Tag Archives: carbon trading

U.N.’s Application of the Clean Development Mechanism to China – Fair or Unfair?

As is customary for many over the Chinese New Year, I spent a lot of time cleaning up old junk in my house the last few weeks. As luck would have it, I happened to run over a December article in BusinessWeek reporting that the U.N. had stopped awarding carbon funding of green projects in China. An excerpt of the article (cnn copy) is provided here:

The United Nations body in charge of managing carbon trading has suspended approvals for dozens of Chinese wind farms amid questions over the country’s use of industrial policy to obtain money under the scheme.

China has been by far the biggest beneficiary of the so-called Clean Development Mechanism, a carbon trading system designed to direct funds from wealthy countries to developing nations to cut greenhouse gases.

China has earned 153m carbon credits, worth more than $1bn and making up almost half of the total issued under the UN-run programme in the past five years, according to a Financial Times analysis. The credits are currently trading at about $10-$15 each.

Industrial countries can meet part of their commitments under the 1997 Kyoto protocol to battle global warming by financing projects that mitigate emissions in developing nations. Projects only qualify for credits if the applicants prove they would not have been built anyway, a condition known as “additionality”.

The controversy over Chinese wind farms and other CDM projects will intensify calls for the system to be overhauled at the UN’s Copenhagen conference, which opens on Monday. Continue reading U.N.’s Application of the Clean Development Mechanism to China – Fair or Unfair?

(Letter) Translation: Carbon Trading Prelude To Low Carbon Economy

Below is a short article on China’s state of Clean Development Mechanism(CDM) under Kyoto Protocol, and future of China’s low carbon, green development:

http://www.epciu.com/Html/0908/17/3471B33FF1937070.html

Carbon Trading Prelude To Low Carbon Economy

Environmental China, 8/17/2009

(Carbon trading market is a hopeful prelude to “low carbon economy”. Beijing Environmental Exchange CEO Mei Dewen says China, being the nation with largest carbon resource, has tremendous development potential in carbon trading. Thru Clean Development Mechanism, in 2012 China may receive 1.8 billion tons of carbon trading credit, as much as several hundred million USD.)

China’s carbon-based economy is a must, says Mei Dewen. Establishing exchange, develop products, speedy connection with international channels, Mei believes, developing market and pricing mechanism, attracting qualified financial institution and enterprises, is central to the future of carbon-based economy.

As 2005 Kyoto Protocol framework relates to China, in recent years, global carbon trading and marketplace had exponential growth, From 377 million Euro in 2004 to 91 billion Euro in 2008, with expert projection of 140 billion Euro in 2012, surpassing oil market as largest marketplace.

Carbon trading and derived financial market is on the horizon. According to World Bank’s estimate, half of the 5 billion ton emission reduction target by developed nations will be realized from CDM, and China have the potential for 35% to 40% of the global CDM.

However, financial development area is lacking, Mei Dewen says. Although China has the largest carbon capital, carbon economy and carbon trading are left and rigt legs, without support from carbon economy, China will lose out on carbon trading like pricing mechanism, and lose out on opportunity in development of new financial sector.
Currently, carbon trading is mostly monopolized by developed nations, such as ETS in EU, ETG in UK, and CCX in US. Although China has established environmental exchanges in Beijing, Shanghai, Tianjing, these 3 exchanges are limited to conservation and environmental protection technology transfer transactions, and still far from monetizing on carbon trading. China’s carbon marketplace development not only far behind developed nation, it’s even behind India.

In concrete terms, China’s carbon trading is akin to farm commodity market, while India’s carbon trading has elevated to level of currency market. Mei says, India’s carbon marketplace development is more advanced than China, in terms of trading platform or CDM capability. India’s carbon credit is 2-3 Euros more per ton than China.