promoting industrial water efficiency in china november 13, 2013
TRANSCRIPT
Promoting Industrial Water Efficiency in China
November 13, 2013
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China is Facing Serious Water Scarcity
Only 2,000 m3 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
Water Availability in China is Unevenly Distributed
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Industrial Water Demand Continues to Grow…
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Water Tariffs are Rising….But Still Cheap
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What other “valuable” resource can you buy for 30 US cents per ton?
IFC Program: Demand Side Water Management
Business Case
Market Awarenes
s
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
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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 solutions8
Conducted Sector Screening
Textile Dyeing & Printing
Pulp & Paper
Chemicals
Pharmaceuticals
Dairy Processing
Food and beverage
Semiconductors
Metal plating/finishing
Petrochemicals
Power plants
Iron & Steel
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Focus on sectors that are water AND energy intensive AND under regulatory pressure
Better Business Case Better Replication/Scale
Dropped sectors mostly dominated by SOEs in China
Petrochemicals Iron & Steel
Evaluated industries that are inherently water intensive
Physical/Regulatory risks Reputational Risks
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
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Dyeing and Printing uses up to 200 tons of water per ton of fabric
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 m3/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
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IFC Program Results .. The First Year
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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 m3/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
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
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