The Asian Development Bank (ADB) is providing CNY300 million in partial credit guarantees to Shanghai Pudong Development Bank, or SPD Bank, to support private-sector financing of energy-efficient buildings across the People’s Republic of China (PRC).
SPD Bank is the first Chinese partner in a program set up by ADB to encourage financial institutions to lend to companies seeking to retrofit old buildings so that they use less energy or to construct so-called green buildings which are designed, constructed, and maintained to optimize energy and water efficiency over the buildings’ lifespan. Retrofitting buildings typically leads to energy savings of 20%-40%.
Under the CNY800 million Energy Efficiency Multi-project Financing Program, ADB is partnering with Johnson Controls, a private sector energy management company listed on the New York Stock Exchange. Johnson Controls identifies buildings with energy savings potential while ADB shares the project credit risks with the financial institutions.
The PRC government is keen to reduce the greenhouse gases that have accompanied the country’s rapid rise in energy consumption in recent years. Given the PRC’s rapid urbanization, improving the energy efficiency of buildings will help significantly in cutting the gases that contribute to climate change. However, companies have found it hard to access the finance to do that given they can offer little collateral to back their loans, while banks themselves have little experience in project finance for energy-efficiency projects.
SPD Bank, listed on the Shanghai Stock Exchange, was the first domestic bank in the PRC to offer a full range of green credit solutions to companies.
Recognizing the huge potential of green construction in the PRC, SPD Bank is supporting cooperation with ADB to boost the development of green buildings using innovative finance.