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Credit line for China targets green energy, Wind industry likely to benefit from united states export aid

For the first time, the Chinese government is expected to get a $50 million credit line from the US Export-Import Bank to help finance "environmentally superior" projects involving renewable energy -- most likely including wind power -- and energy efficiency. The proposal was announced by US Department of Energy (DOE) officials after a two day meeting in Washington DC between top government energy officials from both countries on bilateral energy co-operation. If approved, the credit line will be only the third time the bank has targeted environmentally friendly technology for such "tied-aid."

"We're encouraged to see the Export-Import Bank taking this step," says Randy Swisher of the American Wind Energy Association. The Ex-Im Bank, as it is often known, is a federal agency for creating domestic US jobs by helping exports that would otherwise not happen because US companies are competing against foreign government subsidised bidders. The proposed "credit facility" must still be approved by the bank's board of directors, a process that could take weeks or even months.

Energy Secretary Federico Peña led the US delegation and China's was headed by Vice Chairman of the State Planning Commission, Ye Qing. The DOE is to work closely with US companies already in China and to provide technical assistance. The announcement also came after a day long meeting between private industry and the official Chinese delegation, sponsored by the US-China Business Council. Among those addressing the meeting was Bob Kelly, chief executive officer of Enron Renewable Energy Corp, which owns Enron Wind Corporation (EWC), as Zond Corp is now known. Zond, which sold $12.5 million in wind equipment to China supported by three Ex-Im loans, is described as one of the bank's California success stories. Sales from the $11 million in loans (Windpower Monthly, July 1996) helped generate jobs at Zond and at suppliers in four other states, says Ex-Im bank.

Catching the small ones

The China credit line, which, once approved, will come into play if there is sufficient demand for projects, would be to finance ventures in the $5-$10 million range using renewable technologies such as wind, photovoltaics, biomass, and small co-generation projects. These are the "smaller projects that often go under the radar screen" of the bank, says Marc Chupka at the DOE. In the last five years, the bank has financed more than $10 billion in exports, resulting in an estimated 145,000 jobs. "I think there's a high degree of interest among US companies, " he adds. "I think this is meant to bring greater financial muscle that will attract companies not already investing in China." Debt repayment will be over 12 years under standard OECD terms for credit.

It is unusual for the bank to be involved in a credit facility that is specific to one area of industry, says Ex-Im's Judy Katz-Nath. Ordinarily, credit is extended to a bank or government simply to enable more purchases of US goods. However, when the bank was re-chartered by the US Congress in 1992, it was mandated to target "green" exports. Since then, $10 million was extended to Brazil and $30 million to Poland, both for environmentally-beneficial technologies, but not specifically those that are energy-related. China's potential for renewables and efficiency is seen as vast and untapped and the US, she notes, is a leader in clean energy technologies.

During the two days of government meetings, the officials discussed a broad range of issues, including nuclear technology, "clean coal" technology, China's need for increased foreign investment in its energy sector, and environmental issues such as global warming. After the meetings, the countries also decided to hold an oil and natural gas forum early next year to consider ways US energy companies can increase their role in China.

China's grid connected wind capacity is now close to 100 MW according to industry sources, although the Xinhua news agency reports the total as 47 MW in 14 wind farms in the northwest and southeast. The country also has an estimated 150,000 plus mini wind generators. The Chinese government has announced a target of 1000 MW of wind power by the year 2000, a goal that it insists can only be met with international financial and technological co-operation. Wind development has been given special priority in China's ninth five year plan, along with solar heating and lighting and rural electrification.

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