Skip to Main Navigation
Results Briefs June 21, 2020

China: Fighting Air Pollution and Climate Change through Clean Energy Financing



Restoring China’s Blue Skies in Jing-Jin-Ji

The World Bank-supported Innovative Financing for Air Pollution Control Program has financed investments in energy efficiency, renewable energy and emissions control. The program has leveraged funding 5.4 times the original loan amount, mainstreamed green finance at Huaxia Bank, and supported China’s efforts to mitigate climate change by reducing carbon dioxide emissions by 2.5 million tons a year.


China was home to many of the world’s most polluted cities and is the world’s largest emitter of greenhouse gases (GHGs). The Beijing-Tianjin-Hebei (Jing-Jin-Ji) region experienced particularly severe air pollution, with an annual average fine particulate matter (PM2.5) concentration of 93 micrograms per cubic meter (μg/m3) in 2014, which far exceeded both China’s national standard and the standard advised by the World Health Organization (WHO).

According to 2015 estimates by the Chinese Academy for Environmental Planning (CAEP), emissions of PM2.5, sulfur dioxide (SO2) and nitrogen oxides (NOx) substantially exceeded the cities’ environmental absorptive capacity by 80 percent, 50 percent, and 70 percent respectively.

Because severe air pollution has serious adverse impacts on human health, the Government of China declared a war on air pollution and put in place a comprehensive government program to tackle it. But achieving the government’s goals required a substantial amount of green financing.


The Innovative Financing for Air Pollution Control in Jing-Jin-Ji Program was the first operation to use the Program for Result (PforR) instrument in the energy sector in China. The program was designed to support the implementation of the government’s Air Pollution Control Action Plan and the 13th Five-Year Plan (2016-2020) for energy efficiency and clean energy, with a focus on controlling air pollutants at their source by improving energy efficiency and expanding clean energy.

The program brought in much-needed financing by mainstreaming green financing in financial institutions to contribute to the government’s targets. The program supported a commercial bank, Huaxia Bank, to provide financing for enterprises to reduce air pollutants and carbon emissions by increasing energy efficiency, investing in clean energy, and tightening air pollution controls. 

2.5 million tons

The Innovative Financing for Air Pollution Control Program has supported China’s efforts to mitigate climate change by reducing carbon dioxide emissions by 2.5 million tons a year.


Since 2016, the PforR program has achieved the following results:

  • Financed 27 subprojects in the areas of energy efficiency, renewable energy, and emission control. Of the total investment of $1.3 billion to date, $208 million (€187 million) came from the World Bank loan, $430 million (€386 million) from Huaxia Bank, and the remaining $662 million from sub-borrowers. The financing leveraged was 5.4 times the original loan amount.
  • Mainstreamed green finance at Huaxia Bank. A green finance center has been established and green financing has become one of the bank’s six key strategic business lines. Its green financing business has grown to RMB 132.5 billion yuan (about $19 billion) as of 2019.
  • Reduced carbon dioxide emissions by an estimated 2.5 million tons a year, thereby contributing to blue skies in the Jing-Jin-Ji region and China’s efforts to mitigate climate change.
  • Addressed financing challenges for renewables by financing innovative business models of distributed solar PV for 73 MW and piloting financing mechanisms for 2,553 rural households to install distributed solar PV systems. 

The program helped to:

  • Reduce coal consumption by improving energy efficiency in the industrial and building sectors and increasing the supply of renewable energy.
  • Reduce air pollution emissions through pollution abatement measures including installing equipment to remove particulate matter, flue gas desulfurization, and denitrification, replacing coal with natural gas, and expanding clean energy vehicles.
  • Strengthen the institutional capacity of the Huaxia Bank by establishing a Green Finance Center, developing green lending procedures, piloting innovative financing models and products, and training its staff.
  • Shift the government’s priority to addressing air pollutants at their source by reducing coal consumption and increasing the use of clean and renewable energy. This approach has also generated substantial greenhouse gas emission reduction benefits.

Bank Group Contribution

  • The International Bank for Reconstruction and Development (IBRD) provided a loan of $500 million. The IBRD funding has directly leveraged more than five times the original loan amount, which has substantially increased the amount of financing to support the government’s air pollution control program.
  •  The Global Environmental Facility (GEF) provided a grant to support implementation of the program with a focus on improving the results measurement and verification system, building capacity, and developing innovative financial products.


The World Bank has been working closely with the relevant government agencies in China including the National Development and Reform Commission (NDRC) and National Energy Administration (NEA), as well as with Huaxia Bank which is responsible for implementing the program.

Moving Forward

With support from the program, the Huaxia Bank has mainstreamed green finance in its corporate business development strategy and piloted innovative financing products in the hope of becoming one of China’s leading financial institutions in this area. Its new Green Finance Center is expected to finance green investments of at least RMB 150 billion yuan (about $21.2 billion) by the end of the program’s implementation in 2022.


 “Compared to coal heating boilers, geothermal heating has zero carbon emissions, and will not generate local air, water and waste pollutants, and it thereby is effective in reducing air pollution in the winter in the Jing-Jin-Ji region. And this technology will not cause groundwater pollution either. Financing from the World Bank and Huaxia Bank has helped overcome our financing difficulties and enabled us to invest in geothermal energy to replace coal heating boilers.“ -  Niu Jichao, an engineer from the Shaanxi New Energy Development Ltd.