Beijing Tackles Waste…and Helps the Environment
August 19, 2008—The Chinese government has placed a growing priority on tackling greenhouse gas emissions, because rapid development in China is fueling economic and urban growth, but not without costs to the environment. A big source of pollution is household waste. Landfills that treat waste produce methane, a key greenhouse gas, estimated to be 21 times more harmful than carbon dioxide. That is why China is encouraging landfills to capture methane. But the local capacity to handle this doesn’t always exist.
At the same time, the global energy squeeze is prompting officials to consider new ways of generating electricity. “China also has an ambitious program to develop renewable energy sources and to increase their role in the overall energy mix,” said David Dollar, World Bank Country Director for China.
Converting Waste to Energy
|“China also has an ambitious program to develop renewable energy sources and to increase their role in the overall energy mix,” according to World Bank Country Director David Dollar.|
As part of this effort, the city of Beijing aims to convert 40 percent of waste into energy by 2010 and is planning to build four waste-to-energy treatment plants to achieve this target. MIGA, a private sector arm of the World Bank Group, helped to secure financing for the first plant with $25 million in investment insurance for Golden State Waste Management Corporation.
Beijing accounts for some 11,000 tons of trash a day, with 60-70 percent of trash going into methane-emitting landfills. “This project is sending 1,600 tons of garbage from Chaoyang District to the incinerator to generate electricity,” said Lawrence Shi, Vice President of Golden State Waste Management Corporation. “This will reduce pollution to the environment and to underground water, as well as help save the land that is used for landfills.”
As Beijing’s first incineration project, the investment is serving as a model for other waste treatment projects planned by the government.
“This project is key for Beijing during the Olympics, but it’s also important to meet our long-term environmental goals,” said Xu Jin Xin, Director of Chaoyang District Administrative Committee.
“It’s also very necessary because right now there is no waste management, and it is through the incineration process that we convert waste into a resource and help improve the environment. Another benefit is the power plant is turning waste into a resource to provide people with electricity.”
Although the main goal of the project is to manage waste, rather than generating power, the electricity produced by the plant can complement power generated by coal and fossil fuels, Shi added.
MIGA Helps Investors Overcome Risks
MIGA’s political risk insurance helps mitigate the risks that typically affect infrastructure projects, such as contract breaches. The agency’s work to reduce the impact of climate change focuses on moving developing countries onto a lower carbon path by exploiting renewable energy resources, supporting energy conservation, and increasing efficiency.
|The city of Beijing is planning to build four waste-to-energy treatment plants by 2010. MIGA is supporting the first of the four plants.|
“Addressing climate change is central to the World Bank Group’s development and poverty reduction agenda,” said Moina Varkie, Director of External Outreach and Partners in MIGA. “We are pleased to be associated with a project that not only reduces carbon emissions, but also helps to conserve scarce landfill capacity in the face of burgeoning urban growth—while generating electricity from a renewable resource. This is truly a win-win-win situation.”
MIGA specializes in mitigating the noncommercial risks faced by infrastructure investments, especially those where local governments are involved.
“The biggest plus from MIGA is the confidence MIGA’s insurance gives to investors, especially international investors,” according to Charles Shen, Deputy Financial Controller with GSE Investment Corporation. “We know that political risk is not an issue for us since we have been in this market for 20 years. But for international investors, they don’t have such knowledge, such experience.”