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Promoting Industrial Water Efficiency in China November 13, 2013

Promoting Industrial Water Efficiency in China November 13, 2013. 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

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Promoting Industrial Water Efficiency in China November 13, 2013

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  1. Promoting Industrial Water Efficiency in ChinaNovember 13, 2013

  2. 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

  3. Water Availability in China is Unevenly Distributed

  4. Industrial Water Demand Continues to Grow…

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

  6. IFC Program: Demand Side Water Management

  7. 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. Conducted Sector Screening

  9. First Sector Targeted: Textile Dyeing & Printing • Economically significantfor 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 Dyeing and Printing uses up to 200 tons of water per ton of fabric

  10. 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

  11. IFC Program Results .. The First Year • 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

  12. 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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