The Asian Infrastructure Investment Bank said on Monday it had approved its first loan in China – US$250 million to utility company Beijing Gas Group for pipeline projects in the nation’s capital.

The announcement came amid surging demand for gas after the government this year ordered millions of households and industrial plants across northern China to switch to gas heating from coal as part of its campaign against air pollution.

The capital has separately announced that it will restart a coal-fired power plant to help ease a shortage of gas, state-owned media China Economic Net reported on Monday.

“Considering the current situation of gas supply and demand, the National Development and Reform Commission has asked our city to immediately resume the backup coal-fired power plant run by China Huaneng Group,” the Beijing Municipal Commission of City Management was quoted as saying in a statement.

The Huaneng coal-fired power plant, with installed capacity of 845 megawatts, was shut in March in a bid to reduce harmful emissions in the city.
The Ministry of Environmental Protection told northern regions last week to allow coal burning in places that have not converted to gas or electric heating to ease gas supply shortages.

For the AIIB project, the bank said it would connect more than 216,000 households in Beijing to an extended natural gas pipeline network.

On completion, and after subtracting the emissions from burning natural gas, the project is expected to reduce annual carbon dioxide emissions by 595,700 tonnes, particulate matter by 3,700 tonnes, sulphur dioxide by 1,488 tonnes and nitrogen oxide by 4,442 tonnes, the statement said.

AIIB President Jin Liqun said China’s commitment to reducing its reliance on coal would change lives and improve the environment.

“That is why we are investing in a project aligned with their ambitious plan,” he said.

He reaffirmed AIIB’s “unwavering commitment” to helping members meet their environmental and development goals, especially their commitments under the Paris Agreement.

“It is only fitting that our first investment in China will introduce sustainable infrastructure that will reduce greenhouse gas emissions and help invigorate one of the most important economic hubs in Asia,” Jin said.

The investment also represents AIIB’s first corporate loan, the bank said, adding that the project involves building gas pipes and installing consumption meters.

Beijing Gas aims to finish the project by 2021.