Two Chinese companies hammered out purchase agreements for greenhouse gas (GHG) emission reductions with the World Bank in Beijing on Friday, covering the one hydro project and one wind farm project in China under the Kyoto Protocol's Clean Development Mechanism (CDM).
The World Bank inked the two deals on behalf of the Prototype Carbon Fund (PCF) and Community Development Carbon Fund.
The Huitengxile Wind Farm Project is located in the Inner Mongolia Autonomous Region. Fifty to 100 wind turbines with a total generation capacity of 100 megawatts will be 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 PCF will purchase 1.6 million tons of certified emission reductions from this project.
The second project inked on Friday was the China Hubei Guangrun Hydro Development Project, located in Hubei's Guangrun county, which will install three power stations in the Guangrun River. The 28-megawatt generation capacity of the Guangrun Station component will supply about 89 gigawatt hours of renewable energy annually to the Jianshi Network, which is connected to the Hubei Provincial Power Grid.
Renewable energy is expected to reduce GHG emissions by increasing the supply of hydro-generated energy to the Hubei Provincial Power Grid, thus displacing coal and gas energy. The Guangrun stations component is estimated to reduce GHG emissions by 72,560 tons of carbon dioxide equivalent a year, and expected to reach full capacity by the end of 2008.
Friday's signings took place at Carbon Expo Asia, the region's first carbon fair held in Beijing, which ran from Thursday to Friday.
Under the Kyoto Protocol, business entities from developed countries are entitled to purchase spare carbon emission reduction (CER) credits from projects or companies that release a lower amount of greenhouse gases than they are authorized to.
According to the World Bank and the International Emissions Trading Association's State of the Carbon Market Report, the global carbon market grew to nearly US$22 billion in the first nine months of 2006, more than doubling in value over the almost US$11 billion recorded last year.
Now the market's total value is about four times the gross domestic product (GDP) of North China's Inner Mongolia Autonomous Region and more than twice the GDP of Laos, said Karan Capoor of the World Bank.
The prosperous carbon market is a result of the CDM and Joint Implementation two mechanisms of the Kyoto Protocol, which aims to reduce the human impact on climate change. It is also driven by voluntary carbon transactions in countries including the United States.
(China Daily October 28, 2006)