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Promoting Industrial Water Efficiency in China November 13, 2013.

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Presentation on theme: "Promoting Industrial Water Efficiency in China November 13, 2013."— Presentation transcript:

1 Promoting Industrial Water Efficiency in China November 13, 2013

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3 China is Facing Serious Water Scarcity  Only 2,000 m 3 of freshwater resources available per person Close to UN “stressed” levels  Water supply-demand gap at 50 billion cubic meters Risk for economic growth  Untreated wastewater causing increasing pollution Adds to water supply problem  Chinese government focusing on “supply” solutions South-North Diversion Project Seawater desalination 3

4 Water Availability in China is Unevenly Distributed 4

5 Industrial Water Demand Continues to Grow… 5

6 Water Tariffs are Rising….But Still Cheap 6 What other “valuable” resource can you buy for 30 US cents per ton?

7 IFC Program: Demand Side Water Management Business Case Market Awareness Access to Finance Help private sector address business risks, reduce costs, and grow sustainably Beyond simple modifications to projects with significant developmental impact Beyond consultant audits to facilitate project financing via IFC partner banks Work with industry associations, NGOs, and government stakeholders to leverage impact 7

8 Challenges in Promoting Water Efficiency Energy Efficiency (EE)  Strong business case due to relatively high energy prices  Strong Chinese government support for energy security reasons  Mandatory reduction targets and financial incentives  Global interest because of direct linkage to GHG reductions  EE modifications typically do not require process modifications Water Efficiency (WE)  Weak business case because of very low water tariffs  Weak or inconsistent local enforcement for wastewater  No single central agency responsible for water issues in China  Water scarcity considered a regional or local issue  WE typically requires plant-specific technical solutions 8

9 Conducted Sector Screening Textile Dyeing & Printing Pulp & PaperChemicalsPharmaceuticalsDairy Processing Food and beverage Semiconductors Metal plating/finishing PetrochemicalsPower plantsIron & Steel 9 Focus on sectors that are water AND energy intensive AND under regulatory pressure Better Business CaseBetter Replication/Scale Dropped sectors mostly dominated by SOEs in China PetrochemicalsIron & Steel Evaluated industries that are inherently water intensive Physical/Regulatory risksReputational Risks

10 First Sector Targeted: Textile Dyeing & Printing Economically significant for China  USD 254 billion in textile exports  50% of global fiber production  2,500 dyeing and finishing (wet processing) mills Uses a lot of water, energy, and chemicals  8 billion tons freshwater per year  50 million tons coal equivalent (TCE) per year  No.2 in chemical oxygen demand (COD) and No.3 in wastewater discharge among 39 industries Focus for global brands, NGOs, regulators  Rising labor costs forcing attention on WE/EE  Supply Chain Sustainability 10 Dyeing and Printing uses up to 200 tons of water per ton of fabric

11 Case Study: Fabric Dyeing & Finishing Mill in Guangdong IFC developed cost-effective projects  Improve metering, replace inefficient dyeing machines, recycle hot wastewater etc. Estimated developmental impact  Save 0.54 million m 3 /yr water  Save 16,830 MWh/yr energy  Avoid 5,340 ton/yr GHG emissions Facilitating financing via IFC partner bank  6 million RMB loan at 3-yr tenure; consistent with payback period 11

12 IFC Program Results.. The First Year 12 Demonstrating Business Case for WE Projects  Firm level advisory and audits at 22 textile facilities  Developed 47 cost effective projects with payback from 6 months to < 4 years  Could save 15 million m 3 /yr water and 300,000 ton/yr GHGs if all projects implemented Promoting Water-Efficiency Financing  Total investment needs 200 million RMB and operational cost savings about 70 million RMB  Bank of Beijing evaluating proposals worth 55 million RMB  IFC evaluating direct investment in clean technology equipment/chemical vendors

13 The Bottom Line….Connecting the Drops Water stress in China is real Climate change impacts could further impact water availability and impede economic growth Industries need to act now to manage operational and regulatory risks Many water efficiency projects do make good business sense especially if they also save energy 13

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