, within the Hongqiao demonstration zone. More
in-depth analysis of the abatement scenarios is being undertaken to determined the year when emissions would
peak. In addition, Changning district government also set an ambitious target to reduce carbon intensity by at
least 50% from 2005 to 2020. To achieve this goal, the government’s strategy contains three parallel tracks:



Green buildings: improving energy efficiency of existing buildings and piloting near zero-emission new
buildings. The Hongqiao zone has few industrial activities, and mostly commercial buildings (shopping malls,
office buildings, etc.), old residential buildings, and public buildings. Improving energy efficiency in existing
buildings accounts for almost 80% of the emission reduction wedge. The district government plans to adopt a
building code that is higher than national standards, with additional financial incentives, and possibly
mandatory policy for building retrofit. The district government also plans to set up a system to regularly audit,
monitor, label, and manage energy consumption for buildings, and implement energy quota for public
buildings (commercial and government buildings). As a result, consumers’ behavior would be changed
towards adopting energy conservation measures in buildings. Furthermore, the district will pilot LED and
solar PV for street lighting;
Low-carbon energy mix: Purchase of green electricity is identified as the second largest emission reduction
source, based on the abatement cost curve and abatement scenarios. Shanghai is the first Chinese cities that
piloted green electricity scheme, and the Changning District government plans to scale up this effort. In
addition, the district government also plans to promote distributed generation and convert oil to gas for
heating boilers;
Green transport: increasing public transport and biking, improving connections between the public transport
modes, and encouraging electric, hybrid, and small vehicles.
The district government is moving ahead on this plan. Introducing international best practice and expertise
through this project can accelerate the speed and enhance the quality and success of this initiative.
B.
PROJECT OVERVIEW:
B.1. BASELINE PROJECT AND THE PROBLEM THAT IT SEEKS TO ADDRESS:
Many municipal governments in China have begun to develop eco-cities or low-carbon cities on their own or
together with international partners. However, the concept of low-carbon city is still not clearly defined. The
Ministry of Environmental Protection (MEP) and the Ministry of Housing and Urban-Rural Development
(MoHURD) both developed national standards for “eco-cities” with the intention of advancing the environmental
agenda in cities. More recently, NDRC announced that areas in five provinces and eight cities were selected to
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pilot low-carbon growth. But there still lacks clear definitions and key indicators to assess environmental
sustainability in a comprehensive and comparable manner.
This proposed project will be the first effort in China at a district/municipal level to apply analytical tools of
abatement cost curve and abatement scenarios to laying out a vision and setting up a low-carbon target and
measurable indicators for the Changning district. This pilot approach will have a wide replication potential to
other cities in China to demonstrate what a low-carbon city would really look like and how to set up a low-carbon
target and measurable indicators.
International experiences are important to devise a vision but Chinese cities should be guided by the creed to lead
and not follow. Emission reduction targets should therefore be bold, and ensure that not only decoupling growth
and carbon emissions (consistent with national government’s target to reduce carbon intensity) but also reversing
the upward emission trend within 10-15 years. To this end, Changning district, with World Bank’s assistance, has
developed the first ever abatement cost curves and abatement scenarios to set up a low-carbon target, and identify
the potential and cost for CO2 reduction. They have also developed indicators by sector targeting the high
potential and low cost actions to achieve the city’s overall emission reduction objective.
Baseline and low-carbon target: The Shanghai Energy Conservation Supervision Center (SECSC) has worked
closely the World Bank team and developed three scenarios: (a) a Frozen Technology Scenario to show the cost
of no action, where existing technologies are not further deployed and no new technologies will be adopted; (b) a
Baseline Scenario including all actions to meet the national government’s target to reduce carbon intensity; and
(c) a Full Potential Abatement Scenario, where the maximum technical potential is tapped under the constraints
of technology applicability, maturity, and supply. The Full Potential Abatement Scenario targets at emissions
peaking within the next 10-15 years and starting to decline, and the peaking year will be determined by in-depth
analysis of the abatement scenarios that are being undertaken.
The preliminary results of the analytical work showed that CO2 emissions could be reduced by 75,000 tons
moving from the Frozen Technology Scenario to Baseline Scenario by 2020 within Hongqiao demonstration
zone. So baseline funding will contribute to this emission reduction. Moving from the Baseline Scenario to Full
Potential Abatement Scenario could lead to an additional 85,000 tons of CO2 emission reduction by 2020 within
the Hongqiao demonstration zone. So GEF funding is sought to contribute to this shift. The preliminary results
also illustrate that achieving the baseline scenario would require deployment of all the abatement options with
negative costs, while achieving the full potential scenario would require deployment of mitigation options with
high positive costs. Please note that these preliminary results are currently under validation, and subject to
change. The final results of the analytical work will be presented in the PAD at CEO endorsement stage.
The wedge analysis of the scenarios demonstrates that retrofitting existing buildings accounts for the bulk of
emission reduction from the full potential to baseline scenario, followed by green electricity, EE in urban
transport, and near zero-emission buildings. Finally, the abatement cost curve shows four priority actions that
have the largest abatement potentials -- air conditioning, distributed generation, green electricity, and building
envelope.
Comprehensive frameworks for low-carbon Cities: Chinese cities aspiring to low carbon labels should focus
on a comprehensive multi-sector approach leading to reduction of the country’s GHG emissions and
sustainability, with clear priorities based on their specific conditions. First, at macro-economic level, the focus
should be on promoting a low carbon economic growth in the future by shifting from energy-intensive industrial
sector to tertiary sector and low carbon industries to provide jobs to their citizens. This is perhaps the single
largest contributing factor for carbon intensity reduction in most Chinese cities. Second, they should drive down
carbon emissions by sustaining demand side energy efficiency measures in the industries, buildings, and vehicles,
combined with clean energy supply. Third, they should promote compact urban forms and public transport to
keep carbon emissions in the transport sector from increasing to unsustainable level. Finally, they should seek
their citizens’ support and build consensus around resource efficient and low carbon lifestyle which is a key
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determinant factor to future energy demand in Chinese cities, particularly with rising income and thus a higher
individual purchasing power.
In the energy sector, such a comprehensive framework also means integration of energy efficiency and renewable
energy, rather than separating them like in the past. For example, near zero-emission buildings require (i) energy
efficient design, building envelope (roof, walls, windows, doors, and insulation) and electric appliances; (ii) onsite renewable energy such as roof-top PVs and solar water heaters; (iii) smart meters; and (iv) purchase of green
electricity to cover the gap. The last point is important for mega cities such as Shanghai where on-site renewable
potential is relatively limited and purchases (if aggregated) of green electricity from outside Shanghai could spur
large demand for green electricity.
This proposed project will be the first effort in China to adopt a comprehensive multi-sector approach to integrate
energy efficiency, clean energy technologies, and sustainable transport to achieve low-carbon objective in
Changning district, with measureable indicators. In the past, most of the GEF-supported low-carbon city projects
worldwide focused on the transport sector only, where buildings and green energy supply are a missing link.
Shanghai and Changning: The Shanghai government is committed to building a low-carbon city, which is an
integral part of their 12th Five-Year Plan. In particular, the Changning district government envisions to become a
leading low-carbon district in Shanghai and China through piloting green energy schemes in the Hongqiao
economic and technology development zone, which was established in 1990s per State Council’s approval, and
then expand to other zones of the district.
Innovations for the Proposed Project: The proposed GEF funding is essential to involving the World Bank to
transfer international knowledge and best practices, and combining investment with technical assistance on policy
advice and business development studies to make the Changning District and Shanghai leaders in achieving
Chinese government’s carbon intensity reduction targets in a most efficient way.
First, the proposed project is innovative because it will pilot definition of low-carbon targets with analytical tools
and adoption of the innovative comprehensive multi-sector approaches to achieve the low-carbon objective. It
sets performance-based indicators such as carbon emissions, emission intensity, energy intensity, building energy
efficiency in terms of MJ/m2, share of renewable energy, and others.
Second, this proposed project is innovative because it will pilot innovative policies and business models. For
example, the project plans to pilot new policies of mandatory requirements for retrofitting inefficient existing
buildings, more stringent and performance-based building codes such as kWh/m2 or MJ/m2, and innovative
business models for building retrofit. If successful, this will have a wide replication potential nationwide.
In addition, Shanghai has already piloted Green Electricity scheme, a pioneer in China, and this project will assist
them in expanding green electricity business to meet the renewable energy target, and share the incremental costs
among the able- and willing-to-pay customers. Within a city boundary, on-site low-carbon energy supply is
limited, constrained by renewable energy potential and water/land resources. To achieve the low-carbon objective
at city-level, increased purchase of green electricity from outside Shanghai is a key solution towards a low-carbon
energy mix, and can spur large demand for green electricity.
Furthermore, this project will study the feasibility, and if possible pilot innovative business models to promote
electric vehicles (for instance, consumers get a newly-charged battery at “electric vehicle service stations” instead
of charging batteries at home). Studies show that electric vehicles (EV), if charged from fossil-fuel dominated
power mix like the one in Shanghai, may not necessarily reduce carbon emissions. In addition, if all the EV
consumers charge batteries at home at night, it will significantly increase the load for the utilities at one time.
Under one of the explored new business models, an EV service company can act as an intermediary between the
utility and consumers, who are responsible for charging batteries from low-carbon energy sources at agreed time
with utilities and supply newly-charged batteries to consumers when they need them.
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Third, this proposed project is innovative because it will introduce innovative clean energy technologies. For
example, the project intends to pilot new near zero-emission buildings, which will be one of the first in the world.
The World Bank has assisted Shanghai in analytical work on the technical and economic feasibility of near zero
emission buildings in Shanghai.
Zero-emission buildings require comprehensive and new energy technologies: (i) energy efficient design,
building envelope (roof, walls, windows, doors, and insulation) and electric appliances; (ii) on-site renewable
energy such as roof-top solar PVs, heat pumps, and solar water heaters; (iii) smart meters; and (iv) purchase of
green electricity to cover the gap. Roof-top solar PVs and heat pumps are not common yet in Chinese urban
buildings. Smart grids and meters are new to China.
B. 2. INCREMENTAL /ADDITIONAL COST REASONING: DESCRIBE THE INCREMENTAL ACTIVITIES REQUESTED
FOR GEF FINANCING AND THE ASSOCIATED GLOBAL ENVIRONMENTAL BENEFITS
The overall project objective is to pilot green energy schemes for low-carbon city in Shanghai, with a focus in
Changning District, thereby reducing greenhouse gas (GHG) emissions. The project will focus on four
components: (1) green buildings, including retrofitting existing buildings and piloting new near zero-emission
buildings (including smart metering); (2) low-carbon energy mix, including on-site distributed generation from
renewable energy and natural gas and purchase of green electricity; (3) green transport with a focus on electric
buses; and (4) integrating green energy schemes to achieve low-carbon objectives.
At the Changning district level, the project will pilot innovative business models, financing mechanisms, and new
low-carbon technologies, and integrating both supply and demand-side abatement options to achieve their lowcarbon objective under all four components. At the Shanghai municipal level, new policies will be developed,
particularly for building EE and renewable districted generation under component 1 and 2, which will be first
piloted in Changning district. If successful, the Changing model has a wide replication potential in Shanghai and
China.
This proposed GEF project includes the following four components:
1.
Green Buildings:
This component aims at improving energy efficiency thereby reducing emissions for existing buildings, and
piloting new near zero emission buildings. It has the following four sub-components:
1) TA on retrofitting existing buildings: The Shanghai Energy Conservation Supervision Center (SECSC) has
done a complete survey of energy use, building envelope, and electric appliances for 50 buildings
(commercial, residential, and schools), representing 80% of the buildings in the Hongqiao Zone of
Changning district. They also plan to expand the energy survey to other parts of Changning district. The
survey demonstrated large energy saving potentials in these buildings, particularly in the areas of building
envelope (better insulation and windows) and heating, ventilation and air conditioning (HVAC) systems.
However, the single largest barrier to retrofit commercial buildings is that the owners, usually multiple
owners for one building, are reluctant to invest in energy conservation measures, because the renters pay for
the energy bill, and owners are uncertain of the returns on energy efficiency investments and do not want to
interrupt commercial operation of the buildings due to retrofit. In addition, the current building energy
efficiency practice usually covers only one or two technologies, such as conversion of oil to gas boilers,
rather than adopting an integrated approach that addresses whole building energy use with both load
reduction and equipment efficiency measures. This sub-component will recommend and provide
implementation support for the district to pilot (i) more bold policies of mandatory requirements for
retrofitting inefficient buildings, more stringent and easy to enforce building codes, performance-based
building standards (e.g. based on kWh/m2 or MJ/m2), and additional financial incentives; (ii) market-based
mechanisms/business models and financing mechanisms to retrofit existing buildings at a large scale; and (iii)
feasibility studies on integrated approach of comprehensive technology renovation.
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2) Investment and TA on new near zero emission buildings: The Bank team has assisted the counterparts in
analytical work on the technical and economic feasibility of near zero emission buildings in Shanghai. The
district government and the Bank team have consulted a few potential project developers for new commercial
building development in the Hongqiao zone, and some of them are willing to construct near zero emission
buildings. Since the incremental cost of the near zero emission buildings is the major barrier to deployment,
GEF resource is sought to share the incremental costs (including EE, RE, and smart meters), together with
district government and project developers. Investing near zero-emission buildings also faces the classic split
incentive barrier—investors/developers bear the high incremental costs, while the renters enjoy the energy
saving benefits. In addition, this sub-component will recommend and provide implementation support to (i)
technologies (both EE and RE) of near zero emission buildings; (ii) integration of intelligent two-way meters
to the grid for the near zero-emission buildings; (iii) market development to create a brand name to attract
suppliers, buyers, users, etc.; (iv) policies (mandatory requirements and additional incentives); and (v)
financing mechanisms for near zero emission buildings. Through piloting the business models and financing
mechanisms, this sub-component intends to demonstrate the technical, financial, and commercial feasibility
of near zero-emission buildings, and help drive down costs through the technology learning curve. If
successful, the government and developers will replicate this experience with their own funds.
3) TA on setting and monitoring building energy consumption quota: This sub-component will help (1) set up
a monitoring and management system for building energy consumption as a monitoring, reporting, and
verification (MRV) system for energy consumption and carbon emissions in buildings; (2) regularly audit and
publish energy consumption in buildings; and (3) implement cap on total energy consumption in public
buildings (commercial and government buildings) by sector. As a result, consumers’ behavior would be
changed towards energy conservation and low-carbon.
4) Investment in retrofitting existing buildings and constructing new near zero emission buildings: This subcomponent will invest in (1) retrofitting existing buildings; and (ii) baseline costs of piloting near zeroemission building, funded by the counterparts and possibly bank loan.
2.
Low-carbon Energy Mix
This component aims at improving carbon intensity of power and heating supply through distributed generation
from renewable energy and natural gas, as well as purchase of green electricity. It has the following three subcomponents:
1) TA on low-carbon distributed generation: This sub-component will provide TA on cost benefit analysis,
supporting policies, and business models for (i) renewable energy generation; (ii) distributed generation of
tri-generation for power, heating, and cooling from natural gas; and (iii) conversion of oil to gas heating
boilers.
2) TA for increased purchase of green electricity: This sub-component will provide TA to (i) increase purchase
of green electricity; and (ii) explore energy savings certificate (white certificate) trading and possibly carbon
emission trading. This sub-component will assist Changning district in purchasing increased volume of green
electricity. For the second sub-component, Shanghai has already been selected by NDRC to pilot the White
certificate trading concept. The Changning district will explore promoting trading among a few large energy
consumers. This will help set up the trading mechanisms (e.g. regulations, price range), and monitoring and
verification system.
3) Investment in low-carbon energy mix: This sub-component will invest in renewable energy, distributed
generation, and conversion of oil to gas heating boilers, funded by the counterparts and possibly bank loan.
3.
Green Transport
In Changning district, to some extent at the municipal level, this sub-component will (1) learn from international
experience and best practice on integrated green transport policies, such as increased parking fees, providing free
shuttle buses within the district, and adapt them to the Changning district, to encourage green mobility; and (2)
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study the feasibility of electric vehicles, if possible, pilot the electric buses to connect metro/light rail stations to
office buildings to cover the last mile. Currently, there is a 1-2 km gap between the metro station and most office
buildings in the zone. This has been a key bottleneck to prevent more people from taking public transport. A good
connection between public transport modes is important.
4.
Integrating green energy schemes to achieve low-carbon objectives
This component will (1) integrate green energy schemes on the demand side in the building and transport sectors
as well as on the supply side to achieve district’s low-carbon objectives, including definition of Measurement
&Verification (M&V) methodology and setting up an M&V system to monitor and verify energy savings and
CO2 emission reductions; and (2) building capacity of key stakeholders such as the implementing agency of New
Changning, and district and municipal government officials to ensure institutional sustainability.
Incremental Reasoning: First of all, despite that many municipal governments in China have begun to develop
eco-cities or low-carbon cities, there lacks clear definition and key performance indicators to define and measure
such initiatives. In addition, the current green energy practice tends to deal with energy efficiency and renewable
energy separately. However, the McKinsey abatement cost curve for the Changning district demonstrated that
achieving the objectives of low-carbon cities requires integration of energy efficiency, renewable energy, and
green transport. GEF resources are sought to pilot and provide implementation support for these integrated
solutions.
While many building energy efficiency measures, such as energy efficient lighting and HVAC systems and heat
pump, are among the lowest cost options on the abatement cost curve, their widespread deployment faces many
barriers. The single largest barrier to retrofit commercial buildings is that the owners, usually multiple owners for
one building, are reluctant to invest in energy conservation measures, as the renters pay for the energy bill and
owners do not want to interrupt commercial operation of the buildings due to retrofit. In addition, most financial
institutions are not willing or interested in building EE lending due to its small size, high transaction costs, long
payback periods, and high risks (both credit risk of developers/ESCOs and technical risk of actual energy savings
achieved), and they are not familiar with the technologies. GEF resources are sought to remove these barriers,
and pilot bolder policies, market-based mechanisms/business models, financing mechanisms, and integrated
solutions to retrofit existing buildings at a large scale.
This project will be one of the first efforts to pilot near zero-emission buildings in China (and the world). The
single largest barrier now is its high incremental cost. Currently, there is little international experience on zeroemission buildings. For example, a recently completed DOE net zero energy office building (220,000 ft2) in
Golden, Colorado cost $259/ft2 to build, compared with the $140/ft2 cost for regular local office building – almost
doubling the costs. In addition, developers also need technical support on international experience of new
technologies and their reliability. GEF resources are sought for technical assistance of near zero emission
buildings and share the incremental costs with district government and project developers.
Finally, this project will support Changning district to pilot bolder policies ahead of Shanghai and China, for
example, mandatory requirements for retrofitting existing buildings, adopting performance-based building
standards (e.g. based on kWh/m2 or MJ/m2), increasing purchase of green electricity, and exploring promotion of
energy saving certificates trading. GEF resources are critical to accelerate the speed and enhance the quality and
success of the low-carbon city initiative in Changning district and Shanghai.
The global environment benefits from this project will improve energy efficiency and increase use of renewable
energy, natural gas, and advanced clean energy technologies, thereby reducing GHG emissions. This project is
innovative as it integrates energy efficiency and clean energy technologies in a comprehensive manner to achieve
low-carbon district objective. The detailed emission reduction estimates will be carried out during project
preparation, and presented in the Project Appraisal Document (PAD) at CEO endorsement stage.
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The TA will be provided at both municipal and district levels, with policy development at municipal level,
focusing on pilot and implementation at district level. Both the municipal and district governments are deeply
committed, and stakeholders have strong capacity. This project will have a wide replication potential inside and
outside China.
B.3. DESCRIBE THE SOCIOECONOMIC BENEFITS TO BE DELIVERED BY THE PROJECT:
In addition to the global environmental benefits, this project, through putting in place sustainable policy,
institutional, and financing schemes for EE, RE, and green transport in Changning/Shanghai, can also bring in
substantial domestic development benefits – improved air quality, reduced energy bills, enhanced energy
security, less traffic congestion, and more livable city. The project will help position Changning district and
Shanghai municipal government to become a leader in China on green energy schemes for low-carbon city
development.
B.4 INDICATE RISKS, INCLUDING CLIMATE CHANGE RISKS:
Risk
Political risks: Changning government
cannot implement bolder policies
Risk
Rating
Moderate
Institutional risks: difficult to convince
building owners to retrofit existing
buildings
Substantial
Cost risks: difficult to convince
developers to pilot near zero-emission
buildings due to its high incremental
costs
Moderate
Distributed generation does not have
access to the grids
Substantial
Weak project implementation capacity
Moderate
Risk Mitigation Strategy
The Bank team has consulted both the municipal and Changning
district governments. The district government can adopt innovative
supportive policies. They are in the process to request for approval
from the Shanghai municipal Development and Reform
Commission to pilot low-carbon development demonstration
district. If approved, they will be granted with authority to pilot
bolder green energy policies ahead of Shanghai and national level.
The Bank team is assisting the district government in conducting a
small AAA work on policies and business models for building
retrofit. SECSC is now conducting energy audit for the buildings in
the Hongqiao district, and compares them with international
benchmarks. The project intends to pilot bold policies that mandate
those existing buildings with energy use above benchmarks (e.g.
MJ/m2 or kWh/m2) to retrofit; and pilot market- based business
models for building retrofit, for example, ESCOs invest in EE
measures and share the energy savings with owners.
The Bank team and the district government have consulted a few
project developers who will build new commercial buildings in the
Hongqiao zone. One of them expressed interests in piloting near
zero-emission buildings in principle. There are also more new real
estate development sites within Changning district. The proposed
project will provide technical support to the design of the pilot near
zero-emission building, and share the incremental costs. The
district government will also provide additional financial
incentives, and the project will also help market development to
create brand names.
This is a major barrier for distributed generation, such as roof-top
PV, at national level. But its solution is closely linked with power
sector reform. This project is unlikely to fundamentally address this
issue. However, the district government has invited the Shanghai
power company to be part of the project. This project also plans to
pilot policy solutions such as wheeling and net metering to address
this issue.
The Bank team has had extensive discussions with the municipal
and district governments on the implementation arrangement of the
project. The district government has assigned a dedicated team to
prepare for this project, and a PMO will be set up under the
leadership of municipal DRC and district government. The district
government also set up the New Changning Low-carbon
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Risk
Risk
Rating
Risk Mitigation Strategy
Investment Management Ltd. as the implementing agency for the
proposed IBRD loan. Shanghai has one of the strongest capacity in
China, demonstrated through the project preparation process. The
project will allocate funds for implementation support.
Overall risk rating
Substantial
B.5. KEY STAKEHOLDERS INVOLVED AND THEIR RESPECTIVE ROLES:
The district government plans to set up a working group involving the key stakeholders to prepare for the project,
consisting of dedicated staff at the district government, SECSC, Shanghai municipal government, Shanghai
Building Design and Research Institute, Shanghai Power Company, Shengneng Group and others. In addition,
key stakeholders also include building owners, managers, and developers; investors, ESCOs, etc.
The proposed project will be implemented by a Project Management Office (PMO), led by the Shanghai DRC
and Changning district government. The district government has assigned dedicated staff from the district
government and experts from SECSC to prepare for this project. The municipal government has been actively
involved in the project. In addition, the district government also set up and injected equity to the New Changning
Low-carbon Investment Management Ltd. as the implementing agency for the proposed IBRD loan. The district
government intends to make the New Changning Low-Carbon company as a sustainable institutional arrangement
to manage low-carbon investments in the district after project completes, through building their capacity and
developing an Operational Manual under this GEF Project.
B.6. OUTLINE THE COORDINATION WITH OTHER RELATED INITIATIVES:
Coordination with other eco-city and low-carbon city initiatives: The World Bank (WB) has been implementing
energy efficiency, renewable energy, and eco-city initiatives in China. This proposed project has built on lessons
learned from international and Chinese experience, as mentioned in section A. The Bank team has closely
coordinated with other ongoing and planned low-carbon city programs in China, notably the Tianjin Eco-city
project and Beijing Environment project. The Tianjin Eco-city project is a green field project targeting at a new
development zone in Binhai. The GEF project in Tianjin intends to (a) develop an implementation framework for
the master plan; (b) TA for public transport; and (c) TA and investment in improving energy efficiency in public
buildings. In Beijing, the Bank is assisting Beijing municipal government in improving their low-carbon city
development plan, and an IBRD lending and GEF TA project are in the pipeline, focusing on renewable energy
and building energy efficiency.
The proposed Shanghai project is a brown field project targeting at reducing carbon and energy intensity in an
existing district with largely commercial buildings. Shanghai municipal government deliberately requested the
Bank’s support to focus on retrofitting an existing commercial district. This approach has been given less
attention and is more challenging, but has a wide replication potential nationwide. Since 90% of energy
consumption in the district comes from electricity, this project will focus on green energy schemes. It intends to
integrate energy efficiency and renewable energy in piloting near zero-emission buildings, demonstrate new
market-based business models to retrofit existing buildings with integrated technology solutions, and adopt a
comprehensive approach to optimize energy mix in both power and heating supply. The project will coordinate
with other low-carbon city initiatives in China, particularly with Beijing, Ningbo, Tianjin, and NDRC designated
pilot low-carbon cities and provinces during project implementation.
Coordination with other building EE and RE initiatives: This project also capitalizes on the past and ongoing
GEF efforts on building energy efficiency and renewable energy in China. The China Heat Reform and Building
Energy Efficiency Project practiced the integrated approach to address residential heating energy conservation by
assisting the development of national policy framework for two-part heat tariff and consumption-based billing
and the implementation of new housing projects which combines advanced energy-efficiency designs, apartmentlevel heat meters, and variable-flow heat supply. The project has been successful in working with local
governments and real estate developers in multiple cities and in leveraging private financing for incremental
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energy efficiency costs. Furthermore, the China Renewable Energy Scaling Up Program (CRESP) has played an
essential role in developing and implementing Renewable Energy Law in China, and contributed to the scale-up
of renewable energy in China. The planned CRESP Phase II will also address national-level policies to encourage
distributed generation (such as roof-top PV) to have access to the grid and green electricity, thereby, has a close
link to this proposed project and can scale up the successful pilot in Shanghai across the nation. Finally, this
proposed project will also build on the success and approach of the award-winning Bank’s assistance in the Green
Electricity scheme in Shanghai.
Building on past lessons learned: This proposed project has built on lessons learned from international and
Chinese experience. First, the low-carbon city concept in China is still not clearly defined due to a lack of clear
standards and key indicators to assess environmental sustainability in a comprehensive and comparable manner.
The Tianjin Eco-city has set ambitious targets for key performance indicators, but Bank’s analysis of these targets
against international benchmarks shows that it may not be realistic. To this end, the team has reviewed
international experience on key indicators for low-carbon cities or green cities, such as the European Green City
Index and LEED Neighborhood Development indicators. Most importantly, the abatement cost curve and
abatement scenarios that the team is assisting the clients in developing will provide analytical underpinning to set
up low-carbon targets and indicators.
Second, the proposed GEF project in Shanghai plans to adopt a comprehensive multi-sector approach to integrate
energy efficiency, clean energy technologies, and sustainable transport to achieve low-carbon objective in
Changning district, with measureable indicators. In the past, most of the GEF-supported low-carbon city projects
worldwide focused on the transport sector only, where buildings and green energy supply are a missing link.
Similarly, most of the GEF-supported energy projects focused on either energy efficiency or renewable energy
alone. However, achieving low-carbon objective at a city level requires a holistic multi-sector approach to
integrate energy efficiency, renewable energy, compact urban design, and public transport.
Third, this proposed project plans to introduce international best practices and pilot innovative policies and
business models, based on the past building EE work. This is the focus of this proposed TA activities. For
example, this project plans to pilot new policies of mandatory requirements for retrofitting inefficient existing
buildings, as well as more stringent and performance-based building codes such as kWh/m2 or MJ/m2. If
successful, this will have a wide replication potential nationwide.
Furthermore, Shanghai has already piloted Green Electricity scheme, a pioneer in China, and the proposed GEF
project intends to assist them in expanding green electricity business to meet the renewable energy target, and
share the incremental costs among the able- and willing-to-pay customers. Within a city boundary, on-site lowcarbon energy supply is limited, constrained by renewable energy potential and water/land resources. To achieve
the low-carbon objective at city-level, increased purchase of green electricity from outside Shanghai is a key
solution towards a low-carbon energy mix, and can spur large demand for green electricity.
C. DESCRIBE THE GEF AGENCY’S COMPARATIVE ADVANTAGE TO IMPLEMENT THIS PROJECT:
C.1 INDICATE THE CO-FINANCING AMOUNT THE GEF AGENCY IS BRINGING TO THE PROJECT:
The World Bank is well positioned to provide both GEF grant for transfer of international knowledge and best
practices and technical assistance on policy advice and business development, combined with IBRD investments.
The proposed project intends to invest $100 million IBRD loans, with matching investment of an additional $100
million from the private sector, in building retrofit, near zero-emission buildings, distributed generation from
renewable energy and natural gas. Shanghai/Changning governments have submitted their investment proposal to
NDRC for approval.
C.2 PROJECT FIT WITH GEF AGENCY PROGRAM - STAFF CAPACITY IN COUNTRY TO SUPPORT PROJECT
IMPLEMENTATION:
The World Bank is a leading international financial institution with strong experience in packaging investment
projects focusing on institution building, infrastructure development, policy reform, and market transformation
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across all the focal areas of the GEF. Since GEF’s inception in 1991 and formal establishment in 1994, the Bank
has an intensive EE and RE portfolio around the world, and the bulk of the Bank’s energy portfolio in China has
been energy efficiency and renewable energy. These projects have been generally satisfactory. The Bank’s China
energy program now launches a new business line on low-carbon energy schemes for cities, and this proposal is
the first attempt to integrate energy efficiency, renewable energy, smart meters, and green transport into one
operation. In China, there has been a close working relationship between the government and the World Bank
since GEF’s establishment. The World Bank has an excellent team of experts specializing in conceptualization,
development, implementation, and monitoring of low-carbon energy projects.
PART III: ENDORSEMENT BY GEF OPERATIONAL FOCAL POINT AND GEF AGENCY
A. RECORD OF ENDORSEMENT OF GEF OPERATIONAL FOCAL POINT FOR THE GOVERNMENT:
NAME
POSITION
MINISTRY
Director
MINISTRY OF FINANCE
INTERNATIONAL
FINANCE
INSTITUTION DIVISION III
DEPARTMENT OF INTERNATIONAL
AFFAIRS
GOVERNMENT OF P.R. CHINA
DATE
B. GEF AGENCY CERTIFICATION
This request has been prepared in accordance with GEF/LDCF/SCCF policies and procedures and
meets the GEF/LDCF/SCCF criteria for project identification and preparation.
Agency
Coordinator,
Agency name
Karin Shepardson,
WB GEF
Executive
Coordinator
Signature
Date
4/4/2011
Project Contact
Person
Xiaodong Wang,
Senior Energy
Specialist
Telephone
Email Address
xwang1@worldbank.
org
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