In many cities across the People’s Republic of China (PRC), fast-growing populations with more disposable income have resulted in greater vehicle ownership. Although cities have tried to keep pace with this growth by investing in more roads, urban areas across the country continue to suffer from traffic congestion.
In addition, air pollution in some major cities has reached dangerous levels. Many of the country’s 500 larger cities do not meet the air quality standards recommended by the World Health Organization. In response, many local governments—with the support of the national government and private companies—are promoting the use of public transport, particularly modern, clean, and efficient bus fleets.
“Clean energy vehicles are extremely important for improving the environment and air quality, and helping citizens travel,”
The city of Qingdao in Shandong Province, along the country’s east coast, is one of those areas where the local government is working with local companies to clean up the air and cut traffic with the use of modernized bus fleets.
“Clean energy vehicles are extremely important for improving the environment and air quality, and helping citizens travel,” says Mao Defeng, deputy general manager of Jowin Group Corporation, the company that operates clean buses in Qingdao city. “In recent years, we have been focusing on clean public transport and clean new energy vehicles. As a state-owned enterprise, our group is obliged to do our part to contribute.”
This expansion of clean bus transport has not come without its challenges. Many local bus companies are not able to find the financing to modernize their fleet, or they are already in debt. Some rely on government subsidies to prevent them from operating at a loss. Many banks are reluctant to make large loans to such companies.
Leasing: A Flexible Solution
To overcome the financing challenges, transport companies have turned to leasing arrangements that offer greater flexibility than ordinary bank borrowing and purchasing of new buses. Leasing allows bus operators to obtain larger amounts of longer-term financing at more competitive rates.
The International Far Eastern Leasing Company Limited has been active in this type of work. “Our clean bus leasing business is positioned to be professional, one-stop, and tailor-made,” says Yongjun Yang, general manager of their Public Utilities Business Unit. “We aim to provide effective solutions for the public transport enterprises that need funding.”
Financing Clean Buses
To support this work, the ADB-financed Loan Program for Clean Bus Leasing is funding the leasing of buses running on cleaner fuels, buses that are energy efficient or use new energy sources, and conventional buses that meet the most advanced environmental regulatory standards for emissions.
“It is much cleaner to drive electric buses and the cost is three to four times less than operating a diesel bus,”
Since it joined the ADB-backed program, the Baoding Public Transport Corporation, a bus operator in Hebei Province, has registered more than 1,300 vehicles and about 70% of them are powered by clean, new energy sources. This includes electric buses that use a charging station that can charge 200 buses per day.
“We charge the vehicles during off-peak hours when the cost of electricity is lower to keep costs down,” explains Cao Chunguang, head of the Technical Equipment Department of the corporation. “It is much cleaner to drive electric buses and the cost is three to four times less than operating a diesel bus,” says Gao Junlin, director of the company’s charging station.
Clean Buses Make a Difference
The program is financing as many as 5,000 leased buses that run on cleaner fuel, including compressed natural gas and liquefied natural gas, as well as electric and hybrid buses. The program, which is ADB’s first private sector loan to support sustainable transport in PRC, is expected to help achieve 1.3 million tons of greenhouse gas emissions savings per year by 2019.
As part of the program, companies have provided $375 million in lease financing for clean buses to more than 15 public transport operators. At least 30% of public transport operators receiving financing from the program are located in less-developed inland or western provinces.
The new buses have been received well by commuters and operators alike. “Electric vehicles are energy saving and environment-friendly,” says Li Yongzhi, a 53-year-old bus driver in Qingdao city. “They run on automatic transmission, which allows very stable starting and extremely low noise, much lower than the noise made by diesel vehicles.”