China Energy Transition Towards Carbon Neutrality Project

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The proposed project will contribute to address key barriers to the energy transition in the electricity and heating sector, including heating sector decarbonization, renewable energy integration, electricity market reforms and renewable energy demand boost. Based on the issues to be addressed, the project is consisted of the following three components.Component 1. National Policy and Regulatory Framework for the Energy Transition. This component will provide technical assistance to support policy and regulatory framework to facilitate the energy transition in the electricity and heating sector and address key barriers. Technical assistance activities will largely aim at five selected key areas where the Bank engagement and international knowledge sharing can bring additional value, including (a) improving legal framework for the energy transition in the electricity and heating sector and building institutional capacity for roadmaps and action plans to achieve carbon peaking and carbon neutrality; (b) advancing electricity market reforms to cope with the increasing penetration of variable renewable energy; (c) facilitating renewable energy integration by improving interprovincial transmission and energy storage deployment and exploring innovative solutions; (d) boosting renewable energy consumption on demand side; and (e) preparing policy framework to support a just transition of fossil-fuel dependent regions and mitigate adverse economic, social and environmental impacts of the energy transition. Component 1 will also support generating knowledge and lessons from provincial pilot and demonstration under Component 2 to inform national policies to replicate across provinces.Component 2. Provincial Pilot and Demonstration. This component will support the pilot implementation of selected approaches to address key barriers to the energy transition at provincial level. Five provinces have been preliminarily selected by NEA and the Bank, including Shaanxi, Qinghai, Zhejiang, Anhui, and Hainan, to be finalized during the first year of implementation. Funded activities under this component will support preparatory analytic work to inform pilot investment or finance small-scale physical procurement for capacity building. Selected pilots are closely linked with the proposed activities under Component 1. The results of the pilot and demonstration will provide empirical evidence to NEA in formulating relevant national policies and regulations for scaling up and replication across China. The selected provincial pilot and demonstration will target the areas including heating sector decarbonization, renewable energy integration, and promoting renewable energy consumption on demand side.Component 3. Capacity Building and Project Management. This component will support institutional capacity building for advancing the energy transition and project management, including monitoring and evaluation of the project outcomes. Trainings, workshops and study tours for the relevant institutions and organizations will be supported for capacity building and knowledge sharing. Regarding project management, NEA has established a project management office (PMO) and it will be maintained during the overall project preparation and implementation period. The PMO is responsible for daily project management.