Cover Note
Program Title: China: End Use Energy Efficiency Project (EUEEP)
Date: 9 September 2002
/ Work Program Inclusion / Reference/Note: /1. Country Ownership
· Country Eligibility / · Cover Sheet Page 1 (UNFCCC Ratified January 5, 1993)
· Country Drivenness / Clear description of program’s fit within:
· National reports/communications to Conventions
· National or sector development plans
· Recommendations of appropriate regional intergovernmental meetings or agreements. / · Page 5, 1st paragraph describes links with the ongoing CCEAP in China.
· Section A4 describes energy conservation progress in China including relevant national strategy, policy and measures, as well as the long-term opportunities to improve energy efficiency in China
· Page 6, last paragraph mentions the country’s commitment to global agreements on sustainable development.
· Endorsement / · Endorsement by national operational focal point. / · National GEF OFP endorsement letter in Annex C
2. Program & Policy Conformity
· Program Designation & Conformity / · Describe how program objectives are consistent with Operational Program objectives or operational criteria. / · Cover Sheet Page 1, Section 2
· Program Design / · Describe:
· Sector issues, root causes, threats, barriers, etc, affecting global environment.
· Program logical framework, including a consistent strategy, goals, objectives, outputs, inputs/activities, measurable performance indicators, risks and assumptions.
· Detailed description of goals, objectives, outputs, and related assumptions, risks and performance indicators.
· Brief description of proposed program activities, including an explanation how the activities would result in program outputs
· Baseline and alternative scenarios
· Global environmental benefits of program.
· Incremental Cost Estimation based on the program logical framework.
·
· Describe program outputs (and related activities and costs) that result in global environmental benefits
· Describe program outputs (and related activities and costs) that result in joint global and national environmental benefits.
· Describe program outputs (and related activities and costs) that result in national environmental benefits.
· Describe the process used to jointly estimate incremental cost with in-country program partner.
· Present the incremental cost estimate. If presented as a range, then a brief explanation of challenges and constraints and how these would be addressed by the time of CEO endorsement. / · Barriers, gaps, relationship between gaps and programme activities are described in sections C to F
· The logical framework matrix is presented in Annex B.
· The project goals, objectives and sub-objectives are described in Section H. Risks and sustainability described in Section J. Description of objectives and activities (OVIs, MOVs and assumptions) are in Section H and Annex B. Milestones of the project are in Annex G.
· Baseline and alternative scenarios are described in Annex A-1 and Section D.
· Baseline and alternative scenarios are described in Annex A-1 and Section D (pp 14-16).
· Global environmental benefits of the project and that of the envisioned EE program are described in Section I and Table 6.
· Annex A provides an estimation of the incremental costs.
· Annex A provides information on the distinction between global and domestic benefits from the baseline and incremental activities.
· Incremental costs were calculated by cooperating with programme stakeholders in estimating baseline & the programme increment. A description of the modality of work with the stakeholders is provided in Section K.
· Table 8 provides information on incremental cost and co-financing for EUEEP. Incremental cost analysis is presented in Annex A-1.
· Sustainability (including financial sustainability) / · Describe proposed approach to address factors influencing sustainability, within and/or outside the program to deal with these factors. / · Sustainability issue is discussed in Section J, and as an integral element of all project activities.
· Replicability / · Describe the proposed approach to replication, (for e.g., dissemination of lessons, training workshops, information exchange, national and regional forum, etc) (could be within program description). / · This is part of all major project components and is outlined in Annex E.
· Stakeholder Involvement / · Describe how stakeholders have been involved in program development.
· Describe the approach for stakeholder involvement in further program development and implementation. / · Stakeholder involvement in the project development and future implementation was presented in Section K.
· Monitoring & Evaluation / · Describe how the program design has incorporated lessons from similar programs in the past.
· Describe approach for program M&E system, based on the program logical framework, including the following elements:
· Specification of indicators for objectives and outputs, including intermediate benchmarks, and means of measurement.
· Outline organizational arrangement for implementing M&E.
· Indicative total cost of M&E (maybe reflected in total program cost). / · Previous and on-going initiatives that have influenced the design of the EUEEP are presented in Section B.
· Monitoring and evaluation is described in Section M and more detailed discussions on monitoring and evaluation approaches and arrangements are in Annex G.
· Indicators for objectives and outputs are listed in Annex B.
· The cost for M&E is specified as a separate budget line (Annex A-2).
3. Financing
· Financing Plan / · Estimate total program cost
· Estimate contribution by financing partners.
· Propose type of financing instrument / · Cover page, section 3
· Implementing Agency Fees / · Propose IA fee / · Justification for associated fees will be submitted to GEFSEC. This is not stated explicitly in the document
· Cost-effectiveness / · Estimate cost effectiveness, if feasible.
· Describe alternate program approaches considered and discarded. / · The cost-effectiveness is calculated to be US$1.40/tonne of carbon as described in Section I.
4. Institutional Coordination & Support
IA Coordination and Support
· Core commitments & Linkages / Describe how the proposed program is located within the IA’s:· Country/regional/global/sector programs.
· GEF activities with potential influence on the proposed program (design and implementation). / · Section B presents the previous and on-going activities and their relationship with the present EUEEP.
· Consultation, Coordination and Collaboration between IAs, and IAs and EAs, if appropriate. / · Describe how the proposed program relates to activities of other IAs (and 4 RDBs) in the country/region.
· Describe planned/agreed coordination, collaboration between IAs in program implementation. / · The EUEEP takes into consideration of the energy efficiency initiatives carried out by the World Bank in China and activities in the EUEEP build on and reinforce the work of the World Bank projects. Similar coordination efforts with projects funded by US/EPA, Energy Foundation, FFEM and UN Foundation have been coordinated during project design.
5. Response to Reviews
Council / Respond to Council Comments at pipeline entry.
Convention Secretariat / Respond to comments from Convention Secretariats.
GEF Secretariat / Respond to comments from GEFSEC on draft project brief.
· Additional text clarifying incentives to encourage the use of energy efficient equipment & system
· Coordination with Air Conditioner activities initiated by SEPA
· Strengthened monitoring and evaluation
· Private co-funding
· Support in the implementation of Energy Conservation Law / Attached as Annex C
· New activities built in Section D and Annex C,pg C11-12
· Fully addressed in Annex E Activities A3.1, A. 3.3 and section L-1
· A new Section I and the modified Annex H and E considerably enhance arrangements.
· Private co-funding added for the first phase on Page 5 with a detailed explanation in Annex I.
· Further highlighted on Page 1, under Summary section
Other IAs and 4 RDBs / Respond to comments from World Bank on draft project brief.
· Associated financing.
· Strengthening coordination arrangement.
· Descriptions of goods and services as project input
· Description of World Bank activities relevant to the project / Attached as Annex C
· Modified on Page 2 in the Summary section and explained in Annex I based on consultation with the Government and best estimate of delivery of the ESCo Phase II Project.
· Included in the revised Section L3.
· Addressed in Annex C. and will be specified in detail in the project document prior to CEO endorsement
· Refer to the revised Section B.
STAP / Respond to comments by STAP at work program inclusion / Attached as Annex C to this Brief.
Review by expert from STAP Roster / Respond to review by expert from STAP roster.[1]
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PROJECT BRIEF
1. IDENTIFIERS:
PROJECT NUMBER:
PROJECT NAME: China End-Use Energy Efficiency Project
DURATION: 3 years
IMPLEMENTING AGENCY: United Nations Development Program (UNDP)
EXECUTING AGENCY: Government of China, State Economic & Trade Commission, SETC
REQUESTING COUNTRY: China
ELIGIBILITY: UNFCCC Ratified January 5, 1993
GEF FOCAL AREA: Climate Change
GEF PROGRAMMING FRAMEWORK: Operational Program #5 Removal of Barriers to Energy Efficiency & Energy Conservation
2. SUMMARY:
The China: End-Use Energy Efficiency Project (EUEEP) is designed in support of the first phase of a 4-phase, 12-year strategic plan developed by the Chinese government to dramatically improve the efficiency of its major end-use sectors, buildings and industry. The project fosters a strategic approach to developing, implementing and enforcing a comprehensive and effective energy conservation policy and regulatory system consistent with the objectives of the Energy Conservation Law of 1998. The project’s purpose is the removal of barriers to the widespread application and practice of energy conservation and energy efficiency in the major energy consuming sectors (buildings and industrial) in China. This will be achieved through partnerships with donors in assisting China establish a sustainable and market-based energy efficiency focus, which will lead to improved economic productivity, reduced greenhouse gas emissions and an improved global environment. Success in implementing such partnerships will strengthen China’s capabilities to aggressively pursue energy efficiency as it makes the transition from a centrally planned economy to a market-based economic system. For the 3-year EUEEP, carbon emissions reductions of approximately 12 million tonnes will be reduced on a cumulative basis (equivalent to over 42 million tonnes of CO2). This will be achieved by reducing energy consumption in these sectors by nearly 19 million tonnes of coal equivalent (tce) over this 3-year time period. If the full 12-year Chinese program is implemented, the cumulative carbon emissions reduction will be about 76 million tonnes (279 million tonnes of carbon dioxide) over the 12-year program lifetime.
3. COSTS AND FINANCING (US$) FOR 3 YEARS:
GEF:
Project $ 17,000,000
PDF-A and PDF-B $ 375,000
CO-FINANCING:
Government: $ 31,000,000
Private: $ 32,000,000 (refer to Annex I)
Total Project Cost: $ 80,375,000
PARALLEL (LEVERAGED) FUNDING:
Private: $1568,420,000
Total Financing: $236,420,000
4. ASSOCIATED FINANCING (over 4 years)
World Bank: $ 22,700,000
Energy Foundation: $ 7,000,000
Total: $ 29,700,000
5. OPERATION FOCAL POINT ENDORSEMENT: Yang Juilin, GEF Operational Focal Point, Ministry of Finance
6. IMPLEMENTING AGENCY CONTACT: Dr. Nandita Mongia, GEF
Regional Manager for Climate Change for Asia and the Pacific, UNDP-GEF, New York, New York USA. Fax 212-906-5825; e-mail:
Manuel L. Soriano, GEF Regional Coordinator for Climate Change – Asia and the Pacific, UNDP-GEF, Kuala Lumpur, Malaysia. Fax: 60-3-20952870; e-mail: .
TABLE OF CONTENTS
A. Background and Context 1
B. Previous and On-Going Projects 9
C. Barriers To Energy Efficiency 11
D. Gaps 11
E. Relationships Between the Gaps and the Project Activities 17
F. Relationships Between Activities and Gaps .19
G. Relationships Between Activities – Crosscutting Perspective 20
H. Rationale and Objectives 22
I. Project Energy Savings and Carbon Reduction 26
J. Risks and Sustainability 27
K. Stakeholder Participation & Implementation Arrangements 29
L. Incremental Costs and Project Financing 34
M. Monitoring and Evaluation………………………………………………………..….35
LIST OF ANNEXES
REQUIRED ANNEXES:
Annex A -- Incremental Cost Analysis A-1
A1. Incremental Cost Matrix A-5
A2. Indicative Phase I Budget A-9
Annex B -- Project Planning Matrix B-1
Annex C -- STAP and World Bank Reviewer Comments & Responses to STAP and World Bank Reviewer Comments. C-1
Annex D -- Government Support Letter D-1
OPTIONAL ANNEXES
Annex E – GEF-Funded Activities in EUEEP and Subsequent Phases E-1
Annex F -- Utilization of Activity Prioritization Criteria F-1
Annex G -- Milestones of EUEEP Implementation G-1
Annex H – Monitoring and Evaluation H-1
Annex I – Industry Co-financing………………………………………………………..I-1
LIST of TABLES
Table 1 – Policy & Regulatory Activities Response To Gaps 19
Table 2 – Institutional/Capacity Activities Response To Gaps 19
Table 3 – Technical Activities Response To Gaps 20
Table 4 – Financial Activities Response To Gaps 20
Table 5 – Informational Activities Response To Gaps 20
Table 6 – EUEEP Carbon & Energy Savings 27
Table 7 – EUEEP Budget 35
Table 8 – Incremental Costs of the EUEEP A-3
Table 9 – Financing of the EUEEP A-9
LIST of FIGURES
Figure 1 – China Energy Demand in Different Scenarios 16
Figure 2 – EUEEP Implementation Structure 34
LIST of ACRONYMS
APR Annual Progress Report
BEE Building energy efficiency
BES Building Energy Standards
CEEP China Energy Efficiency Programme
DRC Department of Resource Conservation and Comprehensive Utilization
EUEEP End-use Energy Efficiency Project
EC&EE Energy conservation and energy efficiency
ECL Energy Conservation Law
ECC Energy Conservation Centre
ECA Energy Conservation Association
EMC Energy Management Company
GEF Global Environmental Facility
LFA Logical Framework Analysis
Mtce Million tonnes of coal equivalent
NGO Non-governmental organization
NPD National Programme Director
PDF-A/B Project Development Fund (Block A or B)
PMO Programme Management Office
PSC Programme Steering Committee
QPR Quarterly progress report
SETC State Economic and Trade Commission
SDPC State Development Planning Commission
tC Tonne Carbon
tce Tonne of coal equivalent
tCO2 Tonne carbon dioxide
UNDP United Nation Development Programme
VA Voluntary Agreement
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A. BACKGROUND AND CONTEXT
A1. EUEEP Project Brief Process in Summary
The Chinese government has developed a long-term, strategic plan for end-use energy efficiency projects in China. Its development has been guided by a wide range of energy experts and stakeholders within various parts of China’s energy domain. The plan fully recognizes that the country faces a number of barriers in achieving its energy efficiency goals and has been designed to address the gaps that exist in current efforts, and to outline interventions necessary to address them.