The Asian Development Bank (ADB) has arranged a US$200mn credit facility for waste-to-energy (WTE) projects in China.

The bank will provide half the money in the form of a direct loan, with the other half coming from a syndicate of commercial banks in 2013.

The finance is for China Everbright International and it will be used to develop agricultural and municipal WTE projects in China, to offset the environmental impact of the disposal of such waste.

Shuji Hashizume, investment specialist within the ADB’s infrastructure finance team, tells GTR that the direct loan has a tenor of 10 years, a length that “is really not available in the commercial market right now”. While he is unable to confirm the pricing, he says that it is “market-based”.

US$120mn of the finance will go towards the agricultural WTE project, with the balance going towards municipal WTE. The facility has not been allocated to any projects in particular, but can be drawn upon when China Everbright identifies projects that require funding.

While the details of the syndicate have yet to be finalised, Hashizume is confident that the ADB won’t have difficulty finding commercial banks to participate.

He tells GTR: “We had our first transaction with China Everbright three years ago and earlier this year we syndicated a US$100mn loan for municipal WTE. The overall market isn’t good, but given our experience and the name value of China Everbright in China and Hong Kong I think I’ll be able to syndicate again on reasonable terms and conditions.”

WTE is a form of biomass. In the agricultural instance, agricultural residue such as bark and stalks are incinerated in order to generate electricity. China is the world’s biggest producer of agricultural waste, producing 700 million tonnes of crop straw alone in 2010.

It’s hoped that the combined facilities will generate around 1,240GW of electricity per year by 2016. WTE is a tactic being employed by the Chinese government to reduce greenhouse emissions and to help mitigate climate change.

China Everbright is part of a state-owned corporation, but in the context of China, it is treated as a private company. It is listed on the Hong Kong Stock Exchange, half the shares aren’t state-owned and it is independently managed.