Carbon EXPO 2009, Barcelona

Introduction on Report of

CDM in ChinaFeng Shengbo

CDM Project Management CenterEnergy Research Institute, NDRC

fengshengbo@eri.org.cn

Cont ent s

•Background• Report Contents• Key Findings

Backgr oundSince the Chinese government and the World Bank, supported by the Swiss and German governments, published the report “CDM in China: Taking a Proactive and Sustainable Approach” in 2004, China has undergone tremendous development in its CDM portfolio, and its position in the international CDM market has changed from entry-level to that of the country with the largest CDM market share.

Backgr oundAs part of a program funded by the Clean Development Fund of the World Bank, this report reviews China’s CDM development over the last five years and provides an overview of the development of the China’s CDM portfolio, including, inter alia, how its CDM policies have gradually taken shape, what the critical tools are in developing CDM projects, and what kind of critical challenges still lie ahead. This report reflects on the progress and achievements in CDM projects that China has achieved in the past five years.

Edi t or i al Boar dEditor in Chief: Su WeiAssociate Editors: Sun Cuihua, Yang HongweiEditorial Board Members: Lv Xuedu, Li Ting, Liu

Weihua, Pei Xiaofei, Gao Yun, Wang Shu World Bank Task Managers: Jostein Nygard and

Carter Brandon

Cont ent s

• Background

•Report Contents• Key Findings

Over vi ew• CDM related background• Implementation framework of CDM in China• Status of CDM implementation in China• Impacts of CDM implementation• Achievements and challenges• Annexes

During the period covered by this study, both China’s particular national circumstances and the CDM process as a whole have evolved. This report tracks those developments, notes China’s achievements, and enumerates the challenges that lie ahead. It demonstrates that China is increasingly taking advantage of CDM opportunities that have arisen during the Kyoto Protocol commitment period (ending 2012) to build a solid system that not only reduces carbon emissions, but also meets national development targets in the Fifth Five-Year Plan such as energy security, employment creation, reduction of local pollution, and technology transfer demonstration effects.

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All CDM projects in China make contributions to the China CDM Fund, based on the value of CERs earned. Each project contributes at a varying rate per an established schedule. The highest rate of 65 percent of the paid-out revenue stream is paid by HFC-23 and PFC projects. All nitrous oxide (N2O) emission destruction projects make contributions at the lower rate of 30 percent, and remaining projects, such as in energy efficiency, renewable energy, methane recovery, and forestry pay only 2 percent. These contributions are beginning to accrue, and the Fund had more than US$300 million as of April 2009. The Fund managers are developing their rules of engagement, and plan to begin disbursing to worthy projects in 2009.

Cont ent s

• Background• Report Contents

•Key Findings

Achi evement s• Creation of a sound CDM regulatory and administrative

framework that has facilitated the delivery of significant environmental and local economic co-benefits.

• CDM projects approved by the Designated National Authority have shown an increasing trend of investment in the three national priority areas for achieving a more sustainable national development path: renewable energy, energy efficiency, and methane recovery and use.

• Consistent with its 11th Five-Year Plan, China has steadily broadened its CDM activities away from industrial processes into multiple market areas offering direct reduction of carbon emissions.

Achi evement s• China has steadily expanded the CDM portfolio into the

poorer provinces of China, especially in the west. • China has successfully created the China CDM Fund,

with payments from all projects receiving CDM revenues. The CDM Fund is nearing the point where it can begin selecting and financing its own projects in China, a unique accomplishment in a developing country.

• There is growing awareness of climate change and a commensurate movement toward developing local capacity to take advantage of CDM opportunities to mitigate its effects. Moreover, China is sharing its experience in this regard with other developing countries.

Chal l enges• Working with the CDM Executive Board (EB) and

Designated Operations Entities (DOEs) to ensure timely validation and registration of DNA-approved projects.

• Strengthening the role of the CDM in facilitating new technology transfer (TT).

• Building human and institutional capacity, still a crucial challenge for the future.

• Assessing the challenges in developing the global carbon market.

Thank you！