World Bank loan supports energy transformation and heating sector reform in Shaanxi province

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-emission energy sources in the heating sector and to promote a pilot pricing reform program in the heating sector in China’s Shaanxi province.

China’s heating sector relies heavily on coal and natural gas, which accounts for about 10% of the country’s total greenhouse gas (GHG) emissions. Unlike the power sector, where renewable energy is growing rapidly, 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 the supply of heat from renewable and low-carbon sources, including geothermal, waste heat and electricity. It also supports pricing and billing reforms to improve the financial stability of the heating sector. The funding will support investment in the necessary infrastructure and an inclusive process for designing and implementing the reform pilot program. The project will help China meet its climate goals of reaching a carbon peak by 2030 and carbon neutrality by 2060, and contribute to global public goods.

“The Shaanxi Energy Transition and Innovation Demonstration in the Heating Sector Project aims to help China demonstrate a path to facilitate energy transition in the heating sector through a comprehensive approach on both the 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 that can be shared with other provinces in China and other countries where heating demand can be replicated.”

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