Thursday, 3 December 2009

China Wind-Power Plans Pose Carbon-Credit Issues

International climate-change officials have raised questions about the economics behind about two dozen Chinese wind-power projects, underscoring the complications involved in putting a price tag on global-warming emissions ahead of a new round of environmental talks in Copenhagen.
A United Nations committee is in various stages of reviewing about 25 wind-power projects that applied to receive carbon credits. The credits, which can be sold and traded and are used by companies to offset their own emissions, are meant to pay for projects that wouldn't have received investment otherwise.

The question is whether the projects need the credits to be economically feasible, said Lex de Jonge, chairman of the executive board of what is known as the U.N.'s Clean Development Mechanism, or CDM. The committee is specifically looking at the tariffs they received from grid operators.
"The suspicion of the board is that in some cases the tariffs may have deliberately been set lower to make the project eligible," he said, adding that the 25 projects represent about half the China projects submitted. "It's not about China," he said.
Chinese officials said project operators applied for the credits in good faith, before national tariffs on wind electricity were set.
The projects represent about 100,000 metric tons of carbon dioxide each on average, Mr. de Jonge said. The reviews were reported Wednesday by the Financial Times.
Coming just ahead of the next round of talks in Copenhagen next week, the carbon-credit tussle underscores how hard it will be to convince nations like the U.S. that China needs extra money to pay for reducing greenhouse gases. China, which has overtaken the U.S. as the world's top greenhouse emitter, has pledged to slow down the pace of its growing carbon emissions. But it wants rich nations to help offset the costs for poor countries' carbon-abatement projects.
China has been the beneficiary of 48% of global CDM carbon credits, which allow economically advanced nations to meet part of their carbon emission reduction targets under the Kyoto Protocol by investing in clean-energy projects in developing nations.
As China's wind-power market matures and with the CDM set to expire in 2012 along with the Kyoto Protocol, the probability that the nation's wind-power projects will be eligible for additional post-Kyoto funding is diminishing, said Lin Na, a project manager of the EU-China CDM Facilitation Project.—Jing Yang and Carlos Tejada