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Challenge

The World Health Organization (WHO) estimates that 4.2 million premature deaths were caused by ambient air pollution worldwide in 2016, of which 40 percent occurred in China. In 2012, Hebei had an annual average ambient PM 2.5 concentration of 112.9 ¦Ìg/m3, the highest in the region and the country.  Tianjin had a concentration level of 112.7 ¦Ìg/m3, and Beijing of 88 ¦Ìg/m3. The annual average ambient PM 2.5 concentration for the Beijing-Tianjin-Hebei (Jing-Jin-Ji) region was three times higher than the new Standard II of 35¦Ìg/m3 set by the Government of China. At the time, Hebei¡¯s air pollution challenges were the result of a large concentration of highly polluting industries and vehicles, coupled with a large agricultural sector.

Approach

Hebei was a key region where China has focused its fight against air pollution. In 2013, Hebei announced an ambitious five-year action plan outlining a series of measures to reduce air pollution, across all sectors including reducing industrial air pollution, transport and agricultural emissions. The target was a 25 percent reduction of PM 2.5 concentration by 2018. In 2016, the World Bank approved a US$500 million loan to support the implementation of air pollution reduction measures using the Program-for-Results (PforR) tool, which links loan disbursements to tangible results.

The Hebei Air Pollution Prevention and Control Program has supported effective utilization of the continuous emission monitoring system, which has been established to track and enforce compliance by all major industrial enterprises (more than 2,000) in the province.  Data collected through the system is also used by the government to analyze emission trends and inform policymaking. A public information channel allows anyone interested to check emission information on any company.

Results

From 2017 to 2019, the central government and Hebei provincial government committed US$2 billion to implement over 200 specific measures across all sectors under the Hebei Province Air Quality Action Plan. With a tight timeline to deliver results, the PforR program helped implement Hebei¡¯s action plan.

To reduce emissions from key industrial sectors, Hebei issued the most stringent industrial emission standards in the country.

To cut transport emissions, more than 4,000 diesel buses were phased out and replaced with electric buses in the province.  The program also financed replacement of the traditional coal stoves with gas stoves to reduce indoor air pollution and coal emissions, benefitting over 1.2 million rural households.

It also addressed emissions from the sectors that tend to be overlooked but could make substantial impact by, for example, improving the efficiency of fertilizer use in agriculture.

These targeted measures have started to pay off. Hebei¡¯s annual average PM2.5 concentration level decreased by almost 40 percent by the end of 2017 compared with 2013, and the deployment of clean heating has reduced annual carbon dioxide emissions by six million tons, equivalent to taking 1.2 million gasoline passenger vehicles off the road per year. 

Bank Group Contribution

The US$500 million loan from the International Bank for Reconstruction and Development (IBRD) leveraged US$2.9 million in funding from the Pollution Management and Environmental Health trust fund supported by Germany and Norway, and US$3.4 million in funding from the Global Environment Facility to bring in international best practices through technical assistance.

Partners

This program has benefited from a strong partnership among several development partners to address air pollution challenges in Hebei. In addition to the World Bank loan, the Asian Development Bank (ADB) provided a US$300 million policy loan with EUR150 million in parallel financing from KfW, the German Development Bank.

Moving Forward

This is the first PforR operation led by the Government in China. Implementation of the result-based instrument provided useful experience and lessons learned for future China-World Bank collaboration, with a focus on using the World Bank operation to leverage about US$2 billion government funding (2017-2019).

The loan collaboration also supported Hebei Province in building institutional and technical capacity and developing a new phase of its air-quality action plan for 2021-2025 using international best practice and robust methodologies. The experience generated in China can be replicated in other countries and regions facing similar challenges in air pollution, such as India and Vietnam.

Beneficiaries

Ms. Bai Huifang, 46, is a resident in Nanzhao Village. ¡°We used to carry coal into our house every day. Despite all the cleaning, our house was always dirty and covered in coal dust.¡± Bai installed a new gas stove in 2016 with a subsidy to help pay for a new stove, which she uses for both cooking and heating. ¡°It is clean and convenient.¡± Like Bai, millions of families in Hebei have installed gas stoves. The government invested in the pipeline network and household connections and subsidized the cost of stoves and gas in the first three years.