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Powerful Deals Set Tone for Carbon Expo

China’s first carbon fair concluded on October 27 with two Chinese companies signing greenhouse gas emission reductions purchase agreements for a hydro-electric and a wind farm project.

Signed with the World Bank on behalf of the Prototype Carbon Fund and the Community Development Carbon Fund (CDCF) in accordance with the Kyoto Protocol’s Clean Development Mechanism (CDM), the deals represented just two out of 18 eco-friendly projects that ended two days of meetings in Beijing.

Under the Kyoto Protocol, business entities from developed countries are entitled to purchase spare carbon emission reduction credits from projects or companies that release a lower amount of greenhouse gases than they are authorized.

Organized by the World Bank and the International Emissions Trading Association, more than 2,000 participants from 94 countries took part in the 2006 Carbon Expo Asia, including government representatives from 25 developing countries, invited by the World Bank.

Chinese officials, who participated in the conference for the first time, saw the fair as a valuable tool for showcasing CDM and emission reductions.

“The Carbon Expo is a bridge between developing countries and developed countries in terms of participating in CDM activities,” said the director general of China’s Office of National Coordination Committee for Climate Change at the National Development and Reform Commission. Said Gao Guangsheng: “It contributes greatly to CDM development in China.”

The carbon market grew to almost US$22 billion in the first nine months of 2006, more than doubling in value from the near-US$11 billion recorded in 2005, according to the State of the Carbon Market Report issued by the World Bank and International Emissions Trading Association.

“All the data shows the carbon market is becoming a powerful financial force supporting clean development,” said the report’s co-author. “Now the market’s total value is about four times the GDP of North China’s Inner Mongolia Autonomous Region,” said Karan Capoor.

Of the final two projects, the Huitengxile Wind Farm Project in Inner Mongolia includes 50-100 wind turbines with a total generating capacity of 100 megawatts, installed to supply 245 gigawatt hours to the North China Power Grid. By avoiding coal-fired generation, this project expects to eliminate 240,000 tons of carbon dioxide emissions a year. The Prototype Carbon Fund will buy 1.6 million tons of certified emission reductions from this project.

The 28-megawatt generation capacity of the other project, the China Hubei Guangrun Station, will supply about 89 gigawatt hours of renewable energy annually to Jianshi County via three power stations sited on the Guangrun River in Guangrun County in Hubei province.

The new stations will prevent the county town from flooding, but it is also hoped they will help to rescue Jianshi County, where 95 percent of the 520,000 total population live in poverty, according to official statistics. The Hubei Provincial Power Grid project will enhance access to cheap water and reliable electricity for some of the poorest areas in the Jianshi County Network.

A Community Benefit Plan, financed by 0.8 percent of the certified emission reduction, involves construction of a potable water pipeline, renovating the local elementary school and supporting nine village clinics in the region. Included in the plans is a Museum for the Tujia and Miao ethnic minorities, with funding for their local festivals.

“The greenhouse gas market has performed well in terms of market functioning, but what’s more important is delivering in terms of catalyzing green investments at a more rapid pace than expected,” said Andrei Marcu, Executive Director of the International Emissions Trading Association. “It is a real change in terms of the availability of finance to address environmental problems in developing countries. We will continue to work to ensure that all countries benefit equally from carbon finance and that projects have a strong sustainable development component, especially on the energy side.”

Some of China’s more serious environmental issues derive from giant industrial gas projects emitting Hydro Fluoro Carbon23 (HFC23), a byproduct of Hydro Chlorinated Fluoro Carbon 22 (HCFC22), used for making refrigerants.

“We do not encourage any more HFC projects,” said Lu Xuedu, deputy director of China’s Office of Global Environment Affairs, Ministry of Science and Technology. “We would prefer to have more energy efficiency and renewable energy projects that could help alleviate poverty in the countryside.”

Expected to reach full capacity by the end of 2008, the Guangrun stations are predicted to reduce greenhouse gas emissions by 72,560 tons of carbon dioxide a year.