OREANDA-NEWS. January 17, 2013. Recently, Agricultural Bank of China Limited (ABC) successfully concluded its first "Energy Management Contract Financing" business. This business provides the "Coke Dry Quenching (CDQ) Project" of Shandong Iron and Steel Company Ltd. with consultancy on energy saving and emission reduction and financing services. Once established, the project is expected to save 53,100 to 66,000 tons of standard thermal coal for the company each year, helping the company to effectively reduce the cost of production and considerably reduce the pollutant discharge, reported the press-centre of ABC.

The "Energy Management Contract Financing" business is an innovative financial business. It is especially developed by ABC according to the Green Credit Guidelines issued by the China Banking Regulatory Commission, to save energy and reduce emission through Energy Management Contract ("EMC" hereinafter) mode. It is also the first specialized EMC financing product introduced by a state-owned commercial bank. EMC is a mechanism aims at promoting energy conservation and emission reduction by means of the market, which has been strongly supported by the Chinese government in recent years. In EMC, energy-saving companies help enterprises to reduce capital and technological risks in energy-saving reforms with their expertise.

They accomplish this through investments in energy-saving reform projects and providing energy-saving services for energy-consuming enterprises (such as power plants, iron and steel works, and hotels). Finally, they recoup the investments and gain reasonable profits by sharing energy-saving benefits. The Development Plan for Energy-Saving and Environmental Protection Industry under the Twelfth Five-Year Plan of China stated that by 2015, EMC will become one of the major means for the energy-saving reforms of domestic enterprises. The output value of the industry will rise from RMB83 billion in 2012 to RMB800 billion in 2015, and there will be about 70 professional service companies with output values over RMB1 billion in China.

The energy-saving and environmental protection industry, with a promising prospect, is one of the seven strategic emerging industries of China. By launching the "EMC Financing" business, ABC seized the opportunities brought by energy-saving and emission reduction reforms of traditional sectors and the arising of strategic emerging industries, which accelerated the innovation of financial products and services. It is another important action ABC took to support the green development strategy of China.