GreenVillage Credit (GVC) is a part of UNEP?s China Rural Energy Enterprises Development (CREED) project that aims to create a clean energy path in China?s Yunnan province and surrounding areas. Supported by the United Nations Foundation (UNF), CREED offers enterprise development services (EDS) and support for consumer credit and income-generation loans. The Nature Conservancy (TNC) China Program is responsible for the consumer credit and income generation component through the GreenVillage Credit project in the northwestern part of Yunnan Province.GVC project explores a new financing approach to promote economic development and renewable energy diffusing by providing local villagers with two types of credit: the household credit to purchase higher quality sustainable energy systems (energy efficient and renewable energy systems); and a loan for activities that can generate income using the new and improved energy services, such as vegetable and cash-crop plantations, animal husbandry, tourism services and other activities with sufficient financial returns.

1.GreenVillage Credit provides local villagers with the consumer credit--instead of grants and subsidies--to install alternative energy systems and, additionally, a loan for activities that can generate income using the new and improved energy services. The approach improves the capacity of local communities to capture opportunities to generate income and thus improve the affordability of cleaner and renewable energy services. 2.GreenVillage Credit is implemented in close cooperation with the community-based GreenVillage Credit Associations, which are composed of local residents participating in the project and receive support from GreenVillage Credit. GreenVillage Credit Associations provide a platform for participation of local residents in planning and management of the project. Such local participation has contributed to smooth implementation and the sustainability of the project.3.The project loan capital is entrusted to local Rural Credit Co-operatives (RCC) that manage the financial operations at village and local levels. GreenVillage Credit provides financial and technical support to member households of local Associations which install new energy systems and conduct income generation activities. The GVC Project team and the local Associations take primary responsibility for loan disbursement and collection. Individual loan amounts, loan periods and interest rates are determined by agreements between the GVC project team, RCCs, and the local Associations

There are currently 589 households in the mountain communities benefiting directly from the project. However, a much larger number of households in North West Yunnan and western China will indirectly benefit from the successful experience and replication of the project.

1. By providing loans for income generation activities, the project is helping to improve the livelihoods of local residents and promote community economic development. 2. The project is contributing to the conservation of forests and biodiversity in North West Yunnan by reducing fuelwood consumption through diffusion of alternative and more efficient energy facilities for households.3. The project enhances the capacity of local communities by offerring various training workshops on alternative energy use and income generation activities, such as tourism management, orchard cultivation and cash crop cultivation.

Adopting a learning-by-doing approach, the Project works closely with different levels of government agencies, including central, provincial and local, as well as rural financial institutions, manufacturers and local NGOs to introduce and disseminate a range of alternative energy technologies while facilitating income generation activities.Involvement of decision makers in local government and rural financial institutions helps them better understand and experience the benefits of the project, so that the government agencies and rural financial institutions can offer financial and technical support to the alternative energy business sector and end-user acquisition of alternative energy ?technologies?. Besides, the project works with local manufacturers and suppliers or contractors on product development, production, modification, dissemination, and services.

1. The proejct has covered 575 households in 5 communities, with totally over $300,000 of loan disbursement and 600 units of reneweable energy system installed, including biogas units, solar water heaters, fuel efficient cookstoves and micro hydropower generators. 2. Fuelwood consumption per household has been cut down by 30%-60% through increasing combustion efficiency and the switch by a growing number of households to alternative resources. This has in turn helped alleviate pressure on forest and biodiversity. 3. Incomes of local beneficiaries show a definite upward trend. One year after the project implementation, the annual income of the project participants has increased by 20% on average.4. The project abates health risks of indoor smoke from the burning of fuelwood. This has been particularly advantageous to women and children. For the most part, they have hitherto borne the brunt of such risks due primarily to their spending disproportionately high amount of time in indoors.5. The project enables local residents to save time and effort on fuelwood collection and cooking, and spending more time on income generation activities for adults for a better livelihood, or having more spare time and opportunities on education for children.

The design of a revolving fund that integrates the installation of alternative energy systems with support for income generation activities in poor communities is financially sustainable. By building the capacity of community-based associations in critical areas such as resource mobilization and financial management, the project has established a strong foundation for accelerated deployment of ecologically sound and affordable energy technologies, driven by growing demand backed by access to credit facilities supportive of income generation and socio-economic development.

The project framework has been welcomed by most local communities and positively recognized by local financial institutions, government agencies and other NGOs. The project model can be replicted in many similar areas in the world. Existing rural financial institutions, such as RCCs, have recognized the benefits of consumer credit and have expressed willingness to provide loans for alternative energy installation.