The Asian Infrastructure Investment Bank has approved its first project in China since its opening in early 2016.
A loan worth 0 million will go to the Beijing Air Quality Improvement and Coal Replacement Project, which aims to reduce the country's coal use by about 650,000 tons annually.
This will be achieved through connecting about 216,750 households in approximately 510 rural villages to the natural gas distribution network, according to a statement from the multilateral development institution.
Upon completion and after reducing the emissions of burning natural gas, the project is expected to cut down annual carbon dioxide emissions by 595,700 tons, particulate matter by 3,700 tons, sulfur dioxide by 1,488 tons and nitrogen oxide by 4,442 tons.
"China's commitment to reducing its reliance on coal will change lives and improve the environment, and that is why we are investing in a project aligned with their ambitious plan," said Jin Liqun, president of the bank.
"With our unwavering commitment to helping members meet their environmental and development goals, especially their commitments under the Paris Agreement, it is only fitting that our first investment in China will introduce sustainable infrastructure that will reduce greenhouse gas emissions and help vitalize one of the most important economic hubs in Asia," Jin added.
The investment represents AIIB's first corporate loan. The project, scheduled for completion in 2021, will be undertaken by the Beijing Gas Group Company. It will involve the construction of natural gas distribution networks in villages, and gas pipelines and household connections.
The project is "enabling parts of rural China to transition off coal" and will have "a marked impact" on Beijing's residents' quality of life, DJ Pandian, vice president and chief investment officer of AIIB said.
"This investment demonstrates our commitment to helping the transition to cleaner sources of energy," he said.