7 november 2009

China a big winner in carbon credit game

By Jerome Cartillier (AFP), October 7, 2009 –

KUNMING, China — In energy-hungry China's southwestern Yunnan province, power is being produced at wind farms, dams and garbage dumps as the Asian giant adopts more "green" technology thanks to carbon trading.

The UN's Clean Development Mechanism (CDM) allows rich countries to fulfil part of their greenhouse gas reduction commitments under the Kyoto Protocol by investing in projects that help reduce emissions in developing countries.

The arrangement is one of the key features of the Kyoto pact on global warming, which expires in 2012. Nations will gather in Copenhagen next month to try to hammer out a successor treaty on climate change.

China, now deemed by some scientists the world's biggest emitter of greenhouse gases, is currently the biggest beneficiary of the CDM as it is home to more than a third of the 1,900 projects registered with the UN.

More than 60 percent of the world's carbon credits, or so-called "certified emission reductions" (CERs), are granted by China.

"The mechanism of course needs to be improved, but it works," said Yan Tang, who oversees low-carbon CDM projects in China for the French Development Agency, which grants loans for such endeavours.

In Kunming, the provincial capital of Yunnan, the city's roughly six million residents produce 3,500 tonnes of household waste every day, which is taken to two dumps.

At one of them, a strange sight looms atop the mountain of garbage: a giant spider-like methane capture unit with dozens of pipes has been set up to trap potent greenhouse gases emanating from the muck and turn them into electricity.

The unit, which cost 15 million yuan (2.2 million dollars) to build, should prevent 64,000 tonnes of carbon dioxide equivalent from reaching the atmosphere each year. That reduction credit has been purchased by an Italian company.

"Without the Clean Development Mechanism, this project would never have happened," said Ban Qinli, the director of Kunming Huanye Project Development Co, a private firm that runs the garbage dump methane capture plant.

In Yunnan alone, the UN has already approved about 20 CDM projects, most of them in the realm of hydroelectric power, and 200 more are in the pipeline.

Some have questioned whether China, the world's third-largest economy with 2.27 trillion dollars in foreign exchange reserves, is really the country most in need of CDM assistance to ensure its transition to a lower-carbon economy.

But Yan said there was no question of the programme's fairness or effectiveness.

"The rules of the game are the same for everyone and the Chinese example can be useful for other countries," she said.

One of the goals of the difficult climate change negotiations that will culminate next month in Copenhagen is to rework the CDM for the post-Kyoto era so that it is available to more than just the biggest developing countries.

For example, as of now, less than two percent of the registered projects are in Africa.

Thanks to concerted efforts by authorities, China has reaped maximum benefit from the programme, and some are concerned that any revamping could sideline the Asian giant in future.

"Two years ago, relevant (provincial) economic authorities did not even know this tool existed," said Wang Xiaoli, director of Yunnan's assistance centre for those trying to run CDM projects.

"Today, they're all wondering and worrying what the programme will look like post-Kyoto."

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