The bank has agreed the loan with Everbright Financial Leasing, the third and final leasing company to receive funding under the $275m Clean Bus Leasing programme, approved by the ADB’s board in 2013.

It is the ADB’s first non-sovereign loan programme to support sustainable transport in China.

Michael Barrow, director general of the ADB’s private sector operations department, who signed the deal on behalf on the bank, said: “The agreement signed today with EFL will increase the quality of life for commuters, improve air quality, and reduce overall carbon emissions.”

He added: “The Clean Bus Leasing programme is proof that the private sector has a critical role to play in environmentally sustainable transport solutions in the People’s Republic of China.”

The project will finance leased buses that run on cleaner fuel such as compressed natural gas and liquefied natural gas, as well as electric and hybrid buses.

By introducing 5,000 buses into China’s urban road system, it is hoped the project will reduce the nation’s greenhouse gas emissions by around 1.31 million tons per year.

The Chinese government has signalled a massive push towards renewable energy in recent months, in response to the dire air quality in many of its major cities.

Last week, it announced it would be investing 2.5tn yuan ($361bn) in green technology by the end of the decade. This would likely see China remain as the world’s largest investor in renewable energy. At present, the superpower’s spending in the sector accounts for 36% of the world’s total.