The European Union Chamber of Commerce put on a rather good seminar this morning in Shanghai on the clean development mechanism (CDM) and how it’s implemented in China. (Go to the UN’s CDM page for all the details)
The CDM event assembled a well-informed panel of speakers. Dr Wang Yong and David Arthur, of top environmental consultancy firm ERM, bookended the presentations, while Peter Corne, a lawyer with Eversheds, took the middle slot.
-Shanghai is especially susceptible to rising sea levels because the city has sunk. From 1921 to 1965, the city sunk 2.6 meters, although that rate has decreased in recent years.
-Wang Yong: “Global warming is here and now”
-Revenues generated by selling certified emission reductions (CERs – not to be confused with this publication) from projects in China must be shared between the project owner and the Chinese government. The sharing rates are as follows: 2% to the government for renewable energy projects, 65% for HFC/PFC projects and 30% for N20 projects. HFC reduction projects make up the majority of CER projects in China right now, although that won’t be the case any more in the next few years.
-CDM projects in China must have 51% controlled by a Chinese partner, although the interpretation of ‘controlled’ does not necessarily mean a Chinese partner must hold 51% equity.
-As expected, the approvals process for a CDM project here is lengthy, convoluted and slow, but it’s getting better. Peter Corne said it used to take up to 11 months to get things approved, but recently it’s been as quick as three months. (See the National Development and Reform Commission’s approval flow chart)
-In future, nearly 50% of the world’s CERs will be generated by projects in China. India currently leads the way, with about 35% of the CER market, and Brazil is second with 14%. China has about 12%. (See latest stats (PDF) on China CDM project approvals from the NDRC; latest World Bank report (PDF))
-The EU is the biggest market for CERs right now (European buyers comprise a 86% share of the market according to the latest World Bank report), and Holland is the biggest within the EU
-Companies don’t have to be limited to CERs, they can also get into verified emission reductions (VERs), which don’t count against Kyoto Protocol mandated emissions goals, but do plenty of good for the environment and for “reputation management,” as ERM’s David Arthur put it.
I’ll be following this fascinating topic quite closely, so there’ll be more to come.
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