Chinese officials earlier this month published new emissions factors for seven power grids, which showed that each megawatt-hour of power generated in the country produced an average of 830 kilogrammes of carbon dioxide.

This figure is 9.2 per cent lower than the last government review in December 2008, which claimed that each megawatt-hour of electricity pumped out 922 kilogrammes of CO2.

Each energy project that earns carbon credits in China is measured against how much carbon dioxide it saves versus a standard power plant.

And consultants said today that a lower emissions factor would mean lower CO2 savings and fewer carbon credits for emission reduction projects that are hoping to get registered.

The impact is expected to be felt mostly by developers who have projects that produce power to China’s northern, north-eastern, eastern, central and southern grids, as these saw the biggest reduction in emission factors.

Up to 50 million

There are 919 renewable energy, fuel-switching and energy efficiency projects in China that are either in the process of validation or that have been submitted for registration, according to Point Carbon’s project database.

Although these projects have the ability to produce 467 million CERs by 2012, many projects are unlikely to survive, according to Karl Magnus Maribu, senior analyst with Point Carbon analytics team.

“We expect that 60 per cent of this volume will not be issued because of registration risk, performance risk and general delays,” he said.

That means only 187 million CERs could be issued from these projects, and with a 9.2 per cent reduction in emissions factors, the data could curtail CER supply by up to 20 million from existing projects before 2012, he said.

But other consultants reckon the impact could be larger.

Assuming the flow of new projects into the pipeline continues at its current pace of 40 per month, the impact could cut CER supply from China by as much as 50 million per year under business as usual levels, said Axel Michaelowa founder of consultancy Perspectives.

The new emissions factor could also impact existing projects that did not lock in a long-term emissions baseline for their facilities.

However, one consultant said no renewable energy or energy efficiency projects registered in China have taken the so-called "ex-post" approach.

Victory for Kyoto

Some interpret the new data as an indication that the CDM is working properly by moving rapidly-growing China toward producing cleaner electricity.

“The lower emission factors show that the Kyoto protocol with its CDM has already had positive effects on the Chinese level of greenhouse gas emissions,” project developer First Climate said in an analyst note.

But others are sceptical, believing instead that the Chinese government is simply being more honest about how clean its energy really is.

“While in the past years Chinese grid emissions factors have continuously increased – which is unrealistic given the frantic speed of new, generally more-efficient thermal power plants that have been added – the new grid emissions factors for the first time seem to be realistic and conservative,” said Michaelowa.

He said that a decision by the CDM executive board to validate grid emissions factors published by host country CDM authorities put pressure on Chinese authorities to publish a realistic figure that would not be rejected by the executive board.

China also lowered the emissions factors in January, reducing it by less than 1 per cent compared with its last review in August 2007.


Source: www.pointcarbon.com/news/1.1169078