On Monday, the Asian Infrastructure Investment Bank (AIIB) disclosed its plan to grant a $250 million loan for a gas development in Beijing, marking its maiden investment in China. This project aims to bring down coal consumption and enhance air quality in the capital region.
This loan, also recognized as the first corporate financial aid from AIIB, will be offered to the Beijing Gas Group Co. The funding will assist in the realization of projects that will facilitate rural households to switch from coal to gas for their cooking and heating needs. The undertaking will entail the establishment of gas distribution networks, pipelines, and domestic connection facilities, as per the statement from the Beijing-based international financial institution.
Set to reach completion by 2021, this initiative will aid China in reducing coal consumption by an estimated 650,000 metric tons each year. It aims to achieve this by connecting around 216,750 homes in approximately 510 rural villages to the gas distribution network, as reported by the AIIB.
China has been actively combating pollution by implementing stringent environmental regulations, including converting coal to gas, to curb emissions.
The AIIB’s president, Jin Liqun, mentioned that the bank’s inaugural investment in China is in harmony with its objective of backing green, sustainable growth for its members.
Jin noted that China’s dedication to reducing its coal dependence will transform lives and enhance the environment, which is why the bank is investing in a project that aligns with this ambitious plan.
Jin further added that this will assist China in developing sustainable infrastructure that will cut down greenhouse gas emissions and help stimulate one of the most crucial economic zones in Asia.
Zeng Gang, a financial researcher at the Chinese Academy of Social Sciences, stated that the energy project funded by the AIIB could imply that the international financial institution might offer more financial support for environment-focused infrastructure projects in China, an essential member of the AIIB.
Zeng mentioned that green financing in China will undeniably be a vital goal for the AIIB. He asserted that it is logical for the AIIB to be the source of long-term financing at relatively lower cost for such infrastructure projects, particularly when Chinese commercial banks are experiencing significant liquidity pressure.
Li Li, the director of energy research at ICIS China, an energy consultancy firm, stated that while AIIB financing should be applauded, the country should also increase investment in seasonal gas storage facilities, expand import channels and enhance the pricing mechanism to tackle potential shortages.
