This initiative aims to promote a set of legal and financial mechanisms to facilitate investment in pollution prevention and energy efficiency.  U.S. equipment and service providers are among the global leaders in pollution prevention, so fostering more investment in this area will boost U.S. export opportunity while advancing sustainable development. 

Proven, cost-effective process and technology upgrades are readily available for factories, commercial buildings and industrial facilities.  However, for many years facility owners have been deterred from making needed improvements by the upfront costs entailed.  By wedding novel finance and legal structures to the proven platform of out-sourced energy services, P2E2 promises to be a powerful enabler of green investment.  Hong Kong’s proximity to industrial facilities in acute need of upgrades combined with its exceptional finance and legal infrastructure make it a natural base for P2E2 projects in Mainland China and beyond.

By using P2E2 technologies, factories and facilities can:

• Reduce energy use
• Reduce pollution
• Lower electricity bills
• Conserve raw materials
• Reduce over-all operating costs
• Generate new revenue streams by generating carbon credits or utilizing waste streams

Potential P2E2 Roadmap:

There are several variations to P2E2, but the mechanisms are essentially the same: factories and facilities can install P2E2 upgrades at little or no upfront cost by engaging Energy/Environmental Service Companies (EESCOs) on a performance contract basis.  EESCOs calculate the amount of long-term cost savings and potential revenue to be generated by installing P2E2 technologies.  The EESCOs are then paid from the cost savings that accrue to the facility owner, generally over 3 – 5 years.

1. Factory or Building Owner schedules a audit with an experienced Energy/Environmental Service Company (EESCO)
2. The end-user facility signs a performance contract with an EESCO outlining the upgrades and services provided by the EESCO, as well as projected cost savings
3. The EESCO obtains financing based on the projected cost savings in the performance contract
4. The EESCO purchases, installs and operates the equipment and/or new systems to ensure maximum operating efficiency, and maximum cost savings
5. Cost savings are shared by the factory and the EESCO

P2E2 Resources:

P2E2 was launched by the U.S. Environmental Protection Agency (USEPA) over a decade ago and has evolved as a private sector initiative.  In the last few years, U.S. Commercial Service – Hong Kong (“CS Hong Kong”) has played a prominent role in promoting P2E2 awareness in China and throughout Asia.  Further, in the interest of spurring on creative approaches to the financing hurdle and positioning U.S. suppliers to participate in resulting projects, CS Hong Kong has fostered a network of government, industry and financial services firms interested in executing P2E2 upgrades.

Financing Entities:

The Asian Development Bank, International Finance Corporation and other institutions have set aside funds for investment in sustainability projects, some of which may be applicable to P2E2.  In addition, P2E2 projects can benefit from a range of private investment sources, commercial loans and loan guarantee programs, many of which are offered by Hong Kong entities.  The outstanding challenge facing the private sector today in fully harnessing the potential of P2E2 is how best to incorporate commercial loans and loan guarantees into the traditional P2E2 mechanism.   Key actors in P2E2 financing include:

HSBC Sustainable Equipment Financing Program http://www.commercial.hsbc.com.hk/1/2/commercial/loans/asset-finance/equipment-finance/green-equipment-financing

Standard Chartered Energy Efficiency Loan Guarantee Program for China http://wholesalebanking.standardchartered.com/en/mediacentre/pressreleases/Pages/03052008.aspx

Hong Kong’s Cleaner Production Program  http://www.cleanerproduction.hk/en/main.asp

Asian Development Bank  http://www.adb.org

International Finance Corporation  http://www.ifc.org

EESCOs:

Black & Veatch Water Asia
Chevalier (HK) Ltd.
Cinotech Solutions Ltd.
Dalkia
Dunwell Group (Enviro-Tech, New Logic and Engineering Limited) 
EDMS (Hong Kong) Ltd.
EESCO P2E2 Hong Kong Ltd.
Energy Resources Management
Focus Energy Ltd.
Honeywell Automation & Control Solutions
Hong Kong Association of Energy Service Companies
Inergi Corporation Ltd.
ITOCHU Hong Kong Ltd.
Japan Ecotech Ltd.
Johnson Controls, Inc.
Optegy, Ltd.
Smart Work International Ltd.
Trane Pacific
Ventronics (HK) Ltd.

Related Technology Providers:

Agmet
Air-pure Systems
Draper Sunshades
Duraflow
Ecology Coatings
Environmental Biotech
Falcon Waterfree
Fremont Industries
Fuel Tech
General Electric
NeuCo Inc
Rockwell Automation
Sidel Systems USA Inc.
Siemens Building Technologies

Interested?

P2E2 is a promising market-driven solution to serious environmental challenges.  If you are a provider of P2E2-enabling services or technologies, represent a project suited to this green finance methodology, or are aware of successful instances where this approach or similar ones have been successfully applied, we would like to hear from you.  While CS Hong Kong’s primary interest is in promoting U.S. involvement in this field, we can all learn and benefit from efforts to perfect this approach, regardless of the source of the inputs or location of the project.  Your case studies and lessons learned will be critical to expanding P2E2 and making it a mainstream “green finance” tool.  Please contact: hong.kong.office.box@N0SPAM.mail.doc.gov