Asia Development Bank (ADB) said it would provide a $250 million loan to Sinopec Green Energy Geothermal Co (SGE) and Iceland’s Arctic Green Energy Corp (AGE) to develop clean geothermal heat in smog-prone northern China.

SGE is a joint venture set up by China’s state-owned oil giant Sinopec and AGE. The project will focus on the Beijing-Tianjin-Hebei region, but SGE chairman Liu Shiliang said the partners plan to "replicate their successful collaboration across Asia."

Geothermal energy, mainly derived from hot underground springs, generates a quarter of Iceland’s electricity. China had planned to develop geothermal energy in the Beijing-Tianjin-Hebei belt as part of its anti-smog campaign, the country said in guidelines published in January.

A 2015 survey by the Ministry of Land and Resources cited that shallow- and medium-depth geothermal resources in 336 Chinese cities were equivalent to around 1.9 billion tonnes of standard coal per year.

The levels of utilised geothermal resources amounted to around 21 million tonnes of standard coal last year, delegates to China’s parliament said.