The Asian Development Bank (ADB) is providing a $130 million (£86m) loan to slash coal use in Qingdao, China.
The project aims to tap low carbon power sources such as natural gas, solar, thermal and waste heat recovered from industrial plants, instead of coal.
It will use the energy to power its district heating, cooling and power production and distribution systems.
China will install small natural gas boilers, a waste heat recovery system from sewage plants and industries, heat pump systems, a solar heating system, a heat storage system and pipelines in eight locations across the city.
The municipal government’s Qingdao Energy Group will also provide $133.6 million (£88m). The project will run for around five years with an estimated completion date of December 2020.
Teruhisa Oi, an ADB Senior Energy Specialist said: “Qingdao like many cities in the PRC which have large power needs for heating in the cold winter months, suffers from poor air quality because of its heavy reliance on coal-fired energy generation and it is committed to sharply scale back its use of fossil fuels.
“This assistance will help the city adopt a non-coal based energy system and low-temperature heat distribution network which will help lower energy intensity by 40% and carbon intensity by 64% from the averages seen in systems in other parts of the northern PRC.”
The UK Committee on Climate Change (CCC) recently signed an MoU to work with China on climate change risk assessments.