World Bank Loan Backs Energy Transition and Reform in Shaanxi Province’s Heating Sector

The World Bank’s Board of Executive Directors has approved a US$300 million (€276.5 million) loan to support the use of renewable and low-carbon energy sources for heat supply and to promote a pricing reform pilot program in the heating sector in China’s Shaanxi province.

China’s heating sector relies heavily on coal and natural gas, accounting for about 10% of the nation’s total greenhouse gas (GHG) emissions. Unlike the electricity sector, where renewable energy is rapidly growing, renewable energy penetration in the heating sector remains minimal.

The Shaanxi Energy Transition and Innovation Demonstration in the Heating Sector Project aims to showcase innovative solutions to increase heat supply from renewable and low-carbon energy sources, including geothermal, waste heat, and electricity. Additionally, it supports pricing and billing reforms to improve the financial sustainability of the heating sector. The financing will support investment in the necessary infrastructure and the inclusive process of designing and implementing the reform pilot program. The project will aid China in progressing towards its climate goals of peaking carbon emissions before 2030 and achieving carbon neutrality before 2060, while also contributing to global public goods.

“The Shaanxi Energy Transition and Innovation Demonstration in the Heating Sector Project aims to help China demonstrate a pathway to facilitate the energy transition in the heating sector through a comprehensive approach on both supply and demand sides,” said Mara Warwick, World Bank Country Director for China, Mongolia, and Korea. “It also provides an opportunity to generate important lessons to be shared with other provinces in China and other countries with heating demand for replication.”