Bridges Trade BioRes • Volume 9 • Number 16 • 18th September 2009

CDM Executive Board Gives Green Light to Chinese Wind Farms

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A UN panel has given provisional approval to 17 Chinese wind farms that had been under review for their eligibility under the Kyoto Protocol’s Clean Development Mechanism (CDM).

The decision, which came on 11 September after protracted deliberation among the CDM executive board, will allow the wind farms to benefit from some US$150 worth of climate financing through the CDM, provided they follow certain recommendations.

Kyoto’s CDM allows industries in the developed world to invest in approved clean energy projects in the developing world. Investors are then given offset credits, or Certified Emissions Reductions (CERs), that can be used to offset a polluting company’s excess greenhouse gas emissions, or sold for profit to another industry in need of CERs.

Observers say the Chinese wind farms will generate some 8 million tonnes of CERs over the next three years.

A review of China’s wind projects was launched earlier this year after the CDM executive board noted a drop in China’s national wind-power tariff rates. Because the CDM is designed to fund new carbon emissions cuts in a given country, if a project becomes self-sufficient it may no longer be cutting emissions.

Thus, by lowering tariffs, Beijing may be sending a signal that wind power has become competitive with other energy sources and is no longer in need of financial support.

China says the misunderstanding is due to the way the country negotiates tariffs, but the CDM executive board says it is concerned that some projects are being intentionally manipulated to allow them to benefit from the carbon credit scheme.

“We see a downward trend in tariffs in certain areas in China,” Lex de Jonge, chairman of the CDM executive board, said at a recent Reuters event. “Changing the tariff may have an impact on a final decision on whether a project is additional.”

Tensions are high between the Bonn, Germany-based CDM board and project developers and brokers. Those working on clean energy projects point to the Chinese wind power case as an example of the glacial pace of project approval in the US$65 billion carbon market.

The owners of the 17 Chinese wind power projects - capable of producing enough power for some 1 million homes - have been given conditional approval and are being asked to revise their project blueprints before the decision is finalised.

But while it appears the projects in question will ultimately get a green light from Bonn, the board placed four new Chinese wind projects up for review.

The approval process for CDM projects has been under fire in recent years. In addition to protracted waiting times, critics argue that complicated system is holding back clean energy projects in countries that are in desperate need.

“The need to encourage the deployment of wind energy in countries like China, where energy needs are growing rampantly, is enormous,” said the International Emissions Trading Association, a Geneva-based lobby group, in a recent letter to the CDM board.

ICTSD Reporting; “UN panel approves Chinese wind farms for financing,” REUTERS, 11 September 2009; “U.N. Panel To Rule On $144 million China wind projects,” REUTERS, 9 September 2009.