CHINA TO MARKET RENEWABLES

This is spectacularly smart of China. While it is a booming economy, it is still a “developing nation” and therefore able to sell credits to the Europeans to develop a renewables infrastructure. By the time it joins the US as a “developed nation,” the Europeans will have built the Chinese a new energy system.

Renewable energy projects to lead in China’s CDM development – industry insiders
JY, July 27, 2007 (Interfax Information Services)

WHO
Chinese energy and economic planners,
Soon to be "green"? (click to enlarge)

WHAT
Emissions market insiders are whispering that China is serious about developing renewable energy installations as much for the opportunity to sell emissions credits to EU emitters as for the clean energy produced. This move signals a new Chinese inclination to partner on energy project development.

WHEN
European Chamber of Commerce seminar July 26.
The EU ETS (carbon market) was $30 billion in 2006. It is expected to double in 2007, double again in 2008 and reach $250 billion by 2010.

WHERE
Seminar in Shanghai, China
Three biggest sellers via the CDM: India, Brazil, China.

WHY
The Clean Development Mechanism (CDM) of the Kyoto Protocols incentivizes the funding renewable, emissions-free energies by giving developers credits for their investments. The credits allow the investing company to emit greenhouse gases above their capped allotment in the process of doing business. Penalties for such emissions with offsetting credits are higher than the cost of the investment.
The procedure of selling credits has driven a huge and growing credit market. China has marketed efficiency measures and hydrofluorocarbon emission reductions but finds renewable energy installations more sustainable if more expensive.
A legal process, covered in the seminar, is required for China to obtain registration validating the renewable projects. Projects also need to become “Designated Operational Entities” via the UN. July 13: 601 projects approved by China, 94 DOE, 13 issued certified credits.
Targeted projects: wind, hydro, biomass and liquefied natural gas
using new methodologies.
Insiders do not see China developing its own cap-and-trade system before the expiration of the new Kyoto phase in 2012.
The nations busy selling emissions credits (mostly to the EU) (click to enlarge)

QUOTES
Peter Corne, managing director, Eversheds LLP: "Economic conditions of a country can undergo significant changes within a year, so it turned potential investors away from China to countries like India, which went ahead with the CDM program as soon as it was enforced…"